Making the decisions about when to buy and sell assets
There are many reasons to invest through a fund, rather than buying assets on your own. At a basic level, investing in a fund means having a professional fund manager make investment decisions on behalf of the investor.
You receive reports on the fund’s performance but have no influence on the investment choices short of removing your money from the fund and placing it elsewhere. Spreading risk is one of the main reasons for investing through a fund. Even if you have a small amount to invest, you can have a lot of different types of assets you’re investing in – you’re diversified. You can spread risk across asset classes (such as cash, bonds, shares and property), countries and stock market sectors (such as financials, industrials or retailers).
Reduced dealing costs by pooling your money can help you make savings because you’re sharing the costs. There is also less work for you, as the fund manager handles the buying, selling and collecting of dividends and income for you. But of course, there are charges for this. They also make the decisions about when to buy and sell assets.