Unit trusts and OEICs
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32. Conclusion
- Unit trusts and OEICs are collective funds which invest the pooled money of individual investors in the stock and bond markets.
- The income and capital growth from the trust's own investments accrue to the benefit of unitholders. The better the underlying investments do, the better the unitholders do.
- For investors with limited capital, or for those who do not want to make their own decisions about what to invest in, they offer the benefit of diversification and professional fund management.
- Trusts charge for their services, through annual management charges and in some cases through charges when you first make your investment (initial charges) or when you sell it (exit charges).
- Charges for active funds are higher than for passive funds.
- Different funds have different investment objectives. Some aim for income, some aim for capital growth, and some for a balance of the two.
- The price of units is calculated once a day by dividing the net asset value of the trust by the number of units in issue, and making a few adjustments.
- You can invest a lump-sum in a unit trust or OEIC or you can drip-feed the money in using a savings plan. You can also shelter your investment in an ISA.
- You can buy through an IFA or direct from the unit trust company.
You have now completed the course. To test your knowledge, take the Assessment test.
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