Unit Trusts/OEICs (Open Ended Investment Companies)
What is a unit trust?
Unit Trusts and OEICs (open-ended investment companies) are a form of collective investment fund. The other main types of collective investment fund are investment trusts and exchange traded funds (ETFs).
The basic idea behind collective investment funds is that individual private investors send the money they wish to invest to an investment manager who pools everyone’s money in to one fund and invests this across a range of suitable investments.
The gains made on shares within the fund are free of capital gains tax to allow you to make the most of your investment.
So for a relatively smaller investment amount the investor can benefit from a very diverse spread of investments. This is because the fund, when all investors’ money has been pooled together, can be worth millions of pounds. So the range of shares the fund can invest in is far greater than the range of shares the individual investor could have reasonably invested in.
How can I make the most of unit trusts?
Investor themselves can further improve their own investment holdings by investing in different funds across different sectors and potentially own 1000’s of shares in a very simple and easy to manage way, without having to manage a portfolio of shares themselves.
Unit trusts and OEICs invest in all sorts of different sectors and industries, which enables you as the investor to put together a group of funds that really suits you.
To give you an idea of the sort of investment sectors out there below is a list of the official sectors as determined by the Investment Management Association.
£ Corporate Bond
£ Strategic Bond
£ High Yield
Absolute Return
Active Managed
Asia Pacific excluding Japan
Asia Pacific including Japan
Balanced Managed
Cautious Managed
Europe excluding UK
Europe including UK
European Smaller Companies
Global Bonds
Global Emerging Markets
Global Growth
Japan
Japanese Smaller Companies
Money Market
North America
North American Smaller Companies
Personal Pensions
Property
Protected/Guaranteed Funds
Specialist
Technology & Telecommunications
UK All Companies
UK Equity & Bond Income
UK Equity Income
UK Equity Income & Growth
UK Gilts
UK Index Linked Gilts
UK Smaller Companies
Collective investment funds are an excellent and cost-effective way of investing in equities and bonds without the hassle and risk of making direct investments yourself.
Where can I invest in unit trusts?
You can buy new unit trusts quickly and easily from our discount funds store.
Why Investor Profile?
If you want an even greater choice of unit trusts, investment trusts, ETFs and shares then our Free Range Portfolio is what you are looking for.
Interesting facts about unit trusts
The UK was the first country to launch a unit trust fund in 1931.
In September 2009 there were £463 billion funds invested in unit trusts.
£90 billion of these were held in Stocks and Shares ISAs.
More assets are invested in the UK All Companies sector than any other with £92 billion invested in total, or 20% of all assets invested.
Unit trusts are split into sectors to make it easier for investors and the industry to classify them for analysis and investment. There are currently 33 different sectors, which are listed above.
Tax levels, bases or reliefs referred to are those currently applying but are subject to change. The tax treatment of investments will depend on the individual circumstances of the investor.
