Introduction to funds

What is a fund?

Funds are the most popular collective investment vehicles for UK retail investors. They allow smaller investors to pool their contributions to invest in a range of different assets such as shares and bonds. Funds usually carry the name of the provider, such as Jupiter, and some indication what they invest in e.g. UK equity income or emerging markets.

Funds can be managed in different ways based on their objectives, some of these include:

  • Income funds - funds that aim to pay a regular income (in the form of dividends and/or interest)
  • Growth funds - funds that aim to grow the value of your capital
  • Actively managed funds- funds that are managed by professionals who use their judgement to decide where and how to invest, in line with the fund's objectives
  • Passive funds - funds that track or closely follow performance of a particular market index
  • Ethical funds - funds that are designed to be socially or environmentally conscious and that will only invest in things that fit with their ethical guidelines.
  • Multi-asset funds - these invest in a range of different types of assets within a single fund usually to a given risk level

How much does it cost to invest in a fund?

When investing in funds, you will pay investment charges. These are taken either from the capital or income generated by the fund. They cover things like the services of an expert fund manager, the running of the fund as well as dealing costs and taxes it incurs when buying or selling investments. Investment charges vary depending on the type of fund so it’s important to read the fund's Key Information Document where you will find full details. When investing in funds through the Willis Owen Platform, you will also pay service fees to us which cover the cost of running our platform and administering your account.

How do you trade in funds?

Funds are usually priced daily, and any buying or selling is carried out at the next dealing point. Because the price an investor gets is the value of all the underlying investments it is not possible to know the exact price until after you have made a purchase or sale.