5 Minutes Read
What are pooled funds
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
When funds collected from many individuals and firms are brought together for investment such as mutual funds, then it is called a pooled fund. Such funds benefit from the large volume of investment leading to a lower cost of trading and lower risks. Though large number of partners are involved in these investments, they are …
When funds collected from many individuals and firms are brought together for investment such as mutual funds, then it is called a pooled fund.
Such funds benefit from the large volume of investment leading to a lower cost of trading and lower risks. Though large number of partners are involved in these investments, they are treated as one single unit making it strong and significant.
Another key merit of pool funds are that individuals with less resource could have the opportunity to reap benefits that are available only to large scale investors.
However, on the flip side, investors will not be expected to gain large profits as profits from such funds will be distributed equally among all investors.
Besides, as there are a large number of parties involved, decision making can be a very tough process. This could be fatal when market is going through a volatile phase and involved individuals find it hard to reach a common ground regarding strategy.
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