A pool of money set aside by one or several investors for a purpose. Some of the most common types of funds include pension funds, insurance funds, mutual funds and exchange-traded funds (ETFs). The objective being to earn money, funds are often professionally managed, and invested into a diversified portfolio of securities such as bonds, stocks or even other funds to be able to track or outperform a benchmark. Investors are typically individuals, financial institutions or governments.
Funds are an easy way to invest into an already diversified instrument, as bonds often contain several securities. Some funds tend to be multi-asset, which means they have different asset classes such as fixed income, equities, and structured products. Some others are only composed of one single type of asset class. The securities contained in each fund are mainly at the discretion of the portfolio manager.
A concrete way of finding more information about a mutual fund is to read the summary of its prospectus. A prospectus provides important details like fund objective, main holdings, main risks, and more.