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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

Investment Trust

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

A summary of a company's income and expenses over a set period of time.
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Year to Date (YTD)

A period of time that starts with the first day of the current calendar year and ends with today.
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Total Return

This is the measurement of a fund’s performance in a specific period.
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Hedge Fund

Investment funds that are often associated with riskier and shorter-term trading strategies.
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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).
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Geometric Mean Return

A way of calculating compound returns on an investment or savings over a set period of time.
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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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Diversification

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