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Investment trusts
Public company aiming to make money by investing in other companies
An investment trust is a public company that raises money by selling shares to investors, and then pools that money to buy and sell a wide range of shares and assets. Different investment trusts will have different aims and different mixes of investments.
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With-profits funds
Stock market return linked but with fewer ups and downs than investing directly in shares
If you save regularly or invest a lump sum using a life insurance policy, you might choose to invest in a with-profits fund. These aim to give you a return linked to the stock market but with fewer ups and downs than investing directly in shares. However, they are complex and are not as popular a form of investing as they used to be.
Market index following the overall performance of a selection of investments
Tracker funds and exchange-traded funds (ETFs) are investments that aim to mirror the performance of a market index. A market index follows the overall performance of a selection of investments. The FTSE 100 is an example of a market index – it includes the 100 companies with the largest value on the London Stock Exchange.
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Pooled investment funds
Combining sums of money from many people into a large fund spread across many investments
Pooled investment funds – also known as ‘collective investment schemes’ – are a way of combining sums of money from many people into a large fund spread across many investments and managed by a professional fund manager.
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Investing in a fund
Making investment decisions on behalf of the investor
There are many reasons to invest through a fund rather than buying assets on your own. At a basic level, investing in a fund means having a fund manager make investment decisions on behalf of the investor.
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Ethical saving and investing
Making the world a better place
With a defined contribution pension, you build up a pot of money that you can then use to provide an income in retirement. Unlike defined benefit schemes, which promise a specific income, the income you might get from a defined contribution scheme depends on factors including the amount you pay in, the fund’s investment performance and the choices you make at retirement.
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Maintaining a diversified portfolio
Spreading risk between different kinds of investments
When you start investing, or even if you are a sophisticated investor, one of the most important tools available is diversification. Whether the market is bullish or bearish, maintaining a diversified portfolio is essential to any long-term investment strategy.
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