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UT/Oeic Advice
UT / OEIC / Investment Trusts
For Definitions of Unit Trusts (UT), OEICs and Investment Trusts then Click Here.
Unit trusts are a form of pooled investment, in that they invest money from lots of individuals in other quoted companies. Unit trusts are not quoted companies; they do not have shares of their own. Instead they sell 'units' which give the holder the right to a proportion of the trusts annual dividend income and ownership of a proportion of its capital.
OEIC’s are Open Ended Investment Companies that have a set-up that lies somewhere between Unit Trusts and Investment Trusts. New Units are established in OEICs, in the same way as Unit Trusts.
Investment Trusts are essentially traded in the same way as other equities. They are companies quoted on the London Stock Exchange whose main activity is to invest in the shares of other companies. When you buy shares in an IT you are indirectly buying a 'share' in all the companies that the IT decides to invest in. The dividend income you receive from the IT, and the value of your IT shares, will rise and fall in line with the performance of the shares which the IT owns and market forces.
Management charges for UT’s and OEICs tend to be higher than for investment trusts (typically 1.5% as against under 1%) and the bid-offer spread can be wide. This is the difference between the price at which the trust offers to sell and buy back its units.
MORE INFORMATION IS AVAILABLE HERE on Taxation Advice of unit trusts and OEICs.