What is a fund?

Have you ever asked yourself “what does a fund mean?” Essentially, a fund is a sum of money or other resources set aside and earmarked for a specific purpose. It can be established by a person or organisation for any objective they are interested in.

For example, it might be a school setting aside money to purchase new furniture for the classrooms, a city municipality setting aside money to build a new road or a group of social activists setting aside money to donate to some charitable matters, such as child development, human rights or animal welfare.

The majority of funds are usually professionally managed. Some common types of funds include insurance funds, pension funds and investment funds, as well as charitable foundations and endowments.

Where have you heard about funds?

You’ve probably heard about funds many times before. As these can be set up for a variety of different objectives and come in all shapes and sizes, you may hear about them from different sources: TV programmes, advertisements, newspapers, the internet, social organisations, financial advisers, employers or even your neighbours.

What you need to know about funds.

Today, almost everybody uses funds to save or grow money. Individuals, institutions and governments all tend to establish funds with different goals.

These are some of the examples of funds commonly used for personal matters:

• Retirement funds
• Emergency funds
• College funds
• Trust funds

Governments also launch funds that are created for various objectives, including:

• Permanent funds
• Debt-service funds
• Capital projects funds

Eager to make earnings, many individual and institutional investors also place their money in different types of funds. Investment funds can allocate money in various types of assets, such as shares, bonds, indices or property, depending on the investment objective and strategy of the fund. The most popular examples include:

• Mutual funds
• Exchange-traded funds (ETFs)
• Money market funds
• Hedge funds
• Fund of funds