Are you planning to invest funds in the Isle of Wight? Two popular options will often appear: unit trusts and OEICs (Open-Ended Investment Companies). Both are types of funds where money is combined from multiple investors. In these collective investment schemes, investors are allowed to pool their money together and invest in a diversified range of portfolios that consist of assets, shares, properties, and even bonds.
However, with professional investment advice in the Isle of Wight from experts, you can plan the type of investment that suits your needs.
What are Unit Trusts?
This is a type of pooled investment fund where the fund manager makes purchases and sell assets on behalf of the investors. To invest in Unit Trusts, the investor needs to buy units instead of shares.
How does it work?
The total value of the unit fund is generally divided into equal portions of units. These units are sold to investors, who then become unit holders. The price of the units will change depending on whether you’re buying or selling them. The buying price is referred to as the bid price, and the selling price is referred to as the offer price.
An unlimited number of units can be created within a single trust. As demand grows, the number of units is added or created to meet the growing demand.
What are OEICs?
OEICs are a type of pooled investment fund where the investor can buy shares instead of units. They receive proper value for each share, with the overall net asset value (NAV) of the fund accurately reflected. OEICs are generally single-priced, and hence their buying and selling prices remain the same. Thus, it is a simple and more transparent investment option. Moreover, OEICs are regulated under UK company law, and the company’s board of directors monitors the funds.
How does OEIC work?
The fund manager in the OEIC investment process generally buys and sells the assets, commonly referred to as the fund’s holdings. These holdings are either in the form of equities, bonds or assets. With the rise and fall in the value of the shares, the price of the shares will change. By investing in an OEIC, the investors can get regular income opportunities. They can reinvest the profits back into the fund. If the investors sell the shares, they will stand cancelled.
What is the difference between OEIC and Unit Trusts Investment?
Structure
An OEIC is a structured investment compared to a Unit Trust, as it is company-backed. Thus from the legal point of view, OEIC is a better option compared to Unit Trusts. Investors in Unit Trusts are not owners of the assets; on the other hand, in OEICs, the investors are the ultimate owners.
Pricing
OEICs are generally single-priced, and the price is expressed per share. However, unit trusts are dual priced. They have different offer prices and bid prices, which makes it difficult for the investors to make proper decisions.
At Ingard IFM, we can provide professional advice on the various investment vehicles that are right for you, including onshore and offshore bonds, ISAs, OEICs, and unit trusts. We can also help you identify assets qualifying for Business Property Relief.