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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.

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More terms

Clean price

The quoted price of a gilt, which excludes accrued interest

W-8BEN Form

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

Yield

Income from an investment as a percentage of its current price.

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

LSE

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

Junk Bond

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

Interest Rate

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

Yield curve

A graphical representation of interest rates over time

Beta

Learn what Beta stands for in finance.

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