Open Ended Investment Companies (OEICs)

An Open-Ended Investment Company (OEIC) is similar to a unit trust, except that it is legally constituted as a limited company.

OEICs, also known as Investment Companies with Variable Capital (ICVC), have been in operation since 1997, both within and outside the UK. Prior to that, they were only allowed to operate outside the UK.

Unlike trusts, OEICs do not have trustees. Instead, they have a depository that holds the securities and carries out similar responsibilities to a unit trustee.

OEICs often function as umbrella funds, meaning that once the main OEIC is authorised, it can establish sub-funds with different investment objectives, such as focusing on shares of a specific country or small companies.

Typically, OEICs have a single unit price, which includes the initial charge. This differs from unit trusts, which have two prices – the higher “offer” price when buying and the lower “bid” price when selling back to the managers.