unit trusts and OEICs
an introduction to unit trusts and OEICs
Unit trusts and open-ended investment companies (OEICs) are types of collective investment, which allow investors to pool their money with other investors to invest more efficiently in stock and bond markets. As 'open-ended' funds, more shares are issued each time someone invests and sold when they exit. In practice, this means that the asset pool will expand and contract as people buy and sell out of the fund and that the price of the fund always reflects the value of the underlying stocks or bonds.
These funds usually have income and accumulation units. The income units pay out any income generated by the fund (such as dividends from shares or coupons from bonds), while for accumulation units, this is simply added back into the units. Each fund will also have different types of share class with different fee structures. Some, for example, have inbuilt commission structures, allowing payments to be made to brokers and advisers. Increasingly fund managers offer 'clean' share classes, which do not contain any facility for such payments and therefore have a lower annual management charge.
When buying unit trusts and OEICs, investors may have to pay an upfront fee, and then the ongoing annual management charge which is deducted automatically from the unit value.
you can invest and hold investment funds with any of the accounts we offer. Whether you’re looking for an everyday trading account, making the most of your ISA allowance or planning for your retirement, there’s an account for you.
our flexible account, where you can invest in all markets in the way you want.
stocks & shares ISA
tax-efficient, low-cost investing with no separate ISA fee.
plan your retirement with our low-cost SIPP. Annual admin fee of just £100 + VAT.