Convenience

Decades ago, people who wanted to build an investment portfolio had to ask a stockbroker to buy the various assets they selected, such as individual company shares or government or corporate bonds. Investors had to take on the direct cost of buying and selling these assets themselves, transaction by transaction, and make their own investment decisions, or appoint someone else to do so.

That all changed with the development of investment funds, and in 1985 the European Commission drew up the European Union's first UCITS Directive. This directive created a set of common rules for retail investment funds across the EU, including those sold in more than one European country, and included safeguards for investors. The UCITS rules required diversification of assets (so that funds would not succeed or fail because of the performance of just one or two investments) and that the assets should be held by a custodian independent of the fund manager. These rules have proved themselves over more than two decades and are still valid today.

Other UCITS rules have been developed since the 1980s, and they continue to offer investors a cost-effective way of investing in a broad range of assets through a single transaction. The process of buying and selling investment fund units or shares is quick, easy and inexpensive, and available on a daily, weekly or twice-monthly basis. Some investors may have time to devote to managing investments personally. However, for most funds will be the most efficient way of putting their money to work.