What is '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.

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More terms

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Interest Rate

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

Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.

Forward pricing

Mutual funds are traded on a forward pricing basis, meaning the price you see will be different to the price you may trade at.

Equity

The amount of money a company would be left with by subtracting its liabilities from the value of its assets.

Costs and Charges

The money you pay when investing.

Balance sheet

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

Investment Trust

A company that pools money together from multiple investors and then invests it.

Alpha

The percentage by which an investor outperforms a relevant benchmark.

What’s a collective investment scheme?