Open Ended Investment Company
An OEIC (Open Ended Investment Company) is a collective investment vehicle similar to the Unit Trust. With the Unit Trust investors purchase units in a fund which represents a fraction of a portfolio of perhaps 50 - 100 different shares. OEICs purchase shares in the fund. Unlike Unit Trusts, OEICs can issue a variety of different classes of shares for each fund.
A wide range of funds are available to choose from. Individual investors assets are pooled together to allow the fund managers to purchase shares in such a way to reduce the risk and spread the opportunity more widely.
In relation to tax the fund grows free of capital gains tax (CGT), although on encashment, the individual investor is subject to CGT. However, each individual has an annual CGT exemption, currently £9,600.00. Dividends are paid with 10% tax, deducted at source, with higher rate taxpayers having additional tax to pay.