Collective Investment Fund


DEFINITION of 'Collective Investment Fund'

A fund that is operated by a trust company or a bank and handles a pooled group of trust accounts. Collective investment funds combine the assets of various individuals and organizations to create a larger, well-diversified portfolio. The following are two types of collective investment funds:

A1 Fund: A fund of grouped assets contributed by either the holding bank or affiliated banks for the exclusive purpose of investment and reinvestment.

A2 Fund: A fund of grouped assets contributed by pension, profit sharing, retirement, or other trusts that are exempt from federal income tax

BREAKING DOWN 'Collective Investment Fund'

The idea of a collective fund is to lower costs through economies of scale by combining pensions and profit-sharing funds. These pooled funds are grouped into what is known as a
master trust account under the control of the bank, which acts as trustee, guardian, executor or administrator.

  1. Reinvestment

    Using dividends, interest and capital gains earned in an investment ...
  2. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  3. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Unit Investment Trust - UIT

    An investment company that offers a fixed, unmanaged portfolio, ...
  6. Profit-Sharing Plan

    A plan that gives employees a share in the profits of the company. ...
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