Understanding funds

What is a fund?


When you choose to save - either through a savings, investment, or a pension product - your contributions will be invested in a fund, with a view to growing your money.

What is an investment fund?

An investment fund is made up of investments bought with money from a number of individual investors.

The individual investors choose which type of fund to invest in, based on the types of assets it holds, and the level of risk.

A fund manager oversees the fund and makes the decisions about which assets it should hold, in what quantities and when they should be bought and sold.

What are the benefits to investing in funds?

There are several benefits to investing in funds, rather than choosing individual assets or investments:

  • The fund manager picks investments for you.
  • Less administration as the fund manager does it all for you.
  • Can be cheaper than buying investments individually.
  • More choice and, as part of a group of investors, access to a wider range of investment opportunities.

More about choosing the right funds for you

What is fund management?

You also need to decide which type of fund management expertise you would like, active or passive.

What types of funds are available?

There are five main types of investment: cash, bonds, equities, property and alternatives. These are called asset classes and it is important to understand which assets the fund you choose invests in.

What is your attitude to risk?

Before investing, you should also decide what your attitude to risk is.

Warning: Past performance is not a reliable guide to future performance.
Warning: Benefits may be affected by changes in currency exchange rates.
Warning: The value of your investment may go down as well as up.
Warning: If you invest in these funds you may lose some or all of the money you invest.

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