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  • Collectives

Collectives

Collective Investments

With a collective investment, your money is pooled, along with that of other investors, to create a large capital sum. Professional fund managers then use this capital sum to build up a large portfolio of investments. This approach enables you to indirectly hold a wide range of stocks and shares or other investments in a way which would not be practical for the majority of individual investors, whilst reducing the effects on your capital of fluctuations in individual share values.

Collectives can also invest in fixed-interest instruments. These include UK government stock, also known as gilt-edged stock or "gilts" for short. Corporate bonds are also fixed interest instruments and both represent direct borrowing on the part of the issuer of the bonds. They are referred to as "fixed interest" because their cost of borrowing is fixed, while the price of the bonds themselves may float up or down depending on supply and demand.

Traditionally, fixed-interest investments have been regarded as a safe option. However, it is important to remember that not only do they fluctuate in price, but also that the investor risks that the issuer may not be able to pay the interest (coupon) on the bonds, or the principal when the bonds mature.

With a collective investment, your capital can benefit from expert full-time investment management, reducing the risk and complexities of direct investment into equities. Your money becomes part of a much larger investment portfolio with much larger individual investments, as well as more individual holdings.

Not all the money in collective investments will be invested. The managers will normally hold a small amount of capital in cash to help pay for costs and to provide money for investors who want to sell units in the investment. In circumstances where there has been a reduction in fund values and/or the funds receive a large number of requests, fund managers may delay or postpone withdrawals to avoid having to sell investments and undervalue them. This can be of particular importance to investments that invest in illiquid or difficult-to-sell assets, e.g. commercial property.

THE VALUE OF INVESTMENTS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE. YOU MAY GET BACK LESS THAN YOU INVESTED.

Company address: Premier Financial Planning (Cheadle) Ltd, 63 Cheadle Road, Cheadle Hulme, Stockport, Cheshire, SK8 5EU
T: 0161 482 8888 F: 0161 482 8899 Email: info@premiercheadle.com

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Premier Financial Planning (Cheadle) Ltd is an appointed representative of 2plan Wealth Management Ltd which is authorised and regulated by the Financial Conduct Authority. Premier Financial Planning (Cheadle) Ltd is entered on the FCA register (www.FCA.org.uk) under no. 488845.
 
Registered office: 63 Cheadle Road, Cheadle, Cheshire, SK8 5EU. Registered in England and Wales Number: 06542655.

The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.

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