POOLED investment funds are a way of combining sums of money from many people into a large fund spread across many investments and managed by a professional fund manager.

There are a diverse range of funds that invest in different things, with different strategies – high income, capital growth, income and growth, and so on.

Unit trusts and open-ended investment companies (OEICs) are professionally managed collective investment funds.

Managers pool money from many investors and buy shares, bonds, property or cash assets, and other investments.

You buy shares (in an OEIC) or units (in a unit trust).

The fund manager combines your money together with money from other investors and uses it to invest in the fund’s underlying assets.

Every fund invests in a different mix: some only buy shares in British companies, while others invest in bonds or in shares of foreign companies, or other types of investments.

You own a share of the overall unit trust or OEIC – if the value of the underlying assets in the fund rises, the value of your units or shares will rise. Similarly, if the value of the assets of the fund falls, the value of your units or shares falls.

The overall fund size will grow and shrink as investors buy or sell. Some funds give you the choice between ‘income units’ or ‘income shares’ that make regular pay-outs of any dividends or interest, or ‘accumulation units’ or ‘accumulation shares’ which are automatically reinvested in the fund.

The value of your investments can go down as well as up, and you might get back less than you invested.

Before investing, make sure you understand what kind of assets the fund invests in and whether that’s a good fit for your investment goals, financial situation and attitude to risk.

The above has been provided by Hartey Wealth Management Limited, Oswestry, SY11 2NR. Tel: 0808 1685866. www.harteywm.co.uk.