Fund investing

Fund investing ⇒ refers to investing in a pool of assets along with other investors, using a fund manager that selects and manages a pool of investments according to an agreed-upon strategy. In this case, the individual investors do not control the selection of assets for investment or their subsequent management and sale. The manager typically receives a percentage of the investable funds (management fee), as well as a percentage of the investment gains (incentive fee).

The advantages of investing through a fund, compared with direct investment, include having the expertise of the fund manager, less involvement and expertise required of the investor, diversification across investments made by the fund, and lower minimum investment requirements. Disadvantages are the cost of fund manager fees and the possibility that the fund manager may perform poorly even when selected through careful due diligence