Unit Trusts and OEIC’s (Open Ended Investment Companies) are collective investments, and are a way of pooling small contributions from many people into a single investment fund.

Pooling in this way can provide a large spread of investments for small sums of money, thus reducing the risk of the portfolio when compared to direct investments. Another advantage of collectives is that they allow investment in specialist areas. At Thomas Heald, the funds we offer are either unit trusts or OEIC’s.

Unit Trusts – Key Facts

• When investing in a unit trust, you purchase units in a fund.
• The assets of a unit trust are held for unit holders by trustees and are invested by the fund managers.
• A unit trust is ‘open ended’ because the fund manager is able to create new units to sell to investors or cancel units to buy from investors who wish to sell therefore the units are readily marketable.
• The price of a unit is based on the underlying value of the assets of the unit trust.

If you buy a unit trust direct, you usually pay between 4 - 5% in charges, but through the Thomas Heald Fund Market these prices are heavily discounted.

Open-Ended Investment Company
(OEIC) - Key Facts

• OEICs are very similar to unit trusts, but are set up as a company in which the investor holds shares rather than units.
• The charges within OEICs can be easier to understand than unit trusts due to single pricing.
• Shares in OEICs can be created or cancelled as required by investor demand, like the units in a unit trust. It may be cheaper to switch between OEIC funds than between unit trust funds because of the structure of an OEIC which is commonly set up as an umbrella company with various different sub-funds (each a separate OEIC).

If you buy an OEIC direct, you usually pay between 4 - 5% in charges, but through the Thomas Heald Fund Market these prices are heavily discounted.

Tax Advantages

Investing in funds outside your ISA allowance enables you to take advantage of your annual tax free Capital Gains Tax (CGT) allowance (£10,600 for 2011/12). This can be used to offset capital gains made when you dispose of shares in an OEIC or units in a Unit Trust.