Collective Investment Schemes

Collective Investment Schemes are more frequently known as ‘investment funds’, ‘mutual funds’ or simply ‘funds’. They invest in assets, such as bonds, equities or cash. The collective assets owned by the fund are called a portfolio, and they are managed by a professional fund manager.

Your money is pooled together with that of other investors, and spread over the whole range of assets within the fund. Your investment in a fund is divided into units; the number of units held represents your proportionate ownership of the fund’s overall assets, and the income and capital growth that those assets may generate. The prices of these units fluctuates because the underlying value of the assets will rise and fall – and since the total value of the fund is divided by the number of units issued, your individual stake will rise and fall to reflect this.

Different funds take different levels of risk. Some are relatively low risk, for example some might invest mostly in cash. Others are more risky, possibly investing in emerging companies or markets with the hope of higher or faster growth.

Always seek professional advice to help select funds that suit your risk profile and which could help achieve your financial goals. This advice should consider your:

    • Risk appetite
    • Financial situation
    • Investment goals, and
    • Knowledge of the fund.

Why choose an investment fund?

We list below some of the key reasons you might consider for investing in a fund:


Funds typically spread their investment across different companies, asset types and geographical regions, providing a benefit known as ‘diversification’. When one investment is down, another might be up, and you’re not taking a chance on the fortunes of one single asset. This means your risk overall is reduced. And by pooling money with other investors, your buying power and access to assets and markets is greater than if you were buying single assets on your own. However, investors should be aware that diversification and asset allocation do not fully protect against market risk.

Ease of use

The day-to-day running of your investment is designed to be straightforward. A fund manager invests on your behalf and you’ll receive regular reports on how your money has been invested. You can choose whether you’d like any dividends to be automatically reinvested, or to receive them as regular income payments.  If you choose regular income through dividend payments this may reduce the potential for capital growth.


Thanks to their ‘bulk-buying’ power, investment funds can be more cost-efficient for investors than buying a high number of individual investments on their own. They spread fixed costs, such as the charges for safekeeping of assets across all investors in the fund. So large transactions can be carried out at a fraction of the cost you’d pay if you were buying directly. While managers aim to keep costs low for investors, there are some additional costs that need to be considered on top of annual management fees. These include dealing fees when units in the fund are bought and sold.

Professional investment management

Investment funds allow you to access the expertise of full‑time, dedicated fund managers and their teams of analysts who have access to market information outside the scope of the average investor. Using the latest research, they are constantly monitoring markets for potential investment opportunities. Their decisions on what to buy and sell – consistent with a fund’s stated investment objectives – reflect the changes they detect in economic or market conditions.

Choice of regions and sectors

You can take advantage of a wide variety of investment styles, sectors and geographical regions. You can opt for a fund that invests in a number of global regions, which can help cushion you against big market swings in any one area. Or you can target a specific region, and link your investment more closely to the fortunes of that locality. You can also, for example, focus on particular sectors, such as natural resources


Capital at risk - Remember, all financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed.