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Investment clubs

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2. A simple explanation of how it works

To get an immediate feel for the mechanics of an investment club, consider the following example:

'Indexbusters' is a club with 10 members. They agree to each put in £1,000 at launch, and to chip in a further £100 per month after that.

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And so it goes on. The units in the Club are valued at the end of every month, based on the Club's assets, and the unit price determines allocations in the following month. The advantage of this system, known as the unit valuation system (UVS), is that it establishes a basis on which new members can join and existing members can leave. It is simple, fair and flexible.

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