Investing without buying shares

whambamboo

Working in the City, I have found that I have to get prior approval to buy or sell any of:

Shares
Debt securities (Bonds, Debentures, gilts, etc.)
Warrants
Options, futures, CFDs, Depository Receipts

This is not a big pain, but will take a couple of days probably any time I want to do something. I'm also banned from selling any share inside a month.

I also need to send a copy of any transactions to the bank.

I can invest freely in 'Authorised Unit Trusts' and Open Ended Investment Companies

I guess under these circumstances I have to steer clear of any investment trusts (as I assume these are just classed as shares), as the hassle of having to get everything approved for regular investment would be too much.

Is it worth looking at OEICs? Do they have any advantages over Unit Trusts?

dunstonh

as I assume these are just classed as shares

Packaged ITs are not but otherwise yes.

Is it worth looking at OEICs? Do they have any advantages over Unit Trusts?

In simple terms OEICs are the replacement to unit trusts. The biggest difference is that they are single priced. Most unit trusts are moving over to OEICs. When investing, you wouldnt give a second thought to whether its an OEIC or a UT most of the time and most consider them as being the same. When people say unit trusts it is a given that you are also referring to OEICs.

whambamboo

dunstonh wrote:

Packaged ITs are not but otherwise yes.

How would you package it?

Is this a useful option for me?

dunstonh

How would you package it?

I dont package them. Some providers do. Those that are packaged are treated as plans and not as shares.

Is this a useful option for me?

Dont know. I know nothing about you and what you want from your money. The UK has about 13 tax wrappers for investments. Which will be right for you will depend on your circumstances.

OEICS/UT funds are simple to understand and easiest to research. You can also place OEIC/UT funds into some of those tax wrappers as well as holding them directly (i.e. ISA, pension, investment bond). If you are going to go DIY, then UT/OEIC is probably the best place to start the research. With over 5000 active funds out there, there should be enough to suit your requirements.

Chrismaths

dh means packaged as in the sense of wrapped in an ISA. For instance Baillie Gifford do an Investment trust ISA. I'm subject to similar restrictions (although if I buy through head office they are waived - not sure I want them knowing my affairs though!). The restrictions are usually waived for discretionary managed accounts as well (ie where you don't control the account day-to-day). If you compliance dept is any good though (and I wouldn't hold out much hope there), then assuming you are investing in large cap shares, and aren't toying with investments that clients have, they shouldn't have too many problems.

OEIC vs Unit trust makes no difference really, you can treat them as one and the same. The main difference is that unit trusts have a bid offer spread (like a share) where as OEICs usually have a 'swinging' price - so you buy and sell at the same price, and that price is affected by how many people are buying and selling the fund on that day. I personally prefer OEICs marginally, but it never enters into my mind when choosing a fund.

whambamboo

Chrismaths wrote:

dh means packaged as in the sense of wrapped in an ISA. For instance Baillie Gifford do an Investment trust ISA. I'm subject to similar restrictions (although if I buy through head office they are waived - not sure I want them knowing my affairs though!).

Still need clarifying. When you say wrapped, do you mean, a self-traded ISA where you can buy and sell inside the ISA? Or is it something where the ISA contains trusts chosen by Baillie Gifford????

Chrismaths

Kind of. A Baillie Gifford ISA will only allow you to buy ITs managed by BG (of which there are many). You can chose the proportions, but it is not "self-select". More details here.

A packaged product is basically an FSA term for what an IFA is allowed to advise on - IFAs on the whole can't advise on individual shares, and often they don't touch ETFs or Investment trusts (although coincidentally these don't pay commission). So a packaged product would include pensions, life assurance, ISA plans (where investment trusts come in), Unit Trusts and the like. A non packaged product would include shares, direct investment trusts, gilts, corporate bonds, etc etc...

If you are doing it yourself, and you don't want to be bothered with compliance monitoring, then don't bother with Investment trusts, the hassle will probably outweigh the benefits. Stick to UTs/OEICs and their offshore equivalents, SICAVs.