Investment guide
What is an investment fund?
An investment fund pools money from many investors and invests it across a collection of assets. Instead of choosing every share, bond or other investment individually, you own an interest in a professionally managed portfolio.
The basics
Your money is combined with money from other investors.
Investment funds pool money from multiple investors. A fund manager invests that money according to the fund's stated objective and investment policy.
This can give an investor exposure to many more underlying holdings than they might reasonably buy and manage individually.
A qualifying fund can potentially be held through different investment accounts, including a Stocks & Shares ISA or pension.
Underlying assets
Funds can invest in very different things.
Shares
Equity funds can invest in companies in the UK, overseas or globally.
Bonds
Fixed-income funds can hold government bonds, corporate bonds or a mixture of debt securities.
Property
Some funds invest in commercial property or property-related companies and securities.
Multiple assets
Multi-asset funds can combine shares, bonds, cash and other investments.
Some funds are broad and diversified; others deliberately concentrate on a country, sector, theme or asset type. The word “fund” therefore tells you very little about risk on its own.
Fund structures
Funds can also be structured and managed differently.
Open-ended funds
Structures such as OEICs and unit trusts generally expand or contract as investors buy into or sell out of the fund.
Index-tracking funds
Passive funds seek to follow a chosen market index.
Actively managed funds
A manager makes investment decisions according to the fund's mandate and objective.
Multi-asset funds
These combine several asset classes within one portfolio.
Investment trusts are also pooled investments but use a different closed-ended company structure. They are covered separately in our Investment Trust guide.
Risk
A fund can spread risk, but cannot remove investment risk.
Diversification reduces dependence on one holding performing well. A broadly diversified fund can help achieve this, but a specialist fund focused on one sector or region may remain highly concentrated.
You may get back less than you invest. Risk depends on the fund's assets, strategy and exposures, not simply on the fact that it is a fund.
Costs
Fund charges reduce the return you keep.
Funds normally have ongoing management and operating costs. Transaction costs can also arise as investments within the fund are bought and sold. These sit alongside any separate platform, account or advice charges.
A fund charge is only one layer of the overall cost of investing.
Comparing funds
Start with purpose and exposure rather than recent performance.
Objective
What is the fund trying to achieve?
Underlying holdings
Which assets, markets, sectors and regions drive its behaviour?
Risk
Does the risk fit your timeframe, attitude to risk and capacity for loss?
Charges
What does the fund cost and what other charges apply?
Past performance can provide historical context but is not a reliable indicator of future results.
Investment planning
Not sure what the funds in your portfolio actually do?
A personal review can look through fund names to the underlying assets, risk, diversification, charges and role each investment plays within your wider financial plan.
Book a conversationThis guide is for general information only and is not personal financial, investment or tax advice. Investments can fall as well as rise and you may get back less than you invest. Past performance is not a reliable indicator of future results. Content checked against current FCA and MoneyHelper investment guidance on 16 September 2026.