GUIDE TO INVESTING IN A CHILD TRUST FUND

MAKING INVESTMENT EASIER

Investment Funds

If you choose Option Three for your child’s CTF, the Lifestyling investment strategy will almost certainly invest the money in *shares* or *bonds* held in *Investment Funds*. Similarly, if you pick Option Two (the account that invests in shares or bonds), probably the simplest way of getting the money into shares or bonds is through an Investment Fund.

Investment Funds, otherwise known as *unit trusts* or *open-ended investment companies*, work by pooling your child’s money with that of other investors. These funds invest in shares in bulk and are managed by professional *fund managers* who are dedicated to investing and administering your child’s money.

INVESTMENT FUNDS - THE ADVANTAGES

DECREASED RISK

Putting your child’s money in an Investment Fund provides quick and easy access to a large number of shares or bonds, or a mix of the two. Spreading your investments like this is known as “*diversification*”, which is the investment world’s word for not putting all your eggs in one basket. It basically means that by holding a wide selection of shares or bonds in an Investment Fund, bad performance from the shares or bonds of one company will not have a severe effect on the value of the entire fund.

With an investment of £250 made directly into shares or bonds outside of an Investment Fund, your child would realistically only be able to invest in one or two companies, but £250 paid into an Investment Fund means that they could hold the shares or bonds of a far greater spread of companies.

MANAGED BY EXPERTS

Investment Funds are managed by professional fund managers who are supported by teams of expert researchers. They work full-time and use their expertise to pick the right companies in which to invest your money. By doing this, they aim to increase the money you get back from your investments and minimise the chance of losses.

PROFESSIONAL ADMINISTRATION

Buying and selling shares takes time and can create a pile of paperwork, but investing through an Investment Fund means that most of the administration is taken care of by the company that runs it, which makes life easier for you.

EASY TO MONITOR

In an Investment Fund you effectively hold a large number of shares, but there is only one selling price.  This price is published every day, which makes keeping track of the value of your investments much quicker and easier than if you held the same shares outside of an Investment Fund. 

If you would like to learn more about how Investment Funds work, and how to choose the right fund for your needs, visit our website at www.investmentuk.org