Unit Trusts & OEIC's

Unit Trusts & OEIC's Railway Pensions OntrackYour first choice for investment may be to take advantage of an Individual Savings Account (ISA), but if you have already used your ISA allowance you can still invest in a unit trust/OEIC (Open-Ended Investment Company).

Unit Trusts and OEICs, a modern version of a unit trust, are a good way for smaller investors to enjoy the power of big institutional investors, putting their money into a variety of assets that could offset some of the risk.

Your money is put into a fund along with money from other investors. This pooled fund is then invested across many different investments by a fund manager. The fund manager looks after the money in the fund making regular adjustments depending on the performance of individual holdings, market conditions and the fund's objective.

Please remember though that the value of an investment may fluctuate and is therefore not guaranteed. You may not get back the full amount of your original investment.

What's the difference between a unit trust and an OEIC?

Both unit trusts and OEICs are open-ended investments, so more shares or units can be issued or cancelled at any stage, however there are a few differences:

  • Unit Trusts issue units, while OEICs issue shares.
  • Unit Trusts generally have two prices; a bid price at which you sell and an offer price at which you buy. OEICs have one price, called the single price at which you buy and sell. 
  • Both unit trusts and OEICs are overseen by an independent body. For unit trusts this is called the Trustee and for OEICs it is the Depositary

 

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