Beginners’ Guides

Beginners’ guide to Investments

Other Types of Investments

You should consider contacting a financial adviser to help choose the most appropriate investment for your situation.

Unit Trusts and Open Ended Investment Companies (OEICs) While the underlying structure of these two types of investments differ, for us as the investor they operate in the same way.

Both pool your money with other peoples’ to invest in:

a spread of shares or bonds,
or other investments,
or a combination depending on their investment objectives.

You can buy and sell ‘units’ or ‘shares’ respectively at any time, and the price you receive is based on the value of the underlying assets the fund has invested in.

Investment Trusts

Investment Trusts are like unit trusts and OEICs. When you invest in an investment trust your money is pooled with other people’s to invest in a wide spread of assets.

But an investment trust is a company that’s traded on the stock exchange with a fixed number of shares of its own. This means that, unlike the other pooled investments, the price you pay reflects the market demand for the investment trust shares rather than the value of the underlying assets.

So sometimes you’ll buy at a ‘premium’ to the asset value or in other words pay more than the underlying value. Other times you’ll buy at a ‘discount’ or in other words pay less than the underlying value.

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