What is an open-ended investment fund?

How collective investment can help spread and reduce risk by pooling your money with that of other investors

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It's well-known that returns on savings accounts are pitiful right now. It's also well-known that historically, equities have outpaced returns from cash. But the stock market can seem a daunting place if you don't know where to start – even though it might be a good move for your portfolio.

This is where open-ended investment companies (Oeics – pronounced 'oik') come in as a good halfway house. Funds are a collective investment – your money is pooled with that of other investors to spread and reduce risk. They also mean instant diversification to a wide range of stocks. They are typically actively managed, which means a dedicated fund manager will make day-to-day decisions about where and when to invest.

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