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Open Ended Investment Company (OEIC) Definition & Example

An open-ended investment company, in short, is known as OEIC, which is pronounced as 'oik' (/ɔɪk/).

Investment Company with Variable Capital (ICVC)

An open-ended investment company is also sometimes known as an "investment company with variable capital" (ICVC).

OEICs were developed to be similar to European SICAVs (société d'investissement à capital variable) and open-ended mutual fund in the United States.


What is an OEIC?

An OEIC is a collective investment vehicle established as a company and regulated by the Financial Conduct Authority (FCA) in the United Kingdom.

In order to promote participation in OEICs, one has to be an authorised person resident or incorporated in the UK.

An OEIC is designed to allow individual and institutional investors to invest in a well-diversified and a professionally managed portfolio of pooled investor funds that invests in different equities, bonds, and other securities, in a relatively cost-effective and tax-efficient manner.

Here, investors can freely purchase and sell shares of the OEIC and the value of the shares owned reflects the net asset value of the underlying assets.

Investors own shares in the OEIC and the OEIC continually issues and redeem shares according to investor demand.

Example

J.P.Morgan OEIC Fund Range offers an extensive range of UK-domiciled OEIC funds, providing UK investors with a diverse choice of growth and income opportunities - across asset classes, regions and sectors.

Definition of Open Ended Investment Company

An “open-ended investment company” is defined in Section 236 of the Financial Services and Markets Act, 2000. An Act of Parliament of the United Kingdom (UK).


Taxation

An open-ended investment company must either distribute or accumulate the whole of its distributable income for a particular distribution period, either as dividend income or as interest.

OEICs are exempt from UK tax on its capital gains. Though they will have to pay 20% tax on their income; however, onward payments to investors are made with this 20% being netted off as basic rate tax relief.

OEICs are subject to stamp duty reserve tax of 0.5% and this also applies to most dealings in the shares of the UK OEIC.

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