What is a Fund?
A fund is an investment vehicle that allows investors to participate in various financial assets that the fund holds. These assets can be shares, bonds, property, commodities or any asset that can be managed, such as collectibles, forestry or other such alternative asset investments.
A fund aims to help an investor achieve a certain type of investment objective; for example income, capital protection, diversification or exposure to certain markets or sectors.
The type, style and management of funds can be diverse, from actively managed stock picking funds to passively managed sector tracking funds. This often means that the range of cost of holding funds can be a broad spectrum with passive funds charging much less than active funds which employ expensive overheads to support their proactive management style.
Funds are attractive to investors that do not have the time or inclination or perhaps capital to study and invest across global markets and look to outsource this effort to fund managers who make the universe of investment opportunities very accessible to even the most modest investor.
In the funds industry, it is estimated that there are around 3,000 funds available in the UK in over 30 different sectors.