Which type of fund involves a trust managed by a bank or trust company?

A collective investment fund is a type of fund that is notably characterized by being managed by a bank or trust company. These funds pool money from multiple investors and invest on their behalf, typically holding a diversified portfolio of assets. The management by a bank or trust company is essential as it brings a level of expertise and reliability in overseeing the investments, compliance with regulations, and ensuring that the trust funds are managed adhering to the interests of the investors.

While common stock funds and index funds might also be managed by financial institutions, they are generally not strictly classified as trust-managed entities. Private equity funds focus on investing directly in private companies or public companies that are intended to be delisted, typically involving a different structure and management style that doesn't fall under the trust management model. Therefore, the defining characteristic of collective investment funds being specifically linked to trust management distinguishes it as the correct answer.