What is a key characteristic of external investment pools?

The key characteristic of external investment pools is the commingling of assets. This refers to the practice where funds from multiple investors or entities are aggregated into a single investment pool. By pooling assets together, external investment pools can achieve greater diversification and access to a broader range of investment opportunities than individual investors might be able to on their own.

Commingling allows for economies of scale in investment management, leading to potentially lower costs and increased operational efficiencies. Since the assets are managed collectively, external investment pools can also provide a more liquid investment option for participants, allowing for more straightforward buying and selling of interests in the pool.

In contrast, long-term investment focus might characterize some pools, but it does not define external investment pools specifically. Similarly, while some investment opportunities might have restrictions to specific beneficiaries, external investment pools typically are open to a wider array of participants. Lastly, the notion of a permanent arrangement does not apply universally to all external investment pools, as many can have specific terms of duration or conditions for liquidity.