Pembroke Wealth Management: 
Unit Trusts and OEICs
Unit trusts are a popular investment vehicle today, they are 'open ended collective investments' which put the cash of many investors into one fund - a 'pooled fund'.
The system allows investors to invest "collectively" which has the benefits of spreading and reducing risk and keeping costs under control.
Unit trusts allow you to invest in the stock market , enabling you to both spread your risk and benefit from expert investment management.
There are many unit trusts to choose from across a wide range of investment sectors. The managers of unit trusts can buy and sell within the trust without having to pay any tax, however tax liabilities can arise on dividends and unit sales by the holder.
What is an OEIC?
Open Ended Investment Companies ( OEICs) are often referred to as the modern day and flexible equivalent of the Unit Trust. They combine the elements of Unit Trusts and Investment Trusts which enable you to pool your investments along with other investors, again, spreading the risk and enabling you to take advantage of the skills of professional Fund Managers.
OEICs and Unit Trusts are both regulated by the Financial Services Authority (FSA).
What's the difference then ?
OEIC rules are based on specifically written Company Law, whereas unit trusts are based on old Trust Law.
OEICS have a single price for buyers and sellers and the charges are shown separately. A unit trust has a separate buying and selling price (bid/offer spread).
The OEIC share price directly reflects the underlying assets of the portfolio
An OEIC has an umbrella fund structure, which means that there can be different classes of share. Each sub share fund can be invested into a different area if required.
For more information, please contact us.
