A pooled (or collective) investment is where a group of people put their money into a fund which is then invested in one or more asset classes by a fund manager. There are a number of benefits to pooled investments including:

• Spreading of risk – Pooled investments will generally invest in one or more asset class so your money can be spread across a wide range of investments. This reduces the impact on your investment if, for example, one company performs badly.
• Professional expertise – Fund manager are experts who pick the investment for you, watch them daily and judge when is the right time to sell.
• Lower costs – If you spread your money over a range of investments yourself, you may incur a dealing cost on each which can be expensive. By pooling your money, you make savings because of bulk buying.
• Choice – There is a very wide choice of funds so that you can pick one or many, whatever suits you best.
• Simplicity – The fund manager will handle the buying, selling and collecting of dividends and income for you, as well as dealing with foreign stock exchanges and brokers. All of this makes life easier for you.

The main types of pooled investments are:

• open-ended investment funds
• investment bonds
• endowments; and
• investment trusts.

Funds are managed in one of two ways:

• Actively: Where the fund manager researches the market and buys and sells assets to try and provide a good return for investors.
• Passively: Where they simply aim to track the market in which they are invested (i.e. trackers).These tend to have lower charges than actively-managed funds because fund managers running actively-managed funds are paid to invest so as to 'beat the market' or generate steadier returns than what just tracking the index would achieve.