What is an investment fund?
An investment fund is a pool of capital that a number of individual investors pay into, which is used to collectively invest in stocks and bonds.
The two main types of investment fund are open-ended and closed-ended.
Where have you heard about investment funds?
Using investment funds is a popular strategy for investors. Some of the most popular global investment funds include USAA Capital Growth Fund, Polaris Global Value Fund and Steward Global Equity Income Fund.
What you need to know about investment funds...
In an investment fund, each investor owns their individual shares but they don’t have any influence on where the money in the fund is invested. This is down to the investment manager, who decides which assets to buy or sell, how many and when.
Investors decide to enter an investment fund based on the fund’s objective – these generally target geographic area or specific industry sectors. There are various forms investment funds can take, including mutual funds, exchange-traded funds and hedge funds. These can be open-ended or closed-ended.
Open-end funds are typically most popular with investors. The number of shares in the fund is much more fluid – open-ended funds can issue and redeem shares at any time to meet investor demand. Shares can also be bought or sold directly from the fund. Closed-ended funds issue a fixed number of shares which can only be bought or sold in the market.
By investing as a collective, investors can benefit from a larger amount of capital, greater investment diversification, risk spread across a range of asset classes and a specialist fund manager.