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Investing Basics: What are Investment Companies?

 

A way to invest in almost anything and spread risk…

 

 

Investment companies only exist to invest.

They make a profit by buying and selling shares, property and other assets.

An investment manager decides what assets to buy in order to build a diverse, managed portfolio.

When you buy shares of an investment company you make an investment that includes a share of all those assets. It’s a simple way of expanding your portfolio and spreading your risk.

You’re not investing alone. Different people contribute money to the company.

When you invest you become one of its shareholders. This means investment companies are a type of collective investment fund, like unit trusts.

 

How a Collective Fund Works

 

 

With an investment company:

 

  • you gain access to a wider range of investments than you could normally buy yourself
  • your investment is managed by an expert fund manager
  • depending on the company you choose, you can invest in specific markets, industries or even small unlisted businesses which are at an early stage in their development
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