*Basic

Pooled funds are funds in a portfolio from many individual investors that are aggregated for the purposes of investment.[1] Examples of professionally managed pooled funds include mutual funds, hedge funds, exchange traded funds, pension funds, and unit investment trusts.[2] Investors in pooded funds benefit from economies of scale, which allow for lower trading costs and diversification.[3]

**Intermediate

Groups such as investment clubs, partnerships, and trusts use pooled funds to invest.[4] The pooled investment account lets the investors be treated as a single account holder, enabling them to buy more shares collectively than they could individually, and often for better prices.[5] Mutual funds are probably the best known pooled funds. They spread their holdings across various investments, reducing the effect that any single securities has on the overall portfolio.[6] Because mutual funds contain hundreds or thousands of securities, investors are less affected if one security underperforms.[7] Another type of pooled fund is the unit investment trust. These pooled funds take money from smaller investors. But unlike a mutual fund, the unit investment trust does not change its portfolio over the life of the fund and invests for a fixed length of time. [8]

***Advanced

Pros and cons of pooled investments:[9] [10] [11] [12]

Pros:
Diversification lowers risk

Economies of scale enhance buying power.

Professional money management is available.

Minimum investments are low.

Cons:
Commissions and annual fees must be paid.

Fund activities have tax consequences.

Individual lacks control over investments.

Diversification may limit the upside.

Sources

[1] Editors. Pooled funds. Pensionsauthority.ie
[2] Editors (2023). Pooled Funds – Overview, How they Work, Importance. Coporatefinanceinstitute.com
[3] Nissen, K, M (2020). Five reasons pooled funds now trump segregated investment accounts. Theamx.com
[4] Editors. What is a pooled fund? Mass.gov
[5] Editors. Pooled fund. Lexisnexis.co.uk
[6] [7] Editors. Are pooled mutual funds the best solution? Woodgundyadvisors.cibc.com
[8] Chen, J (2023). Unit Investment Trust (UIT): Definition and How to Invest. Investopedia.com
[9] Editors (2023). Pooled Investment Vehicle: Definition, Types, Pros & Cons. Financestrategists.com
[10] Editors. What are the advantages and disadvantages of a pooled fund? Uglobal.com
[11] Editors (2021) Pooled Investments. fe.training
[12] Editors (2022). Pooled Investment Vehicle – Explained. Thebusinessprofessor.com