Unit Trusts & Open Ended Investment Companies (UT & OEICs)

What are Unit Trust and Open Ended Investment companies?

UTs and OEICs are pooled funds of investors’ money, which are used to buy a range of shares, gilts, bonds or cash deposits.  Both UTs and OEICs are open-ended funds, meaning that the size of each fund can vary according to supply and demand.

Who are they suitable for?

Investors must be over the age of 18.  The suitability of the underlying investment fund will depend on the individual attitude to investment risk.  UTs and OEICs should be viewed as medium to long term investments.

What are the benefits?

Risk is reduced as a broad range of shares is held.  The fund manager will invest the money on behalf of investors and the value of your investment will vary according to the total value of the fund.  Initial charges are usually levied as well as an annual fee to cover the ongoing costs such as administration.  You can invest into a UT or an OEIC through an ISA (Individual Savings Account). 

UTs and OEICs are separated into categories so they can be compared against other funds with similar objectives and underlying assets, for example, European funds are grouped together.

The funds can be further broken down according to risk/return and length of investment the investor requires. 

What are the risks?

The risks associated with such investments are dependent on the inherent risks involved with the underlying asset class within the fund.