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Like unit trusts, OEICs provide a mechanism of investing in a broad selection of shares, thus aiming to reduce the risks of investing in individual shares. Therefore, you have an opportunity to share in the growth potential of stock market investment. However, do remember that your capital is not secured and your income is not guaranteed.

You have access to your investment when required, although you should regard investing in an OEIC as a medium to long term investment (around 5-10 years). You may invest by lump sum and / or by regular monthly payments. Through the OEIC structure there is the flexibility to switch easily between the investment funds provided by your OEIC manager.

Do remember that the value of your fund(s) and any income you choose to take depends on the performance of investments in that fund. Where a fund invests overseas, exchange rate changes may also cause the value of your fund to fluctuate.

OEIC shares are bought and sold at a single price. All charges, such as the initial charge, are shown separately, making it easier to understand exactly what costs are involved. Like unit trusts, the initial charge you face on OEICs will be detailed in management group literature and in a Key Features document. It can sometimes be as much as 6%.

So for each £100 initially invested, with an initial charge of 6%, only £94 is actually put into the fund. Obviously the lower the initial charge, the greater the proportion of your initial investment that will be actually invested. Equity funds tend to have the most expensive initial charge at 5%-6% and Index Trackers and Money Market funds the lowest at 0%-1%. Additionally, there is an annual management charge, which is typically 1-1.5%.

Funds with low or no initial charges may have a penalty exit fee for short term investors. This is to encourage people to keep their investment in the fund; the charges decrease the longer the time invested. Most funds have different charges for each share class.