Qualified advisers answering your
Financial Questions
call 0800 092 1245

Unit trusts and OEICs explained

You can pool your money together with other investors with OEICs and Unit Trusts. They are a form of collective investment that allows you to participate in a wider range of investments than can normally be achieved on your own, with smaller sums of money. Pooling your money with others also reduces the risk.

For example, if you have £1,000 it wouldn’t really be worth investing in the stock market. If, however, you put in £1,000 along with other people’s money, then it obviously accumulates a much larger pot of money to invest.

Basically, OEICs and Unit Trusts are a flexible and relatively cheap way to invest in the stock market. They are run and regulated in a similar way, and you can also invest in them through your ISA, making it a much more tax efficient way of saving.

The differences between an OEIC and a Unit Trust
• An OEIC is set up as a company with flexibility, whereas a Unit Trust is a trust
• Unit Trusts have two prices – the 'bid' price which is the lower price you receive when you sell, and the higher 'offer' price you pay to invest. The difference between the two prices is commonly known as the bid/offer spread. Unit trusts are expected to become 'single-priced' eventually, and some already are.
• With an OEIC there is usually a single price to buy and sell shares, so it's easier to see the actual effect of the fund manager’s charges. However, it is important that you understand the way your investment charges are made – the Key Features document, provided by the investment company that runs the fund, will explain this.

The entire fund is divided into units or shares which are valued on a daily basis which reflects the core value of the fund as a whole. This value will fluctuate on a daily basis with market conditions.

For more information on these, please contact a financial adviser.

Share this..

Related stories

Financial Guides

Financial Calculators

Our useful calculators can help you get your finances in order:

Latest News


Helpful new tax year facts that could affect you and your money

Blog | Seven helpful new 2016/2017 tax year facts that could affect you and your money. Our recent online blog shares a brief outline on how to stay up to date.

Read more

Useful Links

Popular Searches

Please Enter More Details

Enter More Details