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

The value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. 

Share classes and charges

We like to keep our charges simple. For private (non-advised) investors there are only two share classes to choose from when you invest.

• Sterling Class A Shares for those investing between £500 and £499,999
• Sterling Class I Shares for investments of £500,000 or more

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 an 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; this is known as accumulation. 

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

Charges

We don’t apply entry or exit charges to investments in M&G funds Sterling Class shares. However, there is an ongoing charge which will vary per fund. The ongoing charge is made up of the Annual Charge which may be discounted depending on the size of the fund, and extraordinary expenses. For property funds, the ongoing charge does not take into account the property operating expenses, also known as PER. For information on all our charges, please refer to our Fund Charges page.

Please read the Important Information for Investors document for more information on share classes, charges and share types.