This page includes some of the good reasons for making investments into ‘funds’ run by ‘fund managers’ on behalf of the investors.
Whether you are looking at investing in a pension, an investment bond or perhaps using a New Individual Savings Account (NISA) you might consider using investment funds. Put simply, a fund is a collection of many different peoples money in one place. Buying large numbers of shares or achieving a portfolio of investments may well be beyond most average investors so they effectively club together to increase their purchasing power.
Typically these pools of money are run and managed by an investment specialist. The manager is paid to make the day to day decisions of where the pooled money is invested. Rather than individuals (who have no interest in markets and shares, or who don’t have the knowledge or time to study market information) choosing which shares to buy, to hold and to sell and at what time, the fund manager uses their expertise to make suitable investments in order for the value of the pooled fund to hopefully grow over time.
Another advantage of pooled investment is being able to diversify.
Diversification and Risk
The value of investments may fall as well as rise. You may get back less than you originally invested.