A pooled investment vehicle — often called a fund — is a structure created by an investment adviser to collect money from multiple investors. Each investor buys an interest in the fund, and the adviser then invests that pooled money on behalf of everyone in the fund. Profits and losses are typically shared among investors based on their ownership stake.

Funds can vary widely in size, how long they hold investments, and what types of assets they invest in. Common examples of pooled investment vehicles include mutual funds, exchange-traded funds (ETFs), hedge funds, private equity funds, and venture capital funds. If you’re wondering what is a pooled investment vehicle or how do pooled funds work, they’re a popular way for investors to gain diversified exposure to a broad range of investment opportunities.

Building Blocks: Private Funds, Building Blocks: Starting a Private Fund, Building Blocks: DIVERSIFY, Building Blocks: Types of Investors, Private Equity Funds, Fast Answers: Investment Companies