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Open ended investment Companies (OEICs) are a type of collective
investment. They were introduced in the UK in 1998. They qualify
as European collective investments under the Undertaking for Collective
Investments in Transferable Securities (UCITS).
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OEICs are open ended. Originally OEICs could not invest in property
or derivatives but as a result of the Financial Services and Markets
Act they can now do so.
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OEICs are established as limited liability companies in which investors
buy shares quoted on the stock market. OEICs are governed by corporate
law and have a board of directors. Each OEIC must have an authorised
corporate director (ACD) and a depository who is independent of
the ACD.
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OEICs have a single pricing structure. The initial selling costs
include a separate change. A "dilution levy" may be imposed
when market demand is very high or low. This levy is added to the
single price at purchase or deducted from redemption proceeds.
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An OEIC can provide different classes of shares and can be denominated
in different currencies. The tax treatment of OEICs is the same
as unit trusts and investment trusts.
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Many unit trusts have converted to OEICs.