Answers · UK 2025/26
What is the difference between an OEIC and a unit trust?
Both OEICs (open-ended investment companies) and unit trusts pool investors' money into a single fund investing in shares, bonds or other assets, and both are priced daily and can be bought or sold at any time. The main practical difference is their legal structure — an OEIC is a company issuing shares, while a unit trust is a trust issuing units — but for most everyday investors the tax treatment and investing experience are almost identical.
Full answer
OEICs and unit trusts are both types of open-ended collective investment funds, meaning the fund grows or shrinks in size as investors buy in or sell out (unlike a closed-ended investment trust, which has a fixed number of shares traded on the stock market instead). Both structures pool money from many investors to buy a diversified portfolio of assets — shares, bonds, property or a mix — managed by a professional fund manager according to a stated investment objective, and both are priced once a day (rather than continuously, like listed shares or investment trusts), with investors buying and selling at that day's single price. The main difference is legal and administrative: an OEIC is structured as a company, and when you invest you buy shares in that company, while a unit trust is structured as a trust, and when you invest you buy units representing a share of the trust's underlying assets, with a trustee (usually a separate institution) overseeing the fund on behalf of unit holders. Historically, unit trusts were more common in the UK, but OEICs have become the dominant structure for newly launched funds since the late 1990s because the OEIC structure is more consistent with fund structures used across the rest of Europe, simplifying cross-border fund administration, though a number of long-running unit trusts continue to exist. For virtually all everyday investors buying funds through an ISA, SIPP or general investment account via a platform, the distinction between an OEIC and a unit trust makes little practical difference to the investing experience, cost, or tax treatment — both are subject to the same dividend tax, savings interest tax and Capital Gains Tax rules outside a tax wrapper, and are equally shielded from all three inside an ISA. Fund platforms typically display whether a given fund is structured as an OEIC or unit trust in its factsheet, but investment decisions should focus on the fund's strategy, costs and track record rather than this structural distinction alone.
Try the calculator
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.