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What is a fund?

What is a fund?

Funds offer an easy and convenient way to invest, and are popular with novice and experienced investors alike. They offer an easy way of diversifying across a number of different investments, and access to the skills of a professional fund manager.

A fund pools together the money of lots of different investors, and a fund manager invests on their behalf. Funds can invest in various types of asset, such as shares, bonds or property, depending on the investment objective of the fund.

Example fund
UK shares: 46%
Overseas shares: 24%
Corporate Bonds: 15%
Property: 7%
Funds: 5%
Other: 3%

With a professional making the investment decisions, investing in funds takes away much of the pressure of choosing and managing your own investments. For many, this will justify the fee that the fund manager charges for their services - normally around 75p a year for every £100 you have invested.

If you invest with a fund manager who chooses assets that perform well, the value of your investments will increase in value over time. On the other hand, always remember that investments can fall as well as rise in value so you could get back less than you invest.

While all investors ultimately seek to grow their wealth, there are a number of different ways to achieve this goal. This means there are many different types of fund available. Some will invest in a broad range of assets across many different countries, while others may invest in one particular asset type, or have a specific geographic focus.

Next: Trading funds