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Pooled Investment is an investment where monies are pooled and managed as one portfolio with one set of objectives. This offers economies of scale to investors because costs associated with managing and administering the pool are spread across all investors. Examples include mutual funds, hedge funds and pension funds.
Synonym: pooled fund
For context, many investors don't realize how profilic pooled investments are in the financial markets. Many mortgages for example are pooled into GNMA mutual funds. Money market instruments at brokerage firms are pooled investment vehicles as well. They have a share prices of 1.00 typically and own short maturity bonds and commercial paper.
Pooled investments are required to provide disclosures in what is called a prospectus, which spells out the investment objective, fees, management team, custody, comparison benchmark and risks of the pooled investment vehicle.
Doc: A pooled investment provides
economies of scale and professional management.
Lia: Why then is the media so focused on
individual securities?
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True
False. While the management of SMAs is centralized, the actual implementation is in a segregated account with individual stock and bond holdings, typically.
Still unclear on Pooled Investments? Check out the Quant 101 Series of free financial modeling tutorials.
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