What is a 'collective investment scheme'? Definition & meaning

Learn what's a collective investment scheme

A collective investment scheme is a fancy legal name for any investment fund that involves multiple people pooling their money together and investing in assets.

In the UK, this could include mutual funds, investment trusts or an open-ended investment company.

Collective investment schemes benefit from economies of scale. A larger pool of money invested has the potential to provide greater returns. It can also mean that transactions and other pieces of bureaucracy incur lower costs.

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More terms

Spot Rate

The currency exchange rate a bank quotes, valid with immediate effect.

Money weighted rate of return

Learn what Money Weighted Rate of Return or MWRR stands for in finance.

Running yield

The annual interest payment (dividend) divided by the current market price of a bond.

Total Return

This is the measurement of a fund’s performance in a specific period.

Accounting standards

The rules a company follows when preparing financial statements.

Interest Rate

The amount a lender charges for lending your money, or a borrower pays you for borrowing your money.

Professional Client

An investor that is able to meet several regulatory criteria.

LSE

London Stock Exchange, which was founded in 1571 and now has a market cap of almost $5 trillion.

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.

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What’s a collective investment scheme?