OEIC stands for Open Ended Investment Company. They are professionally managed collective investment schemes that pool your money with other investors. When you invest in an OEIC you buy shares in the company. The total number of these shares changes over time as they are bought and sold. Your money is then combined with other investors' and invested in a selection of stocks, shares and other assets by the fund manager. This is known as the fund's investment portfolio.
Pooling your money with other investors gives the fund manager more buying power to make larger and more diverse investments than you could make on your own. This reduces risk by spreading the money across a variety of different investments. The value of an OEIC fund is linked to the performance of its portfolio: when the value increases, the value of your shares grow too, and the same applies if the value goes down.
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