OIECs

An OEIC Open Ended Investment Company - is a pooled collective investment vehicle in company form. OEICs first became available in May 1997 and were introduced as a more flexible alternative to established unit trusts.   An OEIC may have an umbrella fund structure allowing for many sub-funds with different investment objectives. This means you can invest for income and growth in the same umbrella fund moving your money from one sub fund to another as your investment priorities or circumstances change. Some OEIC providers allow you to do this without charge as you stay within the same share class with the same charging structure. OEICs may also offer different share classes for the same fund.   By being "open ended" OEICs can expand and contract in response to demand - just like unit trusts. The share price of an OEIC is the value of all the underlying investments divided by the number of shares in issue. As an open-ended fund the fund gets bigger and more shares are created as more people invest. The fund shrinks and shares are cancelled as people withdraw their money.   You may invest into an OEIC through a stocks and shares Individual Savings Account ISA. Each time you invest in an OEIC fund you will be allocated a number of shares. You can choose either income or accumulation shares - depending on whether you are looking for your investment to grow or to provide you with income - providing they are available for the fund you want to invest in.  

What are the benefits of investing in an OEIC

Like unit trusts OEICs provide a mechanism of investing in a broad selection of shares thus aiming to reduce the risks of investing in individual shares. Therefore you have an opportunity to share in the growth potential of stock market investment. However do remember that your capital is not secured and your income is not guaranteed.   You have access to your investment when required although you should regard investing in an OEIC as a medium to long term investment. You may invest by lump sum and or by regular monthly payments. Through the OEIC structure there is the flexibility to switch easily between the investment funds provided by your OEIC manager.   Do remember that the value of your funds and any income you choose to take depends on the performance of investments in that fund. Where a fund invests overseas exchange rate changes may also cause the value of your fund to fluctuate.
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