Investing in funds
Find out what funds are and how to invest
Important information - Our service is designed for investors who want to make their own investment decisions without personal advice. If you are unsure of the suitability of an investment for your circumstances please contact us for investment advice. Investments will fall as well as rise in value so you could get back less than you invest. Tax rules can change and benefits depend on individual circumstances. Once held in a pension money is not usually accessible until age 55 (57 from 2028).
What is a fund?
A fund is an investment that pools together money from lots of individuals. The fund manager then invests the money in a wide range of assets e.g. UK shares, overseas shares, bonds etc. Each investor is issued units, which represent a portion of the holdings of a fund.
Different funds specialise in different sectors - for example, if you're interested in Europe you could invest in a fund that focuses on Europe.
Why invest in funds?
Fund managers choose and manage underlying investments
Benefit from the expertise, knowledge and time spent by the fund manager and their team researching and picking the best opportunities in a chosen sector.
With an active fund, a fund manager uses their skill to try and do better than a benchmark to fit an investment goal. Passive funds try to closely track the performance of a stated index, so are also known as tracker funds.
Diversifying
Investing in funds means your money is spread across multiple assets. As some investments will perform better and some worse over time, diversifying will, in theory, help spread the risk and smooth returns over time.
Investing for the long term
We always recommend investing for at least 5 years - you have a better chance of riding out short-term volatility and benefitting from greater returns.
Want to get started but don't know how?
Let us ask you a few questions and we'll help you find the right approach
Investment advice from HL
If you don’t want to choose investments yourself, an adviser could save you time and effort by building an investment portfolio for you.
A financial adviser can:
Pick investments that are suitable for your goals
Create a well-balanced and diversified portfolio
Make sure your portfolio is cost and tax-efficient
If you’d like a professional to make your investment decisions for you, you can choose a financial adviser to help.
Why hold funds with Hargreaves Lansdown?
Choose from over 3,000 funds
Whether you're an experienced investor, just starting or want to leave it to an expert, you'll be able to find the right funds, with over 3,000 funds to choose from.
Competitive charges giving you value for money
Online fund trades cost £1.95 and are usually confirmed by the next working day. We also have an automated low-cost income reinvestment service.
Expert fund research
Our experienced research team's knowledge and insight is available to you with regular research updates. Sign up to alerts to keep you up-to-date with the latest insight.
Invest from £100 or just £25 per month
Pay in on a monthly basis from £25 a month. You can choose to invest in funds, FTSE 350 shares or eligible investment trusts, or hold the money as cash until you choose what to do with it.
Frequently asked questions about investing in funds
The type of unit you hold determines how any income generated from the fund's underlying investments is treated.
With income units, income is paid out to fund holders as cash. This could provide the investor with an income stream or the cash could be reinvested to buy additional units.
With accumulation units income is retained within the fund and reinvested, increasing the price of the units. Generally, for investors who wish to reinvest income, accumulation units offer a more convenient and cost-effective way of doing so.
You can buy funds online, over the telephone or by post. Please ensure you have read the fund's Key Investor Information Document (KIID) or Key Features first which is available from the individual fund factsheets on the website.
Online: If you're registered for online access, simply log in and select the relevant account, such as the HL ISA or SIPP and click the ‘Deal Now’ button. Search for your chosen fund investment and continue to the confirmation page.
If you're not already registered, you can set up online access by selecting the ‘Register’ tab at the top right of the screen.
Telephone: Provided you have set up your security details, you can call our stockbrokers on 0117 980 9800 Monday - Friday: 8am - 8pm.
The fund dealing charge is £1.95 for online trades and £29 if you trade over the phone or by post.
Funds fall into two main categories – unit trusts and open-ended investment companies (OEICs). They share many characteristics, for example both are normally priced once per day. The price is based on the net asset value (NAV) of the underlying holdings divided by the number of units or shares in issue. Dealing for both types of fund takes place on a forward-pricing basis, which means that a buy or sell instruction is placed at the next available valuation point. For this reason investors do not know the price they will pay or receive until after the deal is completed.
Unit trusts and OEICs are both ‘open-ended’, which, normally speaking, means that if more investors are buying units than selling, the manager ‘creates’ new units. If the opposite is true, the manager ‘cancels’ units in the fund.
Unit trusts and OEICs can differ in the way prices are displayed, and the way charges and discounts operate.