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What is a Fund?

Funds are suitable for investors who do not have the time or expertise to construct and monitor a portfolio themselves. We go back to basics and explain all

Emma Wall 26 January, 2016 | 12:10PM

 

 

Speaker: A fund is an investment vehicle that allows a large number of people to pool their money together in order to invest in a range of different securities such as stocks, bonds, property or commodities. Funds have differing objectives such as to deliver a regular income or capital growth for the investor. Funds are grouped together into categories determined by this aim and by where in the world the underlying stocks or bonds are from.

A fund can be actively managed, where an appointed individual picks which securities to invest in from a larger pool, assisted by a research team.

Or a fund can be passively managed, where the investor can gain exposure to a particular index or commodity, providing that investor with the same returns as the underlying market.

Funds are suitable for investors who do not have the time or expertise to construct and monitor a portfolio themselves. They require a smaller investment than picking individual stocks or bonds allowing the investor to gain access to a far greater number and variety of securities.

This video was animated by Morningstar Video Producer Roberto Iacurci

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Emma Wall

Emma Wall  is Senior Editor for Morningstar.co.uk