Generally referred to as mutual funds in the US and Canada, in Europe or internationally they are more commonly called unit trusts. They are professionally managed, regulated, collective investment vehicles that pool money from many investors to invest in the financial markets. In a nutshell, when you invest in a fund, you hold units of that fund and when the fund’s assets increase or decrease in value, so does the unit price you own.
Funds are often categorized as money market funds, bond or fixed-income funds, stock or equity funds, property or absolute return funds. They can be actively-managed funds with a professional fund manager and a management team making decisions daily about the fund’s holdings, or passively managed funds such as index funds and ETFs, where they track a financial index like the S&P500.