An open-ended investment company, or OEIC (pronounced 'oik'), is a modern and more flexible version of a unit trust. It uses the basic structure for collective investments commonly used in Europe and the US. As with unit trusts, the size of the fund is variable - more units or shares can be issued if there is demand for them - and the price of shares or units in the fund is fixed by the value of its underlying assets.
However, instead of having two prices for its shares (one for buying and one for selling), as a traditional unit trust does, an OEIC has one price for both; management fees and commissions are charged separately. This is designed to make it easier for you to see exactly what you are getting. OEICS can be operated as an 'umbrella' structure, which means that, within each, there can be various sub-divisions of funds, each with their own objectives and the ability to invest in different financial products.
This flexible structure makes it cheap and easy for OEICS to keep up with changing consumer demands.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
See Ed Bowsher's video tutorial: Why we like investment trusts.
-
The top stocks in the FTSE 100After a year of strong returns for the UK’s flagship index, which FTSE 100 stocks have posted the best performance in 2024?
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
