Open Ended Investment Company:

Hybrid investment funds that have some of the features of an investment trust and some of a unit trust. Like investment trusts, OEICs are companies that issue shares on the London Stock Exchange, and that use the money raised from shareholders to invest in other companies. Unlike investment trusts, they are open-ended which means that when demand for the shares rises the manager just issues more shares.

With an investment trust, if demand exceeds supply, the response may be a rise in the share price. The price of OEIC shares is determined rather differently, with the key factor being the value of the underlying assets of the fund. But in contrast to unit trusts, there is no bid/offer spread with OEICs, so the price of the shares should be the same whether you are buying or selling.

OEICs have been popular on the continent but were only launched in the UK in 1997.

The values cannot be guaranteed and can go up as well as down.

For more information click here.*