An open-ended investment company is a type of investment fund domiciled in the United Kingdom that is structured to invest in stocks and other securities. The company's shares list on the London Stock Exchange and the price of the shares are based largely on the underlying assets of the fund. These funds can mix different types of investment strategies such as income and growth, and small cap and large cap, and can constantly adjust their investment criteria and fund size.
OEICs are called open-ended because they can create new shares to meet investor demand. Also, the fund will cancel shares of investors who exit the fund.
An open-ended investment company pools investors’ money and spreads it across a wide range of investments, such as equities or fixed-interest securities. This diversification helps reduce the risk of losing an investor’s principal. OEIC funds offer the potential for growth or income. They usually function as a medium to long-term investment, held for five to 10 years or longer.