They collect a pool of funds from investors for the purpose of diversifying risk, earning interest or dividends, and/or generating profits from the investments' increased value.

Answer: Mutual funds

Explanation: Mutual funds refers to the funds in which the funds from many investors are pooled together to purchase several different securities. These funds are managed by the investment professionals.

The investors of such funds benefit from the interest or dividend earned on the purchased securities or from selling the shares of these funds in the capital market and earning capital gain.

Hence from the above we can conclude that the given statement is referring to mutual funds.