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OEICs and Unit Trusts at a glance

  • When people talk about ‘funds’ they often mean OEICs and Unit Trusts

  • Funds have investment objectives and invest in assets to meet those

  • Investing in funds can help you to spread your investment risk

  • Their value still goes down and up though and you can get back less than you invested


Important information

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested.

All investments carry an element of risk which may differ significantly. If you are unsure as to the suitability of any particular investment or product, you should seek professional financial advice



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What can I trade in on the Alliance Trust Savings Platform?

To view the list of all the funds available on the Alliance Trust Savings platform read our List of Funds. For ISA accounts please remember there are a few restrictions.

view the list of funds

How OEICs and Unit Trusts work

OEICs and unit trusts let you invest in a range of assets based on the fund’s investment objectives.


Unlike investment trusts they don’t have a fixed number of shares. They issue shares (or ‘units’ in the case of unit trusts) based on supply and demand.

The price of shares or units is directly linked to the value of the assets they invest in and is usually worked out once a day. They’re traded through the fund manager, not the stock market.

The main difference between OEICs and unit trusts is their legal structure. An OEIC is structured like a company. A unit trust is structured as a trust.

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Unfamiliar with some of the terms? Our glossary might help.

go to the glossary

Dilution levy

If you want to buy or sell a very large number of shares or units in a fund the fund manager might charge you a dilution levy.


This is to cover the fund’s costs in doing this for you, so they don’t have an adverse impact on its other investors.

Be clear on risk

Use investment selector to research the types of assets your trust invests in. Some are riskier than others. although that may also mean they offer the potential for higher returns than others.


Look for the Key Investor Information Document (KIID) for the fund. It will give you all the details.


Income from OEICs and Unit Trusts

OEICs and Unit Trusts can pay you an income. They often give you the option to reinvest income in the fund in the form of more shares or units.

Different funds do things in different ways depending on their objectives. Some are designed to pay out a steady income for example. You can check a fund’s income policy through our investment selector.

You don’t pay tax on income from OEICs and Unit Trusts if you hold them in an ISA or SIPP Account. For Investment Dealing Accounts (IDA) you may have to pay income tax. How much depends on your personal circumstances.

If you sell shares or units in a fund in an IDA at a higher price than you bought them for, this counts as a gain for any capital gains tax you might have to pay.

Charges

You can check charges for OEICs and unit trusts via KIIDs within the investment selector. They can include:

  • An initial charge when you buy your shares or units.

  • An ongoing charge figure (OCF), often used to compare fund charges.

  • An exit charge when you sell.

You may also have to pay a 'bidoffer spread' depending on how your fund works. And a dilution levy in some circumstances.


Remember:

  • Be clear on your investment goals and how much risk you are prepared to take.

  • Do your research before deciding to buy.

  • Get advice if you need it.

Find a financial adviser near you

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Single priced funds

With single priced funds there is just one price for buying and selling.


This is usually based on the mid-point between the offer price and the bid price that the fund manager is paying for underlying assets in the fund.

Prices for both dual priced and single priced funds can change every day.




Dual priced funds

Dual priced funds have an offer price and a bid price. You buy shares or units at the offer price and sell them at the bid price.


The difference is called the bid/offer spread. It’s effectively a cost to you. A similar idea to getting different exchange rates when you buy or sell foreign currency at a bank.

Check the KIID or Fund prospectus to find out if a fund is dual priced.

Prices for both dual priced and single priced funds can change every day.


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Browse investments

Our Investment Selector is powered by Morningstar, a leading provider of investment research. Use it to:

  • Check what you can access through your Account (over 4,000 investments to choose from)

  • Find out about the risks and charges for each investment (which are on top of the charges you pay us for your Account)

  • Review past performance for investments although remember that past performance is not a guide to future performance

Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.