Collective Investments – ISAs, Unit Trusts, OEICS Investment Trusts
All of these vehicles allow you to invest in a diversified, professionally managed manner and whilst there are various differences they share characteristics that benefit the private investor. We can use them to assist you in building a portfolio appropriate to your investment objectives, tax position and attitude to risk.
Pooling Of Investor Funds
Investment into real assets such as shares and commercial property has produced greater returns than cash over virtually all long term periods. However, holding all of your money in a small number of shares can be risky and can lead to capital loss and volatility. Collective investments pool the cash of many investors into one fund a 'pooled fund' which allows broader spread, reduces risk and keeps costs down.
Expert Investment Management
Good investment management requires a review of investment holdings, decisions regarding acquisitions and sales together with close scrutiny of the economic environment. Most private investors lack the time, knowledge and motivation to fulfil this function so collective investments will employ professional managers on their behalf.
Reduced Administration
Anyone with a portfolio of shares knows that the administration generated by dividend payments, disposals and Capital Gains Tax calculations can be burdensome. Some people welcome this 'second job' but for many a simple life is appealing. A collective investment fund manager may buy and sell shares, receive dividends etc. without generating paperwork or a Capital Gains Tax liability for the investor. The collective investment may hold 100 shares but the investor will only ever receive paperwork relating to the fund as a whole.
Unit Trusts and OEICs
Unit trusts are a popular investment vehicle today and are 'open-ended collective investments'. There are many unit trusts to choose from across a wide range of investment sectors and managed in a variety of styles including actively or passively.
Open-ended investment companies (OEIC) are the modern day and flexible equivalent of the unit trust and combine elements of unit trusts and Investment trusts.
OEICS have a single price for buyers and sellers and the charges are shown separately. A unit trust has a separate buying and selling price (bid/offer spread). The OEIC share price directly reflects the underlying assets of the portfolio.
Investment Trusts
Investment trusts are the oldest form of collective investment fund and were originally intended to allow the public to share in the profits from Great Britain's overseas trade. Most investment trusts will have a particular investment strategy and may offer investment that is diversified across a range of geographical markets or they may specialise in a particular area.
An investment trust is simply a company that has been set up to invest in the shares of other companies. By buying shares in an investment company, the investor is spreading the risk that would normally by associated with a single share investment.
Investment trust shares may not reflect the value of the underlying shares according to the demand for the investment trust shares. Sometimes the investment trust shares will trade at a value less than the Net Asset Value (NAV) of the underlying investments. The trust is then said to be trading at a discount.
Investment trusts are allowed to borrow money to invest. This gearing means that stock market movements may be accentuated when compared to a similarly invested unit trust.
From a tax perspective, investing in investment trusts is treated the same as investing in shares.
An investment trust will have a board in the same manner as any other company and may manage the investment selection themselves or appoint an external manager.
Using Your Individual Savings Accounts (ISA) Allowances
ISAs allow you to create a substantial portfolio of assets that grow outside of the Capital Gains Tax regime and most Income Tax. In tax year 2021/22 you may invest up to £20,000 into a collective investment such as a unit trust or OEIC and escape future Capital Gains Tax and most tax on income generated.
ISAs are available to UK residents over 16 years of age (although investment in stocks and shares is only open to those over 18 years of age) and of particular benefit to those wishing to invest for long term growth. The ability for a couple to annually remove £40,000 from the Capital Gains Tax regime is potent.
You can invest into a number of components in ISAs. A cash ISA is effectively a tax free deposit account whilst a stocks and shares ISA may include collective investments such as shares and bonds.
We can help you select investments that are appropriate to your investment objectives and attitude to risk and identify the best managers. ISA portfolios should be regularly reviewed especially in view of the ability to transfer money from the cash element into stocks and shares.
Assets Financial Services has many years’ experience of providing independent financial advice regarding investment for people in Brighton and Hove, Sussex, London, Reading, Croydon and the South East.
If you would like a 'no obligation' chat about the choices available to you please contact us.
The value of investments can fall as well as rise and you may get back less than the amount invested.
Pooling Of Investor Funds
Investment into real assets such as shares and commercial property has produced greater returns than cash over virtually all long term periods. However, holding all of your money in a small number of shares can be risky and can lead to capital loss and volatility. Collective investments pool the cash of many investors into one fund a 'pooled fund' which allows broader spread, reduces risk and keeps costs down.
Expert Investment Management
Good investment management requires a review of investment holdings, decisions regarding acquisitions and sales together with close scrutiny of the economic environment. Most private investors lack the time, knowledge and motivation to fulfil this function so collective investments will employ professional managers on their behalf.
Reduced Administration
Anyone with a portfolio of shares knows that the administration generated by dividend payments, disposals and Capital Gains Tax calculations can be burdensome. Some people welcome this 'second job' but for many a simple life is appealing. A collective investment fund manager may buy and sell shares, receive dividends etc. without generating paperwork or a Capital Gains Tax liability for the investor. The collective investment may hold 100 shares but the investor will only ever receive paperwork relating to the fund as a whole.
Unit Trusts and OEICs
Unit trusts are a popular investment vehicle today and are 'open-ended collective investments'. There are many unit trusts to choose from across a wide range of investment sectors and managed in a variety of styles including actively or passively.
Open-ended investment companies (OEIC) are the modern day and flexible equivalent of the unit trust and combine elements of unit trusts and Investment trusts.
OEICS have a single price for buyers and sellers and the charges are shown separately. A unit trust has a separate buying and selling price (bid/offer spread). The OEIC share price directly reflects the underlying assets of the portfolio.
Investment Trusts
Investment trusts are the oldest form of collective investment fund and were originally intended to allow the public to share in the profits from Great Britain's overseas trade. Most investment trusts will have a particular investment strategy and may offer investment that is diversified across a range of geographical markets or they may specialise in a particular area.
An investment trust is simply a company that has been set up to invest in the shares of other companies. By buying shares in an investment company, the investor is spreading the risk that would normally by associated with a single share investment.
Investment trust shares may not reflect the value of the underlying shares according to the demand for the investment trust shares. Sometimes the investment trust shares will trade at a value less than the Net Asset Value (NAV) of the underlying investments. The trust is then said to be trading at a discount.
Investment trusts are allowed to borrow money to invest. This gearing means that stock market movements may be accentuated when compared to a similarly invested unit trust.
From a tax perspective, investing in investment trusts is treated the same as investing in shares.
An investment trust will have a board in the same manner as any other company and may manage the investment selection themselves or appoint an external manager.
Using Your Individual Savings Accounts (ISA) Allowances
ISAs allow you to create a substantial portfolio of assets that grow outside of the Capital Gains Tax regime and most Income Tax. In tax year 2021/22 you may invest up to £20,000 into a collective investment such as a unit trust or OEIC and escape future Capital Gains Tax and most tax on income generated.
ISAs are available to UK residents over 16 years of age (although investment in stocks and shares is only open to those over 18 years of age) and of particular benefit to those wishing to invest for long term growth. The ability for a couple to annually remove £40,000 from the Capital Gains Tax regime is potent.
You can invest into a number of components in ISAs. A cash ISA is effectively a tax free deposit account whilst a stocks and shares ISA may include collective investments such as shares and bonds.
We can help you select investments that are appropriate to your investment objectives and attitude to risk and identify the best managers. ISA portfolios should be regularly reviewed especially in view of the ability to transfer money from the cash element into stocks and shares.
Assets Financial Services has many years’ experience of providing independent financial advice regarding investment for people in Brighton and Hove, Sussex, London, Reading, Croydon and the South East.
If you would like a 'no obligation' chat about the choices available to you please contact us.
The value of investments can fall as well as rise and you may get back less than the amount invested.