Commingling of funds is a method of combining all funds from different investors into a single investment in order to maximize the benefits.
Commingling, in securities investing, is a process in which money from several different investors is pooled into one fund. In investment management, commingling involves combining assets contributed by investors into a single fund or investment vehicle. This single fund is then part-owned by each contributor. A commingled fund structure is also used to manage institutional investment funds.
The process is done due to its multiple benefits. Using pooled funds allows fund managers to keep trading costs down since trades can be executed in larger blocks. Additionally, commingled funds offer investors the advantage of scale as a larger pool of money provides access to a wider range of investments that may require a larger buy-in.
Furthermore, all types of commingled funds offer investors advantages of scale, meaning you’re likely to get a better return through a commingled fund than through an investment vehicle that keeps your invested funds separate.
Individual investors also pay smaller fees to their broker because the fund pays the broker’s fees rather than individually. This is more cost-efficient than hiring personal investment managers to handle smaller sums of investments.
Gunnar Jaerv is the chief operating officer of First Digital Trust — Hong Kong’s technology-driven financial institution powering the digital asset industry and servicing financial technology innovators. Prior to joining First Digital Trust, Gunnar founded several tech startups, including Hong Kong-based Peak Digital and Elements Global Enterprises in Singapore.
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