Chapter 6: Characteristics, risks, behaviours and tax considerations of investment products

Question 1

6.1

What is a collective investment scheme?

Answer 1

An Investor ‘pools’ their money together with other investors, they own their own shares/units within the fund.

Price of the share fluctuates, reflecting performance

Unit trust or OEIC’s are the most known types

Question 2

6.1

What are the benefits of collective investment schemes?

Answer 2

• You can pool smaller investments
• professionally managed
• diversified investments
• access unavailable markets
• reduce portfolio risk