/

Collective investment scheme

What’s a collective investment scheme?

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.

‍

More terms

Value stocks

Stocks in companies that aren’t necessarily growing fast, but instead are dependable and stable.

Balance sheet

A summary of a company's finances, including its assets, liabilities and shareholder equity.

Alpha

The percentage by which an investor outperforms a relevant benchmark.

W-8BEN Form

Non-US individuals and businesses may have to file this form for the Internal Revenue Service (IRS), the US tax authority.

Ponzi Scheme

A form of fraud designed to lure new investors, and pays the earlier backers by using the new investors' money.

Margin call

Learn what a margin call stands for in financial terms.

Stock Exchange

A physical/digital place where stockbrokers and traders can buy and sell securities.

Year to Date (YTD)

A period of time that starts with the first day of the current calendar year and ends with today.

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

You’re just minutes away from commission-free investing

When you invest, your capital is at risk

Freetrade does not provide investment advice and individual investors should make their own decisions or seek professional advice. The value of investments can go down as well as up and you may receive back less than your original investment. Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority (FCA reg. no. 783189). Registered in England and Wales (no. 09797821).

© 2026 Freetrade, All rights reserved. The Apple logo is a trademark of Apple Inc. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.