Help & FAQs

Why should I invest in a collective investment?

One of the key benefits of investing in a 'collective' investment such as a Unit Trust or an OEIC is the diversification of risk.

Generally, there are considered to be lower risks involved in holding a basket of shares when compared to the risks associated with investing in a single company as the risk of failure is spread.

Geographic and sector exposure

Collectives can also be used to gain specific exposure to a specialised market where direct investment would be too risky or expensive. A UK investor may find it much easier and safer to buy a collective investing in, for example, South American markets, than to try and buy shares in individual companies listed on any of the stock exchanges of South America. Holding investments in more than one geographical region can also form part of a diversification strategy.

Research

Fund managers also benefit from the support of teams of researchers and analysts in making investment decisions. A private investor would find it very difficult to conduct a similar level of research into as many companies as a professional fund management group.

Submitted on 10th Oct 2017

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The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.

Selftrade does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.

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