Funds & wrappers
Fund
Also called Collective investment or Pooled fund
A pooled vehicle where many investors’ money is managed together under one strategy.
How it works
Pooling gives a small investor access to diversification, professional administration and markets that would otherwise be impractical to reach.
The trade-off is that you own units in a vehicle rather than the underlying assets directly, which affects tax, voting rights and what happens if you want out quickly.
Related terms
- Index fundA fund that aims to match an index rather than beat it, at very low cost.
- ETFA fund whose shares trade on an exchange throughout the day like an ordinary share.
- Mutual fundA fund that creates and cancels units on demand, priced once a day at net asset value.
- Net asset valueThe value of everything a fund owns, minus what it owes, divided by the number of units.
- Expense ratioThe annual percentage of your money a fund takes to cover its running costs.
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