Collective investment schemes are set up and managed by individuals or legal entities to allow investors to pool their assets and invest as a group. All investors are treated equally.
Contractual investment funds separated
The law recognises various forms of collective investment schemes, the most common in practice being the contractual investment fund. To protect investors, companies that manage contractual funds place the assets entrusted to them into legally separate pools that are subject to strict requirements concerning the safe keeping and use of the assets. In particular, custodian banks must ensure that fund assets are rigorously separated from their other assets.
Privileged investors in bankruptcy
If a fund management company goes bankrupt, fund assets are segregated from the bankruptcy proceedings and paid out to investors, who receive preferential treatment over other creditors.