Guide to OEICs/Unit Trusts
Your first choice for investment may be to take advantage of an Individual Savings Account (ISA), but if you have already used your ISA allowance, you can still invest in an Open-Ended Investment Company (OEIC) or a Unit Trust.
Unit Trusts and Open-Ended Investment Companies (OEICs) are a good way for smaller investors to enjoy the power of big institutional investors, putting their money into a variety of assets that could offset some of the risk.
Your money is put into a fund, along with money from other investors. This pooled fund is then invested across many different investments by a fund manager. The fund manager looks after the money in the fund, making regular adjustments depending on the performance of individual holdings, market conditions and the fund's objective.
Please remember though that the value of an investment may fluctuate and is therefore not guaranteed. You may not get back the full amount of your original investment.
What's the difference between a unit trust and an OEIC?
Although fundamentally they offer the same benefits, there are a few key differences between Unit Trusts and OEICs:
- Unit Trusts issue units, while OEICs issue shares.
- Unit Trusts generally have two prices: a bid price at which you sell and an offer price at which you buy. OEICs have one price, called the single price at which you buy and sell. Note: Prudential Unit Trusts have only one unit price.
- Both Unit Trusts and OEICs are overseen by an independent body. For Unit Trusts this is called the Trustee and for OEICs it is the Depositary.
Find out more about Prudential's Unit Trusts and OEIC.
What does investing in a unit trust or OEIC involve?
Unit Trusts and OEICs are best viewed as long-term investments (five years or more), but you can access your money whenever you need to. Depending on your provider, there may be a charge for this.
Tax treatment of unit trusts and OEICs
Investments held in a unit trust and OEICs are subject to certain tax rules. To find out more read investments and taxation.
