OEIC's

Having been popular in Europe for a number of years, this form of investment is now becoming more popular in the UK.

An OEIC is a company which invests it's capital and shares in other investments. Features of OEICs are as follows :

• In a similar way to which a unit trust is run by a fund manager an OEIC is looked after by a "Corporate Director".
  
  

• OEIC's are set up under company law, and not trust. A "Depositary" oversees the operation to ensure investor protection in much the same way as a unit trust trustee would act for a unit trust.
  
  

• OEIC's are unable to borrow money to make investments.
  
  

• OEIC's are priced in line with the value of the assets held so, unlike investment trusts the shares will not trade at a premium or a discount.
  
  

• An Annual General Meeting of shareholders must be arranged as is required of normal companies.
  
  

• Investors may purchase redeemable participating preference shares in the OEIC. The number of shares that are issued is variable in that the Corporate Director may issue more shares on demand. Because the number of shares in the OEIC may change the fund is "open-ended" in the same way as a unit trust.
  
  

• Shares are traded at a single price with no bid / offer spread. However initial charges are still made for purchases.
  
  

• Taxation on dividends from an OEIC is the same as that for unit trusts and investment trusts.
  
  

• An "umbrella fund" may be used. This means that separate companies may be used to specialise in different types of share. This offers the investor greater flexibility for their investment. By using a share exchange facility the investors are able to switch funds if required.

The value of investments can go down as well as up. Past performance is not a guide to future performance.