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What about investing in funds managed in Sri Lanka?

You may feel uncomfortable with the idea of picking your own shares to invest in even though you may believe the stock market still offers the best prospect for future returns. So what about collective investing? A collective investment is a fund that takes money from a number of private investors and pools it together. A professional fund manager will then use his or her skill to increase the value of the funds under management by investing in a portfolio or wide range of companies.

There are three types of collective investment you could choose from: unit trusts; investment trusts and open-ended investment companies. This means they can keep on receiving funds for putting into the market, creating new 'units' whose value is based directly on the assets held by the fund. Investment trusts are closed-ended. They have a finite number of shares that are traded in the stock market alongside the shares of the companies they invest in. The share price of the investment trust will not necessarily directly reflect the value of the assets it holds. In addition investment trusts can borrow money for investment, and this gearing can magnify any growth or losses in the fund.


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