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

Zero-Sum Game

A situation in which one person's gain is another's loss.

Investment Trust

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

Net Asset Value (NAV)

The value of a company's assets relative to the number of shares it has.

Investment Return

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

Junk Bond

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

Conventional gilts

Gilts where the dividends and principal repayments are fixed in nominal terms. This is as opposed to an index-linked gilt where the dividends and principal repayments are related to movements in the Retail Prices Index (RPI).

LSE

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

Leverage

A method of trading using borrowed money that usually involves a very high level of risk.

Diversification

An investment strategy in which money is put into a variety assets.

What’s a collective investment scheme?