What is Collective Investment Scheme?

A Collective Investment Scheme is an understanding presented by any company, which reserves the contributions, or payments made by the investors, and deploys them. Despite the likeness between CIS and Mutual Funds regarding the pooling of savings and issuing of bonds and securities, they fail to agree in their investment objective. While Mutual Funds invest in securities, extensively, CIS confine their investment to plantations and real estate. Any entity proposing to operate as a Collective Investment Management Company has to apply for SEBI's registration. Investors with a less knowledge about how to invest in share market should know about every scheme prior to any investing.

The CIS is well organized in many administrations and now serves as an investment mode for a wide range of investment opportunities. The International Organization of Securities Commission (IOSCO) has, in its Report on Investment Management of the Technical Committee, defined the Collective Investment Schemes (CIS), as "an open-ended collective investment scheme that issues claimable units and invests primarily in transferable fund securities or money market instruments". Intraday trading tips in India makes you understand each and every scheme more easily.

A scheme should be agreed on the termination of duration mentioned in the scheme or on the accomplishment of the purpose. A scheme may also be wound up on the possibility of any event which in the opinion of the trustee differs. The scheme can also be winded if unit-holders of a scheme holding 3/4th of the nominal value of the unit capital a resolution to that effect or if in the opinion of the CIMC, the purpose of the scheme cannot be accomplished then through the approval of least 3/4th of the nominal value of the unit capital of the scheme.