Pooled Funds

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Definition of 'Pooled Funds'

A pooled fund is a type of investment vehicle that pools together the money of multiple investors and invests it in a variety of assets. This can be a more efficient way to invest for individuals who do not have a large amount of money to invest on their own.

There are many different types of pooled funds, each with its own unique features and risks. Some of the most common types of pooled funds include mutual funds, exchange-traded funds (ETFs), and hedge funds.

Mutual funds are a type of pooled fund that is managed by a professional investment manager. The manager invests the fund's assets in a variety of stocks, bonds, and other securities. Mutual funds can be either actively managed or passively managed. Actively managed funds are managed by a professional who actively trades the fund's assets in an attempt to outperform the market. Passively managed funds are managed by a computer program that tracks a specific index, such as the S&P 500.

ETFs are a type of pooled fund that is traded on an exchange like a stock. ETFs are typically passively managed and track a specific index. ETFs can be a good option for investors who want to track an index but do not want to pay the high fees associated with actively managed mutual funds.

Hedge funds are a type of pooled fund that is typically used by institutional investors and high-net-worth individuals. Hedge funds are often more risky than mutual funds and ETFs, but they can also offer the potential for higher returns. Hedge funds are typically actively managed and use a variety of strategies to try to generate returns.

Pooled funds can be a good option for investors who do not have a large amount of money to invest or who do not want to actively manage their investments. However, it is important to understand the risks associated with pooled funds before investing.

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