An investment fund simply pools together money from a variety of individuals. A ‘fund manager’ then uses this pool of money in order to invest it in a variety of assets, with the aim of increase the value of your money. It is possible, for a fund manager to invest the ‘pooled money’ into a variety of assets including cash, equities, bonds and property. The asset classes invested in will aim to reflect the objective of the fund.
One of the main benefits of an investment fund is that your risk is spread. An investment fund will spread the pooled money across a variety of companies, and therefore your money does not strongly rely on the performance of one company. Additional benefits include gaining exposure to investment opportunities that may not be available to you on an individual basis. Similarly, you can potentially reap the benefits of the expert knowledge of fund managers.
However as with all investments of this nature, it is important to note the value can rise as well as fall depending on company and market performance. Therefore, the associated risks must be fully understood before committing to any investment fund.
Fund and investment funds can be presented in a number of ways, including the following (click for further information):