What is a 'collective investment scheme'? Definition & meaning

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

Value Investing

The art of buying shares which trade below their value, according to the analysis of the value investor.

Conditional dealing

Trading in new shares before they’re officially admitted to the exchange, on the condition that admission goes ahead.

Accounting standards

The rules a company follows when preparing financial statements.

NYSE

The world's largest stock exchange. Wall St HQ.

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).

Geometric Mean Return

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

W-8BEN Form

Non-US individuals and businesses may have to file this form for the Internal Revenue Service (IRS), the US tax authority.

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.

Packaged Retail and Insurance-based Investment Product (PRIIP)

An investment where, regardless of its legal form, the amount repayable to the retail investor is subject to fluctuations.

What’s a collective investment scheme?