A fund brings together many money from multiple investors and allows a fund manager to use the respective money to invest in assets. The main goal of a fund is to increase the money of investors and sometimes provide a regular income.
Funds can invest in multiple asset classes such as shares, property, cash or bonds and the allocation of each if any varies depending on the goals of the fund.
Investing in funds is often seen as a lower risk alternative than investing in shares because investors are not reliant on the performance of just one or a few shares or assets.
For example, if you invest in a single share, say Share A and that share falls 50 percent – you will experience a loss at the respective time. However, say a fund manager invested in Share A as well as share B and Share C – the logic is that share B and C may have had good performances, thus countering the heavy loss on Share A.