A mutual fund collects money from thousands of retail investors to purchase a diversified portfolio. Professional money managers handle the portfolio aiming to produce capital gains or income for the fund's investors.
Unlike ETFs, you don't buy mutual funds on the open market from other investors. Instead, you buy and sell shares directly from the fund company at the Net Asset Value (NAV) price, which is calculated exactly once per day after the market closes.
Historically, most mutual funds were actively managed and charged high fees. While index mutual funds exist today with incredibly low fees, they generally lack the intra-day liquidity and tax efficiency found in the ETF wrapper.