I come across a lot of portfolios that have invested in individual shares. Typically these will have been held with a stock broker or discretionary manager (pretty much the same thing) in the past. Or it may be that the investor themselves has fancied a dabble or accumulated the odd share holding over time.

I thought it might be useful to have a quick overview of the difference between holding shares and holding funds in an investment portfolio.

Shares

  • You invest in individual companies, one at a time.
  • There is no ongoing cost of holding the share as such, but you may be charged admin fees by the platform provider.
  • You have to decide which shares to invest in, and which sectors, and do all the buying, selling, research and analysis.
  • You will typically have a portfolio bias towards UK Equities because they are easier to trade and more well known.
  • You have a more focused portfolio which makes it higher risk.

Funds

  • The fund will invest in individual shares and will hold sometimes up to 1000 or more shares.
  • There is a cost of holding the fund as it manage the buying, selling and analysis for you.
  • The fund will manage the decision making process of what shares are held.
  • You can invest in 1000’s of company shares in different sectors, regions, countries etc. with just a few funds.
  • You have a more diversified portfolio which lowers risk.
If you are interesting in finding out more about whether the investments you hold are right for you then feel free to claim your free financial review.

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Blog by Jaskarn Pawar

Jaskarn Pawar is an experienced and award winning Chartered and Certified Financial Planner. He advises people all over the UK on financial planning and wealth management issues to help them reach solutions to fit their personal needs. You can contact Jaskarn on 01604 211234 or by e-mail on jaskarn@investorprofile.co.uk