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Independent financial advice - collective investment schemes

Take independent financial advice to find which collective investment scheme is right for you

The collective investment scheme

A collective investment scheme is an arrangement that enables a number of investors to 'pool' their assets and have these professionally managed by an independent financial advice manager. Investments may typically include gilts, bonds and quoted equities, but may go wider. For example some investments may be in unquoted investments or property.

Reducing risk

Investors in such schemes are able to reduce risk by spreading their investments more widely than may have been possible if they were investing in the assets directly. Independent financial advice explains that the reduction in risk is achieved because the wide range of investments in a collective investment scheme reduces the effect that any one investment can have on the overall performance of the portfolio.

Types of collective investment schemes

There are numerous options to discuss when you take independent financial advice regarding collective investment schemes: Unit Trusts, Authorised Unit Trusts, Open-ended Investment Companies, Unauthorised Unit Trusts, Pension Fund Pooling Schemes, Enterprise Zone Property Unit Trusts, and finally Offshore Funds.

What are the advantages of a collective investment scheme?

As well as risk reduction, choosing collective investment as a result of independent financial advice means you are reducing your dealing costs and the administration involved in the process of buying, selling, collecting dividends and so on. Independent financial advice about pooling your money reveals that you and your co-investors have the advantages of buying in bulk whilst keeping your dealing costs down.

What are the disadvantages of a collective investment scheme?

  • Paying for a fund manager. The professional manager running the investment fund on behalf of all the investors takes a fee direct from the investment fund. This is a cost you'd avoid if you managed your own investments.
  • Lack of choice. Although you can choose the type of fund you invest in, you have no control over the choice of individual shares, bonds and so on which go into the fund.
  • Loss of owner's rights. If you hold a company's shares direct, you are sometimes entitled to shareholders' perks (for example, discounts on the company's products) and you have the right to attend the company's annual general meeting and vote on important matters. Investors in a collective investment have none of the rights connected with the individual investments in the fund, so take independent financial advice to see if a collective scheme is right for you.

You can have a brighter financial future. If you would like independent financial advice about bridging loans call our experienced advisers today on 01424 777 156 or e-mail mike.robertson@mraltd.com