OEICs, unit trusts, SICAVs and other fund structures

An OEIC, or open-ended investment company, is a type of pooled investment fund set up as a company¹. You buy shares in the company, the company uses the pooled money to buy a portfolio of investments, and the number of shares in existence rises and falls as people buy and sell. OEICs sit alongside unit trusts as the two main UK structures for open-ended funds: the difference is legal rather than practical, with an OEIC structured as a company and a unit trust structured as a trust¹.

Both are collective investments in the legal sense. The Financial Services and Markets Act 2023 defines a collective scheme investment as including "a share in an authorised open-ended investment company ("OEIC"), a unit in an authorised unit trust scheme, or a unit in an authorised contractual scheme"². That legal status is what brings these funds inside the FCA's authorisation and disclosure rules, which is what produces the documents you are given before you invest and the complaint routes you can use afterwards.

What an OEIC is: a company that exists to hold investments

An OEIC is a company, but not one that makes or sells anything. Its whole purpose is to hold a portfolio of investments on behalf of the people who own shares in it. When you invest in an OEIC you become a shareholder, and the value of your holding moves with the value of the underlying portfolio. HSBC, which runs funds in both structures, explains that "an OEIC is structured as a company, while a unit trust is structured as a trust"¹.

Because it is a company, an OEIC has a board, and the day-to-day investment decisions are delegated to an authorised corporate director, often abbreviated to ACD. The ACD is the FCA-authorised firm that runs the fund: choosing the investments, pricing the shares and dealing with purchases and sales. When you see a fund described as an OEIC, the name on the front is usually the fund manager's brand, and the ACD is the authorised firm behind it responsible to the regulator.

A well-known example of the structure in practice is the Fundsmith Equity Fund, whose factsheet records its fund type as "UK OEIC"⁵. Many of the funds offered by high-street banks, fund managers and investment platforms are OEICs, and many others are unit trusts. From the point of view of what the fund invests in, how it is priced and what it costs, the two structures work in much the same way, which is why they are usually discussed together.

What an OEIC is not, is an investment trust. Investment trusts are also companies, but they are closed-ended: there is a fixed number of shares, and the price is set by trading on the stock market rather than by the fund manager creating shares⁴. The distinction matters when you come to buy and sell, and it is covered below.

How pooled funds work: many investors, one portfolio

The idea behind any pooled fund is simple. Which? describes it plainly: investment funds "pool your money with that of other investors to give you a stake in a tens or hundreds of stocks, bonds, or other types of investments"³. Instead of buying a handful of company shares yourself, you buy one holding that spreads your money across a whole portfolio, chosen and monitored by a professional fund manager.

The pooling does several things at once. It gives you diversification, because a fall in any single holding has a smaller effect on the whole portfolio. It gives you access to markets and instruments that would be expensive or impractical to buy directly. And it hands the stock-picking to a manager whose job is to follow the fund's stated objective, whether that is tracking a market index or actively choosing investments. The trade-off is the cost: fund charges are deducted from the fund, and they are set out in the fund's documents. The ongoing charges figure is the standard way to compare them.

Pooled funds are also the building blocks of most ready-made options. Model portfolios and ready-made funds are typically collections of OEICs, unit trusts and similar structures, chosen to fit a level of risk. If you invest through a robo-adviser or digital investment service, what you usually end up holding is a set of pooled funds in one of these structures.

The structure also determines what happens when things go wrong. Because an OEIC share or a unit trust unit is an authorised collective scheme investment², the fund sits inside the regulatory perimeter: it must be run by an authorised firm, it must produce the disclosure documents described later in this page, and complaints about it can go to the Financial Ombudsman Service.

Unit trusts and OEICs: units or shares, both open-ended

The core similarity is that both structures are open-ended. HSBC states that OEIC and unit trust funds "are both open-ended. This means the fund manager can create more units or shares at any time to meet demand"¹. Which? makes the same point about funds generally: they "are 'open-ended' investments and can issue or redeem units at any time to satisfy investors who want to buy into" them⁶.

The three structures compared: what you hold and whether the fund can expand

The differences sit underneath that similarity:

• Legal form. An OEIC is a company; a unit trust is a trust, with a trustee holding the assets on behalf of unit holders¹.
• What you hold. Shares in an OEIC, units in a unit trust¹.
• Who runs it. An OEIC has an authorised corporate director; a unit trust has a fund manager and a trustee.

Against an investment trust, the contrast is sharper. Investment trusts are "closed-ended, which means there are a fixed number of shares available"⁴. Because the number of shares is fixed, the price you pay depends on supply and demand in the market, not just on the value of the portfolio. With an open-ended fund, the price is calculated from the value of the underlying investments, which is why dealing in OEICs and unit trusts happens at set points in the day rather than instantly on an exchange. How funds are priced and when your deal goes through covers this in detail.

One consequence of the open-ended structure is that a fund cannot run out of shares to sell. When you sell your shares in an OEIC, "those shares will be cancelled, so the number of shares in an OEIC can change"¹. The fund expands when money comes in and contracts when money leaves. A fund can nonetheless close to new investors: the T. Rowe Price (UK) Asian Opportunities Equity fund closed to all purchases on 20 February 2026, with the closure taking effect from 13 April 2026, showing that a fund's openness to new money is a commercial decision as well as a structural one.

Fees differ between the structures, though not always in the direction people expect. HSBC notes that "investment trust fees tend to be lower than those for a unit trust or OEIC"⁴. The fuller comparison, including how investment trusts can borrow against their portfolios, is on the investment trusts and investment trusts vs unit trusts and OEICs pages.

SICAVs and other offshore funds sold in the UK

Many funds sold to UK investors are not UK OEICs or unit trusts at all, but offshore funds, most commonly SICAVs. A SICAV is a societe d'investissement a capital variable, an investment company with variable capital, set up under Luxembourg or Irish law. Like an OEIC it is an open-ended company: it issues and cancels shares as investors buy and sell, and its price is calculated from the underlying portfolio. The difference is where the fund is domiciled and regulated, not how it behaves for you.

Offshore funds are easy to find on UK platforms. Triodos, for example, sells a range of Luxembourg SICAV impact funds to UK investors, and produced new Key Information Documents for several of their share classes in April 2026. Artemis likewise runs a Luxembourg SICAV range, and on 28 April 2026 renamed its Global High Yield Bond fund to Global High Yield Opportunities. These are ordinary events in the life of an offshore fund: the structure stays the same while names, share classes and documents change.

Why the offshore structure exists comes down to how funds are sold across borders. A Luxembourg or Irish fund can be passported for sale in many countries from one domicile, which suits fund managers with international customers. For a UK investor, the practical points are these:

• The fund needs to be recognised for sale in the UK and offered through a UK-regulated platform or broker.
• It must still give you a key information document, described in the next section.
• Its tax treatment can differ from a UK fund, particularly around how gains and income are reported. How investments are taxed covers the general position, and checking whether an offshore fund has reporting status covers the specific question that matters for offshore funds.

A change of manager is also something offshore and onshore funds both go through. From 26 September 2026, the management and administration of the M&S unit trust funds transfers to new firms, with the fund names changing and M&S no longer involved, though customers stay invested in the same funds. When a fund you hold changes manager, name or structure, the fund changes, mergers and closures page explains what to expect.

Reading the risk scale from 1 to 7 in the key information document

Before you invest in a fund, the rules require a short document to be given to you setting out what it does and how risky it is. Which? explains that "the Key Investor Information Document (KIID) and Prospectus will detail how the fund would invest your money and how risky it is", with the risk shown on a scale from 1, not very risky at all, to 7, very risky³.

The scale is a standardised measure, so a 4 means broadly the same thing across funds, which makes comparison possible in a way that marketing language does not. Which? also notes that knowing your own risk appetite makes it easier to pick funds and ETFs, "which have a risk rating scale" of the same kind⁷. The scale is a summary, not a promise: a low number means less variation is expected, not that you cannot lose money, and a fund's actual risk depends on what it holds. Investment risk and your attitude to risk goes into what lies behind the numbers.

Two documents matter here, and their names are easily confused. UCITS funds, the regulated category that includes most OEICs and unit trusts, were required to come with a "key investor information document" (KIID)⁸. Other packaged investment products fall under the PRIIPs regime, under which providers "must publish product information in a 'key information document' (KID) for investors", covering the product's management fees, risk profile and future performance scenarios calculated under a standard methodology⁹.

The two documents differ in one important respect. The KIID "included information about the product's past performance, rather than future performance scenarios"⁹, while the KID looks forward instead. The forward-looking approach has drawn criticism: the House of Commons Library reports that "the methodology for calculating future scenarios for the KID led to them overstating likely future gains"⁹. So a KID's performance scenarios are illustrations produced by a fixed formula, not forecasts, and the Commons Library notes that open-ended funds "have been told they do not have to produce KIDs yet" and continue to produce a KIID in the meantime¹⁰. The fund documents page sets out what each document contains and where to find them.

FCA rules add a further layer for some packaged products sold with advice or guidance: a key features document must include, under a Risks heading, "the material risks associated with the product, including a description of the factors that may have an adverse effect on performance or are material to the decision to invest"¹¹.

Holding OEICs and unit trusts in an ISA

OEICs and unit trusts can be held in the main tax wrappers as well as in ordinary accounts. HSBC notes that "you can hold investment trusts, unit trusts and OEICs inside an ISA to shelter your money from tax up to a certain limit"⁴. The same funds can generally be held in a pension, where the tax treatment is different again, and in investment bonds offered by insurers.

Where you hold a fund affects three things: the tax you pay, the allowances you use, and what happens when you sell. Inside an ISA there is no further income tax or capital gains tax on the fund's returns; in a general investment account, dividends and gains are taxable, with the fund's reporting status mattering for offshore funds. The where to hold investments page compares the options side by side.

The ISA rules themselves apply across Great Britain and Northern Ireland: the government guidance on ISA flexibility applies to England, Northern Ireland and Wales¹². ISA rules are UK-wide in practice, so the nation you live in does not change which funds you can hold or the allowance you get.

One point worth knowing for estate planning: government guidance on valuing shares for inheritance tax lists unit trusts, investment trusts and open-ended investment companies among the listed stocks and shares whose value is established by reference to market prices at the date of death¹³. Where a fund is held, and in whose name, is therefore relevant beyond tax on returns.

How to complain about a fund

If something goes wrong with a fund, an investment platform or the way your account was run, there is a set route to follow, and it is free. The Financial Ombudsman Service's position is that complaints go to the company involved first: "If they don't send you a final response within eight weeks, or you're unhappy with their response, you can complain to us"¹⁴.

The complaint route for a fund or investment account

The ombudsman can look at complaints about the way an investment was run, not just about administration. Its guidance covers cases where a consumer is unhappy "about advice you've received, or the way your adviser or investment company managed your ISA"¹⁴. The same first-then-ombudsman pattern applies to unregulated collective investment schemes, where the ombudsman's starting point is that you make a formal complaint to the company first, and bring it to the ombudsman if there is no final response letter within eight weeks or you are unhappy with the response¹⁵.

What the ombudsman cannot do is compensate you for a fund simply performing badly. Its role is to decide whether a firm did something wrong: mis-sold investments, poor administration, unsuitable advice, misleading information. Does FSCS cover poor investment performance? and mis-sold investments and bad investment advice explain where the line falls.

Complaints about funds and investments are a measurable part of the ombudsman's workload. Its quarterly data for Q3 2025/26 records, among investment categories, 24 new complaints about exchange traded funds¹⁶, alongside larger volumes for other investment products. If your complaint is about a data breach rather than the investment itself, for example if a firm lost your personal information, the route is different: the Information Commissioner's Office handles those, and you complain to the firm first and then to the ICO if you remain dissatisfied.