Investment Funds
Important information
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and the GIA and tax rules can change. Whilst we may draw attention to certain investment products, we cannot know which of them, if any, is best for your circumstances and must leave that judgement to you. If you are unsure about the suitability of any investment you should seek professional advice
What is an investment fund?
An investment fund pools together investors' money in one big pot. It is a way of investing money, alongside other people, so that smaller investors can have access to a larger number of companies or assets, spreading risk and allowing a professional manager to make the tough investment decisions.
Investment funds are also known as unit trusts or open-ended investment companies (OEICs). At Chelsea, we can offer discounts on unit trusts and OEICs, which serve to reduce your initial charge and enhance the amount invested. An investment fund can be purchased either outside an ISA wrapper or inside an ISA wrapper. Either way, the charges are the same within the Chelsea FundStore – it's just the tax advantages that differ.
What's the advantage of investing in an investment fund rather than just directly in shares?
Most investors don't have vast amounts of money, so if you buy individual shares, you won't be able to buy many. If you invest in a fund, because your money is pooled with that of other investors, your money will be spread over a larger number of shares, which reduces the risk of your investment.
By investing in a fund, you won't have to decide in which stocks to invest. You will have a dedicated fund manager, sometimes a whole team, who will seek out the best investments and spend many hours pouring over company reports and accounts. They will be able to shift the emphasis of the fund at different stages of the economic cycle.
Active versus Passive investment funds
Some funds are known as passive and these will simply mirror a specific stock market or 'index'. We prefer active funds. Actively-managed funds have a manager at their helm who devotes their time to analysing stocks and selecting those they believe will outperform. They will whittle down the universe of several thousand stocks to invest in perhaps 100. How they go about doing so varies widely from one manager to the next.
What are the different types of investment funds?
Investment funds can invest in various different asset classes e.g. property, equities, fixed interest etc. Equity funds are the most common and they can invest in various different regions e.g. UK, Europe, Asia etc.
What's the difference between a unit trust and an OEIC?
Unit trusts are dual priced, meaning that they have both a buying (offer) price and a selling (bid) price. OEICs have a single price, which does not include the fund provider's initial charge. More detail on these can be found in the Glossary. Whilst there is the technical difference on the way in which they are priced, there is no reason to choose either one or the other.
How do I invest in an investment fund?
There are three easy ways to invest in an investment fund via the Chelsea FundStore and benefit from our discounts:
- You can go straight to our online fund supermarket, the Chelsea FundStore, and invest online with a debit card. If you purchase before 10am then it is likely that your purchase will meet that day's pricing point.
- You can call us on 0207 384 7300 to invest using your debit card.
- You can send in an application form for the Chelsea FundStore, by either downloading a copy from our website, or requesting one by telephoning or e-mailing us.
You can also invest via ourselves directly into a fund provider's investment fund (i.e. outside the FundStore) either over the telephone or via application form. However, due to increased administration costs, this is less cost-effective for investors.