Open-Ended Investment Company, Investment Platform of the Future

- 07 January 2022 08:00 WIB
OEIC, a corporate investment fund with an adjustable capacity. (Unsplash/Mathieu Stern)
OEIC, a corporate investment fund with an adjustable capacity. (Unsplash/Mathieu Stern)

JAKARTADAILY.ID - An open-ended investment company, or OEIC, is an investment platform organized to invest in stocks and other assets and is based in the United Kingdom.

The fund's underlying assets determine the value of the company's shares, which are listed on the London Stock Exchange (LSE). These funds can combine several investing strategies, such as income and growth, as well as small-cap and large-cap, and can modify their investment requirements and fund size on a regular basis.

Since they can produce additional shares to suit investor demand, OEICs are referred to as "open-ended." Investors who leave the fund will have their shares canceled.

An open-ended investment firm gathers money from investors and invests it in a variety of assets, such as stocks or fixed-income securities. This diversification reduces the risk of an investor losing their money. OEIC funds can provide both growth and income. They are typically held for five to ten years or longer as a medium to long-term investment.

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In 2021, investors started to pay an initial charge of 0 percent to 5 percent when purchasing new shares. This form of front-end load reduces the quantity of money moving into the fund to buy shares. An annual management charge (AMC) of roughly 1 percent to 1.5 percent of the value of an investor's shares is also charged.

The fund managers' services are covered by the AMC. Fees are substantially lower in non-actively managed funds, such as index trackers.

The total expenditure ratio (TER), or ongoing charges number, is used by most funds (OCF). The AMC and other fees necessary to compare different items are included in each payment. The TER and OCF do not include dealer fees, which can add significantly to annual expenditures if the fund has a high turnover rate.

Investors who do not have the time, motivation, or skill to manage their investments actively can benefit from OEICs. Depending on the fund, investors can make a single contribution or make monthly payments with a minimum quantity. In addition, getting money online or over the phone is usually simple.

Editor: Mukhtar Wijaya

Source: Investopedia


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