What is a fund?

-- | 18/06/2018

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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

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