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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

Gross Margin

The difference between a company's revenue and the cost to produce its goods/services, divided by revenue.

Key Information Document (KID)

A document issued by an investment fund to help investors determine if it's the right fund for them.

Yield to maturity (YTM)

What is yield to maturity and why is it useful?

Net Income (NI)

The money a firm is left with from sales after subtracting taxes and different business costs.

Accounting standards

The rules a company follows when preparing financial statements.

Forward pricing

Mutual funds are traded on a forward pricing basis, meaning the price you see will be different to the price you may trade at.

Time-Weighted Rate of Return (TWRR)

A return calculated over the time period invested, that excludes extraneous elements, such as deposits to and withdrawals from the investment accounted.

Beta

Learn what Beta stands for in finance.

Annualised Rate of Return

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

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