Basically your question boils down to "how does a mutual fund work?"
Lets say you have $500,000 and you want to put that money to good use tracking the S&P 500 List. You could just buy $1,000 in shares of every company on that list. but then, as the value if the individual shares go up or down, any maybe some dropping out and being replaced, you´d have to come in at certain intervals to rebalance, meaning to sell some of the shares that have gone up or dropped out and using that money to buy the appropriate amount of those that have gone down or being newly introduced.
Now that is a lot of work, and you want your money to work for you, not work for your money.
So you hire somebody to do that work for you - a stock manager. Hmm, turns out he want to earn at least $150,000 a year. Well that is not good, that´s more than your average return from your investment.
So you talk to me and I have the same problem. So we pool our money, you put 500,000 in and I put 500,000 in. The manger has the same amount of work. He just have to buy double the amount of shares and we can share his wage between us, cutting costs for each of us in half. Still, much to expensive to make sense.
So we go on an take on others to put their money into the pool until we have a vast sum, say $100,000,000 for the manger to do basically still the same work. No we are talking. We only need 0,15 % of the sum invested to pay the wage, the rest of the returns go into all of our pockets.
And voila, we have created a mutual fund - specifically an index fund - of course you could also advise your fund manager not to follow the S&P 500, but pursue another investment strategy for other forms of mutuals.