Kellands (Bristol) Limited
Financial Management Consultants
Quays Office Park
Conference Avenue
Portishead Bristol BS20 7LZ

Tel: 0117 900 4000

E-mail: bristol@kelland.co.uk

Collective investment schemes

Most investments that people make are in collective investment schemes. It makes sense as it reduces risk for the investor.

Collective investments, or pooled funds, are funds where a large number of investors pool their money together under professional investment management. The investment manager then acts collectively on their behalf.

The most popular collectives are unit trusts, investment trusts and Open Ended Investment Companies (OEICs). However, there are also offshore funds, with-profit funds, commercial property funds, corporate bond funds, exchange traded funds (ETF’s) etc.

There are thousands of collective investment funds available, focusing on hundreds of different sectors and countries. Specialist funds for example concentrate on a specific region, sector or type of investment. Then there are generalist funds that are able to invest in any type of company in any sector across the globe.

So the major benefit of collective investments is that they can reduce the risk of investing, by spreading the risk of their investment. The fund manager is able to purchase a far greater number of investments than the individual investor possibly could. Because of this, the possible impact on the collective investment fund caused by one particular investment performing badly is low, as it forms only one small part of a much larger investment portfolio.

Another benefit of collectives is access to a higher degree of diversification. For example, if you were looking to invest in UK smaller companies, it would be impractical (in terms of costs and research time) to invest in more than a couple of companies. A fund manager, however, can buy shares in many companies and spread the investment further. The fund manager will also have the in-depth knowledge plus a team of researchers behind them to monitor the sector for new opportunities as well as potential problems.

A further benefit is that fund managers have access to markets and instruments where individual investors don’t have the knowledge, capital or perhaps even the legal right to invest. This includes hedge funds, emerging markets, private equity situations and complex derivatives.

With thousands of collective funds to choose from, the question is how to pick the best funds for you? It is not an easy process, even for professionals. But getting quality financial advice from Kellands Bristol will help immeasurably.

We recognise that past performance is not always the best guide to future results, so whilst we take historic data into account, we focus more on continuous assessment. We also try to get to know and understand the fund managers - and aim to recommend funds that will produce upper quartile results.

To help us understand your financial objectives and risk profile, contact Kellands Bristol today, so that we can arrange an initial without obligation meeting.

Please be aware that the value of investments linked to the stockmarket, and the income from them, may rise or fall depending on market conditions and that you may not always recoup your initial investment. In addition past performance should not be seen as an indication of future performance.