Compare OEICs & Unit Trusts
Open Ended Investment Companies (OEICs) & Unit Trusts
OEICs are not tax free like your ISA, but there are alternative benefits. The ability to switch between funds tax free as your investment objectives evolve is often available and can be very attractive. Many people like the single pricing system, the bid price and the offer price are the same, and the charges are paid for separately in what is known as a dilution levy. Because you are investing in a company that runs a lot of funds, switching between funds is usually free or of nominal cost. This means you can manage your portfolio according to market conditions without worrying about the effect of sizeable switching costs when changing funds. Unit Trusts, like OEICs, are open ended companies that can expand and contract according to market conditions. Unlike OEICs, Unit Trusts have a dual pricing system, and the bid – offer spread is the difference between them. Your monies are pooled (hence the ‘collective’ investment) in a trust and each unit is an equal fraction of the total sum. Because you are investing collectively, you benefit from the economy of scale. Fund sizes range from about £5M to over a billion pounds. Collective investment mitigates much of the administrative charges meaning a relatively small investment pot can still be well diversified across a range of funds.
Because of the tax free benefits of ISAs, most people will use up their annual ISA allowance before investing in a separate OEIC or Unit Trust. For investors who have used up their annual ISA allowance, compare OEIC / Unit Trust funds offered through Heritage and look at how much cheaper it is investing in the funds by taking advantage of our discounts.
Click on the OEICs / Unit Trust funds link on the Quick Links box to compare OEIC funds and find out which has the best discounts through Heritage.
Investing in an OEIC through Heritage will save you money. The funds that you choose to invest in will have an Initial Charge, somewhere between 0-5.5%, within which it has been costed to pay an average commission of 3% to financial advisers for introducing you to the investment house. The full Initial Charge is levied whether you apply to the provider direct or use a fund supermarket but not if you invest through Heritage. We rebate all the Initial Commission we receive on all the funds we offer, meaning more of your money is invested. Because we provide the investment houses with a lot of business each year, we have also been able to negotiate further discounts, which is why investing through Heritage will save you money and we are always on the end of the phone if you need some help.
