OEICs – the smart way to invest
You can buy or sell shares in a company but you may prefer to invest in the stock market through Open Ended Investment Companies (OEICs). These are pooled funds of investors’ money managed by specialist professional fund managers who decide how best to invest in order to achieve set objectives. The advantages of investing in this way are that:
- Your dealing costs are lower; and
- You benefit from lower risk because your investment is spread across many companies instead of being concentrated on just a few.
What is the difference between an OEIC and a unit trust?
Both OEICs and unit trusts are open-ended investments, so more shares or units can be issued or cancelled at any stage. However,
- OEICs issue shares and unit trusts issue units.
- OEICs have one price, called the single price which is used when you buy and sell; unit trusts have two prices, a bid price for selling and an offer price for buying.
- OEICs and unit trusts are overseen by an independent body; for OEICs it is this is called the Depositary, for unit trusts it is the Trustee.
