Collective investment schemes

Collective investments, or pooled funds, are funds where a large number of investors pool their money together under professional investment management. The investment manager then acts collectively on their behalf.

Collectives come in various forms, from unit trusts, investment trusts, Open Ended Investment Companies (OEICs), offshore funds, with-profit funds, commercial property funds, corporate bond funds, exchange traded funds (ETF’s) etc. There are literally thousands of collective investment funds out there, focusing on hundreds of different sectors and countries.

The major benefit of collective investments is that they can reduce the risk of investing, by spreading the risk of their investment. The fund manager is in a position to purchase a much greater selection of investments than the individual investor. This means that the impact of one badly performing investment on the collective investment fund is low, as it comprises a small part of a much larger investment portfolio.

Collectives also give you a much higher degree of diversification. If you wanted to invest in UK smaller companies, for example, the costs and research time involved would mean that practically you could only invest in a few companies at best. A fund manager, however, will have the resources to bulk buy shares in many companies, thus spreading the investment further. He or she will also have the in-depth knowledge of the sector, as well as a team of researchers behind him/her to monitor the sector on a continuous basis for new opportunities.

Collective funds also have access to specialist markets and instruments, such as hedge funds, emerging markets, private equity situations and complex derivatives, which are possibly beyond the understanding and reach of most investors.

With thousands of collective funds to choose from, it is not an easy process to select the right funds for you. This is where quality financial advice from Kellands Hale can help you.

We all know that past performance is not a good guide to future results, so whilst historic data is important, our focus is more on continuous assessment. We also seek to get to know and understand the fund managers with the aim of recommending to our clients funds that will produce upper quartile results.

For help with your investment portfolio planning, please contact Kellands Hale today, so that we can arrange an initial without obligation meeting.

Please be aware that the value of investments linked to the stockmarket, and the income from them, may rise or fall depending on market conditions and that you may not always recoup your initial investment. In addition past performance should not be seen as an indication of future performance.