Unit Trusts & OEICs

Investment funds, unit trusts and OEICs (Open Ended Investment Companies) are pooled investments that are divided into a number of units or shares.

Each unit or share represents a small but equal proportion of the fund. The price of each unit or share will fluctuate in line with movements in the price of the underlying assets which make up the fund as a whole. The price per unit or share is normally calculated on a daily basis and will determine the price of the investment and whether or not the fund has made or lost money for each individual investor holding units or shares in the fund.

There are thousands of different unit trusts and OEICs operating in the UK marketplace together with many more pooled investment vehicles such as pension funds and Investment Trusts.

A pooled investment fund gives investors the opportunity to invest their money (together with that of many other investors) across a number of underlying assets / asset classes, thereby spreading risk and enhancing diversification.

The pooled investment funds can be either actively managed or passively managed. In an actively managed fund stock or asset picking is the responsibility of a fund manager usually in connection with a good research team, whereas a passive fund will mirror or follow a specific index or benchmark.

The benefits of Unit Trust / OEICs for investors is as follows:

• Easy way of accessing the stock-market as opposed to buying individual company shares
• Money is invested and looked after by investment professionals
• Potential for a higher return than a deposit type investment
• Capital is spread across a wide range of underlying assets

You can buy a wide range of Unit Trusts and OEICs and other pooled funds, through Rosan Select. In addition we have attached a Key Guide on Investment Planning & Asset Allocation, which considers a number of the key decision making processes that individuals should consider before embarking on structuring investment portfolios. Inevitably, this is an area where professional financial advice is extremely important and you can contact us for further information.