Funds are a set of specifically selected stocks (and sometimes bonds) to achieve a specific investment result, like matching a risk level or covering a specific theme. Directly, or through further investment in underlying funds, these invest in two things:

Stocks

Stocks are tiny chunks of ownership of public companies. By owning a stock you own a little bit of a company like Facebook. The Funds Plum offer all invest in small chunks of many different companies, with a different bundle of companies depending on the fund.

Stocks can fluctuate in value, but historically have given higher returns than bonds.

Bonds

Bonds are loans to big companies or governments. By buying a bond, you are lending out your money to a big company. This is safer than a stock, as the interest rate is fixed, and you are not exposed to changes in value of the company. By adding more bonds to a fund, the manager reduces the risk, and in return gives up some potential return.

Plum Advanced funds consist nearly completely of Stocks, while the Basic funds combine stocks and bonds to achieve the desired risk level.

Did this answer your question?