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

Over-The-Counter (OTC)

A security that is sold outside of an exchange.
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Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.
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Retail Prices Index (RPI)

An index published each month by the Office for National Statistics, which measures the level of retail prices in the UK. Cash flows on all index-linked gilts are linked to the RPI.
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Fixed Income

An investment that provides a fixed rate of return, often over a specific set of time.
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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.
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Fundamentals

The data or information that is likely to impact a company's stock price.
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Alpha

The percentage by which an investor outperforms a relevant benchmark.
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Know Your Customer (KYC)

A legal requirement for financial firms to understand exactly who their customers are. Used to prevent money laundering and terrorist financing.
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Yield to maturity

What is yield to maturity and why is it useful?
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