Pooling money
Instead of buying every underlying asset directly, an investor owns units or shares in a pooled vehicle. The fund then holds the portfolio on behalf of its investors.
Different structures can hold cash instruments, bonds, shares, property or a mix of assets.
The mandate matters
Two funds can have very different risk even if both are marketed as simple investment products. The fund documents should state what it can own, its objective and any limits on the portfolio.
The name of a fund is less informative than its actual holdings and rules.
What to compare
Useful comparisons look at the assets held, fees, liquidity, return calculation, minimums and risk rather than one headline yield.
Past returns describe what happened before; they do not guarantee what happens next.
General information only. Investment products can lose value, and terms, fees and regulation can change.