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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

Equity

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

Balance sheet

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

Real Estate Investment Trust (REIT)

An investment trust specialised in investing in commercial property such as parking garages or GP offices.

Net asset value

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

American Depository Receipts (ADRs)

Tradeable assets that let Americans invest in overseas stocks using US laws and dollars.

Interest Rate

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

Alpha

The percentage by which an investor outperforms a relevant benchmark.

Gilt

What is a gilt?

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.

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