Open-Ended Investment Companies (OEICs)

What is an OEIC?

Instead of buying and selling individual investments yourself, it can be easier and more cost-effective to invest in the markets through an Open-Ended Investment Company (OEIC).

An OEIC is a collective investment scheme, or managed fund, in which the money of many investors is pooled together to purchase investments in a range of different assets, according to the investment policy of the managed fund.

An OEIC can be set up as a single company or as a company with several sub-funds, known as an umbrella scheme. Each sub-fund within the umbrella scheme has its own investment policy and objective.

What are the benefits?

There are many advantages to investing in an OEIC rather than directly in the stockmarket:

• Diversification - OEICs can offer greater potential for growth and can help to reduce your investment risk as your money is spread across a range of assets rather than relying on the fortunes of just one. In essence your eggs aren't all in one basket
• Expert management - Your investment is managed by a professional fund manager, supported by expert research and market analysts to help you achieve your goals
• Economies of scale - When you invest in an OEIC your money is pooled with that of other investors, enabling fund managers to achieve economies of scale when they buy and sell holdings on your behalf

There are risks and considerations with investing in OEICs:

• The value of investments and any income from them can go down as well as up and you may not get back the amount you put in.
• You need to be comfortable making investment decisions and balancing the level of risk you are willing to take with the potential for growth.
• If you are unsure of whether this type of investment is suitable for you please seek financial advice as we are unable to give advice to help you make your investment decision.

Share classes and charges

There are three share classes to choose from when you invest with M&G. The choice depends on whether you’re investing with or without a financial adviser, and how much you’re investing.

• Sterling Class A Shares are for those investing without an adviser
• Sterling Class R Shares are for those investing via a financial adviser or with myM&G
• Sterling Class I Shares are for those investing £500,000 or more (with or without a financial adviser), or for those with an overall investment value of £250,000 or more with myM&G

Income or accumulation?

Once you have chosen your share class, you need to decide how you would like your money to work for you.

You can choose to receive an income from your investment and have this paid into your bank account, or you can choose to have any income your investment generates kept within your fund to add to your investment; this is known as accumulation. 

• Accumulation shares - Accumulation shares keep income within the fund rather than paying it out. Funds with Accumulation shares are shown with Accumulation (or Acc) after their fund name. 
• Income shares - If you would prefer to receive an income from your investments, you can choose income shares when you invest. Funds with income shares are shown with Income (or Inc) after their fund name. With income shares the income could be paid monthly, quarterly, six monthly or annually depending on the fund. Receiving an income may affect the return you get back on your investment.

Charges

We don’t apply entry or exit charges to investments in M&G funds Sterling Class shares. However, there is an ongoing charge which will vary per fund. The ongoing charge is made up of the Annual Charge which may be discounted depending on the size of the fund, and extraordinary expenses. For property funds, the ongoing charge does not take into account the property operating expenses, also known as PER. For information on all our charges, please refer to our Fund Charges page. We might change our charges in the future.

Please read the Important Information for Investors document for more information on share classes, charges and share types.