Britain joins the rest of Europe
Saturday 06 May 1995
"We are offering smaller investors a flexible way of building up their savings," he promised and promptly gave the nation more than 200 pages of draft regulations and comment for open-ended investment companies.
The OEIC (unfortunately pronounced oik) is nothing more complicated than a corporate version of a unit trust and the benefits to the private investor are essentially the same as those of a unit trust. Instead of units, investors will buy and sell shares of a company that may, but not necessarily, be quoted.
The Government is promising the same level of investor protection and the same tax treatment.
The advantages over unit trusts are that Oeics will offer greater flexibility.
At the moment, a unit trust investor must sell the units of one trust and buy the units of another to alter the weighting of a portfolio - an expensive business. The Oeic will act as a corporate umbrella for a number of funds, allowing investors to switch easily (and more cheaply) between them.
Investors will also benefit from single pricing. Oeic shares will be bought and sold at a single price, eliminating the wide bid/offer spread on unit trusts that can cost investors dearly.
A third advantage is that Oeics will have different classes of shares reflecting different charging structures and different funds. Shares sold direct to the public, for example, may have lower charges than those sold through intermediaries.
The disadvantages of Oeics amount to no more than those of unit trusts. The single pricing formula should eventually apply to unit trusts as well but this will not necessarily make for cheaper dealing in either. The Securities and Investments Board is still drafting detailed rules on charges and pricing formula.
Professional fund managers agree that the Treasury proposals will prompt a fundamental shake-up of the British investment industry. The Association of Unit Trusts and Investment Funds reckons most unit trusts will have converted to Oeics within two years.
But the real beneficiaries will be the fund managers. The debate over whether to switch retail investment funds from parochial trust-based vehicles to internationally recognised ones has essentially been a debate about reversing the flow of funds from London to offshore centres.
The Oeic is intended to help UK fund managers compete for overseas investors and it will allow the payment of gross dividends for non-UK residents.The impact on the domestic investor will be limited to the legal structure of the investment vehicle. If an exisiting unit trust wishes to convert to an Oeic, the fund manager will need the agreement of the unit-holders. But no changes will be needed to the underlying fund. Once converted, the new shareholders will also have the right to attend an annual meeting.
Investors' money will be protected by a depository, equivalent to the trustee, who will hold the fund assets on investors' behalf. One of the key issues to be resolved is whether the depositary should be fully independent of the fund manager.
The key difference between a domestic Oeic and the offshore versions of Oeics that already exist is that investors will be protected by the Investors Compensation Scheme.
- 1 Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Kim Kardashian on Bruce Jenner's 'story': 'We support him no matter what, and I think when the time is right, he'll talk'
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village