Simple Pound

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And finally, let’s solve the last remaining secret of investment choices - open ended investment companies. One of the reasons I wrote about investment trusts yesterday, is that OEICs are a hybrid form of units and investment trusts.

They are companies issuing shares on the London Stock Exchange and subsequently use the money from their shareholders for other investments - essentially what investment trusts do. The difference to investment trusts is (and here’s where the similarity to unit trusts comes into play - which makes the OEIC a hybrid form) that OEICs are open-ended.

As I’ve already explained in the post about unit trusts, an open-ended investment means that the fund manager can keep issuing shares so that the price reflects the true underlying value of the fund (rather than some inflated number that merely represents a stock market hype for example).

But there is one difference between OEICs and unit trusts: OEICs don’t have the bid-offer spread that you’ll find with unit trusts. Therefore, you will always be able to buy and sell your shares for the same price, rather than having to sell for less than what you originally paid.

I think we’ve now covered a wide range of investment choices in this series and it’s about time to wrap it up. Yes, I could go into lots and lots of detail about options, futures, exotic derivatives, currencies, commodities, real estate and so on and so forth (the list is endless), but that would be missing the point, because I don’t intend to buy any of these (yet?). So why bother?

If you really feel like you want to know more about any of the above, leave a comment and I might re-consider…

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