Investing in funds

Exchange-Traded Funds (ETF) is made up of a selection of assets such as stocks, commodities, bonds or a mix. Money from investors is pooled together to purchase these assets. As their name suggests, ETFs trade on stock exchanges.

ETFs tend to focus on a particular strategy, such as tracking a stock index (like the S&P 500), commodity (like gold), specific industry (like healthcare), geographic region (like Europe), or theme across multiple industries and regions (like ESG in emerging markets).

Like ETFs, Investment Trusts in the UK offer an easy option to diversify – and are not to be confused for the more well-known, but different meaning of "trusts". When buying into an Investment Trust, you're purchasing shares in an investment company. The pooled money from investors is used to then buy assets that are managed by the Investment Trust in line with its investment strategy.

Both options offer a simple way to diversify. But, while an ETF tracks the performance of a stock index, region, trend, or theme, the performance of an Investment Trust is based on how the portfolio of assets and its investment strategy are managed.

Yes. Mutual Funds are managed by a fund manager that will determine how the investors' pooled money is invested. To get a better understanding of the fund and whether it aligns with your investment strategy, every fund must provide a Key Investor Information Document, better known as a KIID, to give you the important information you need.

Using the CMC Invest app you can place the buy and sell order for a Mutual Fund whenever you want, at any time. However, Mutual Funds are priced once a day and the dealing in Mutual Funds are different to ETFs. For more information read our article here.

Mutual Funds will charge a management fee, which is commonly known as a 'Fund charge', which can vary in percentage depending on the Mutual Fund. You can find out the fees of a Mutual Fund in the Key Investor Information Document (KIID).