Open-ended investment companies (OEICs)
An OEIC (pronounced ‘oik’) is an investment company formed using a specially-written company law and in many respects is just a modern version of the unit trust. The key difference is that in an OEIC you buy shares rather than units, and OEIC pricing is easier to understand as OEICs only have one price, and you pay the costs of investing separately. With unit trusts there are both buying and selling prices.
OEICs can act as an umbrella, and so have several sub-funds with different investment objectives. One may invest in UK shares, another in UK corporate bonds, a third in American shares, and some shares may be issued in other currencies, so you can easily diversify your portfolio according to your investment objectives. Like unit trusts, but unlike investment trusts, OEICs can both expand or contract to meet demand. They are regarded as the future of collective investments. You buy OEICs via their authorised corporate directors (equivalent to unit trust managers), company sales people, independent financial advisers or stockbrokers.
