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.

Arithmetic Mean

The sum of a set of numbers added together and then divided by the total amount of numbers in that set.

United States Dollar (USD)

The famous greenback our friends in the US use as currency.

Dirty price

The total price payable on the purchase of a gilt. It’s calculated as the clean price plus accrued interest.

Unit Trusts

A collective investment scheme the investors pay money into in exchange for units. The money is invested in a diversified portfolio of assets.

Venture Capital Trust (VCT)

A listed company run by a fund manager, investing mainly in private companies.e.

52-week high/low

The highest, or lowest, price a share has traded at in a passing year.

Bookbuilding

How banks work out what investors will pay for shares before an IPO, one order at a time.

Earnings per share

We look at what earnings per share mean and how to calculate it

What’s a collective investment scheme?