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

Compound interest

Understand what compound interest means and how it's calculated

Income statement

A summary of a company's income and expenses over a set period of time.

Accrued interest

The interest earned on a gilt since the last dividend date. When buying a gilt, the buyer pays the accrued interest at the time of a transaction to the seller in addition to the clean price of the gilt

Alpha

The percentage by which an investor outperforms a relevant benchmark.

Ponzi Scheme

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

Securities

Bonds and stocks.

Collective investment scheme

Learn what's a collective investment scheme

UK Treasury bill

A debt instrument issued by the UK government with a maturity of less than one year.

Investment Return

The amount of money made or lost from an investment. Usually expressed as a percentage.

What’s a collective investment scheme?