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How Best to Invest in Stocks and Shares
Investment trusts
OEICS
Offshore funds


UK AUTHORISED OEIC OR UNIT TRUST

What is an OEIC?

OEIC stands for an open-ended investment company which works in a very similar way to a unit trust except that an OEIC is legally constituted as a limited company (Plc). OEICS have been operating outside the UK for some time but only since 1997 has it been possible to operate an OEIC in the UK. OEICS are not trusts and do not therefore have a trustee. However they have a depositary which holds the securities and has similar duties to a unit trust trustee.

Most OEICS operate as umbrella funds which means the OEIC is authorised and then can set up sub-funds without gaining individual authorisation for individual sub-funds. Each sub-fund has different investment aims, e.g. a sub-fund may specialise in the shares of small companies or in a particular country, e.g. the USA. Each sub-fund can also have different charges and minimum and maximum investments. Unit trusts are allowed to do this too, but few do.

Most OEICS only have one unit price and the initial charge is added as an extra. Unit trusts always have two prices, the lower or bid price is what you get when you sell back to the managers; the higher or offer price is what you have to pay when you buy. More on OEICS.


Other types of OEIC or Unit Trust
Investment Trusts
Offshore Funds

Last updated 26 March 2011.