UNIT TRUSTS & OEIC’s
What is a Unit Trust?
A Unit Trust is an investment fund shared by a large number of different investors who pool their money. The fund is divided into segments called ‘units’. Investors take a stake in the fund by buying these units, the price of which will vary as the value of the investments in which the trust has invested can increase or decrease.
What is an OEIC?
An Open-Ended Investment Company (OEIC) is a pooled investment that operates in a similar way to unit trusts. However their legal status is different – they are set up as limited companies. This means that investors buy and sell shares in the OEIC. As with units trusts, the share price represents the value of the fund assets divided by the number of shares in issue.
How do they differ?
OEICs differ from investment trusts in that they are open-ended, which means that when demand for the shares rise the manager just issues more shares.
Another difference between a Unit Trust and OEIC is that OEICs quote a single price rather than a bid and offer (buy and sell) price and they are governed by company law rather than trust law.
Most new funds launched today are established under the OEIC structure and it is widely predicted that, over time, most Unit Trusts will convert to OEICs.
Helping you decide
To find out more about OEICs and Unit Trusts get in touch with us, and we will help you find the right solution for you.
Please note – The value of your investment in Unit Trusts and OEICs may go down as well as up.