An open-ended investment company (OEIC) is a pooled investment fund in the UK.  A professional fund manager uses the money pooled together from the investors to buy investments such as stocks, bonds and funds in line with the investment strategy.  The fund manager will spread the money across several different investments and reduce the risk and impact of any one investment reducing in value.  

OEICs are listed on the London Stock Exchange (LSE) and you can buy shares in the company through your investment platform.  They are called open ended because shares are issued each time someone invests, and you can buy and sell the shares at any point in the day when the market is trading.  Like the other investments we have discussed, you will incur fund manager charges and dealing charges.

As with the other investments we have discussed, you gain money from selling the shares if they go up in value, and / or through dividend payments.  You will lose money if you sell the shares when they go down in value.  With an income OEIC, you gain from any dividend payments received from shares in the fund, or from interest on bonds.  For an accumulation OEIC, dividends and interest payments are automatically reinvested by the fund manager - check how the fund operates before investing.

For a more comprehensive explanation of OEICs, search online or follow the link below: