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.

‍

More terms

ESG investing

ESG is a hot topic right now for investors. Understand what ESG investing is all about and how you can use it to diversify your portfolio.

Equity ETF

An exchange-traded fund that is comprised of a set of stocks.

Internal Rate of Return (IRR)

A means of calculating the potential future return on an investment.

Investment Trust

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

Rate of Return

Profit on an investment, expressed as a percentage of the investment.

Net asset value

Mutual funds and investment trusts are priced on their net asset value (NAV).

Annualised Rate of Return

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

Running yield

The annual interest payment (dividend) divided by the current market price of a bond.

Junk Bond

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

What’s a collective investment scheme?