Open-Ended Investment Companies (OEICs)

What is an OEIC?

Instead of buying and selling individual investments yourself, it can be easier and more cost-effective to invest in the markets through an Open-Ended Investment Company (OEIC).

An OEIC is a collective investment scheme, or managed fund, in which the money of many investors is pooled together to purchase investments in a range of different assets, according to the investment policy of the managed fund.

An OEIC can be set up as a single company or as a company with several sub-funds, known as an umbrella scheme. Each sub-fund within the umbrella scheme has its own investment policy and objective.
 

What are the benefits?

There are many advantages to investing in an OEIC rather than directly in the stockmarket:

• Diversification – OEICs can offer greater potential for growth and can help to reduce your investment risk as your money is spread across a range of assets rather than relying on the fortunes of just one. In essence your eggs aren't all in one basket
  
• Expert management – Your investment is managed by a professional fund manager, supported by expert research and market analysts to help you achieve your goals
  
• Economies of scale – When you invest in an OEIC your money is pooled with that of other investors, enabling fund managers to achieve economies of scale when they buy and sell holdings on your behalf
   

There are risks and considerations with investing in OEICs:

• The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.
  
• You need to be comfortable making investment decisions and balancing the level of risk you are willing to take with the potential for growth.
  
• We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.
   

Are OEICs right for me?

This guide explains more about who OEICs are designed for, but please note this is our view and doesn’t take into account your individual circumstances.’  
 

Charges

Our charges vary between the funds that you can invest in, and then by the class of share they might hold.

For each fund, you will pay an ongoing charge (which consists of an annual charge and extraordinary expenses) plus a share of portfolio transaction costs (the costs incurred when funds buy and sell investments). Please see our Fund charges page for more details.
 

Share classes

There are three main share classes to choose from when you invest with M&G. The choice depends on whether you’re investing with or without a financial adviser, and how much you’re investing.

• Sterling Class A Shares are for non-advised customers with up to £499,999 per fund 
• Sterling Class R Shares are for advised customers with up to £499,999 per fund or for total holdings on myM&G up to £249,999 
• Sterling Class I Shares are for customers with over £500,000 per fund or for total holdings on myM&G over £250,000

Income or accumulation?

Once you have chosen your share class, you need to decide how you would like your money to work for you.

You can choose to receive a regular income from your investment and have this paid into your bank account, or you can choose to have any income your investment generates kept within your fund to add to your investment; the latter is known as accumulation. 

• Accumulation shares – keep income within the fund rather than paying it out. Accumulation shares are shown with Accumulation (or Acc) after the fund name. 
• Income shares – If you would prefer to receive an income from your investments, you can choose income shares when you invest. Income shares are shown with Income (or Inc) after the fund name. With income shares the income could be paid monthly, quarterly, six monthly or annually depending on the fund. Receiving an income may affect the return you get back on your investment.