What do collective investment vehicles primarily aim to achieve?

Collective investment vehicles are designed to pool funds from multiple investors, allowing them to collectively invest in a diversified portfolio of assets. This diversification is one of their key advantages, as it helps to spread the risk across a variety of investments rather than concentrating it on a single asset. By providing access to a diversified range of investments, these vehicles enable individual investors, often with smaller capital amounts, to benefit from a broader array of opportunities that they might not be able to access on their own. This can include equities, bonds, real estate, and other asset classes, effectively allowing for greater risk management and the potential for more stable returns over time.

In contrast, while maximizing individual investor wealth is a goal for many investors, it is not the primary aim of collective investment vehicles; rather, it is a potential outcome of diversification. Limiting exposure to high-risk assets may be a strategy some funds employ, but the primary focus is generally on diversification. Ensuring fixed rates of return is not characteristic of most collective investment vehicles, as many rely on market performance and do not guarantee fixed returns.