Open Ended Investment Companies (OEICs) are a staple in UK and European wealth management, but their relevance for Australian investors is growing as cross-border investing becomes easier and more regulated. With 2025 bringing fresh financial policy updates and a maturing appetite for global diversification, it’s time to unpack what OEICs are, how they work, and why Aussies might want to pay attention.
What is an Open Ended Investment Company (OEIC)?
At its core, an OEIC is a type of managed fund that pools investors’ money to invest in a diversified portfolio of assets—usually shares, bonds, or property. Unlike closed-end funds (which have a fixed number of shares traded on an exchange), OEICs are ‘open-ended’, meaning they create or cancel shares based on investor demand. This keeps the share price closely aligned with the underlying net asset value (NAV).
- Flexibility: Investors can buy or sell shares at any time at a price set by the NAV.
- Diversification: OEICs typically invest across a wide range of assets, reducing risk compared to buying individual shares.
- Professional management: Fund managers make decisions on behalf of investors, aiming to meet the fund’s stated objectives.
OEICs are regulated in the UK by the Financial Conduct Authority (FCA), but many are available to international investors, including Australians, often through platforms or as part of international portfolio services.
Why Should Australians Care About OEICs?
Historically, OEICs haven’t been a household name in Australia, where unit trusts and listed investment companies (LICs) are more familiar. However, 2025 is seeing a surge in interest for several reasons:
- Global diversification: With local markets facing volatility and property cooling off, many Australians are looking to international managed funds for stability and new growth opportunities.
- Regulatory alignment: Australia’s new Financial Services Regulatory Modernisation Act 2025 has streamlined cross-border investment, making it easier (and safer) for Australians to access foreign funds like OEICs.
- Tax efficiency: OEICs may offer tax advantages when held through compliant international platforms or SMSFs, thanks to recent updates to the Double Taxation Agreement between Australia and the UK.
For example, a Sydney-based investor using a global investment platform can now access a UK equity OEIC without the administrative headaches that once plagued international fund investing. The 2025 regulatory reforms have reduced paperwork and clarified tax reporting, making it more practical for everyday Australians.
Benefits and Risks of Investing in OEICs
OEICs offer some unique benefits, but they aren’t for everyone. Here’s what to consider:
Benefits
- Liquidity: You can redeem shares on any dealing day at the fund’s NAV, avoiding the price discounts/premiums often seen with closed-end funds.
- Choice: OEICs cover nearly every asset class and investment style—growth, income, ESG, and more.
- Transparency: Regular reporting and strict FCA regulation provide a high level of investor protection.
Risks
- Currency risk: Investing in overseas OEICs exposes Australians to exchange rate fluctuations, which can amplify gains or losses.
- Regulatory risk: While the 2025 reforms have made things smoother, cross-border investments still carry the risk of future policy changes or tax complications.
- Fees: OEICs may have management fees and platform charges, so it’s vital to compare costs with local alternatives.
One 2025 example: Several Australian expats in London have been using OEICs to build globally diversified portfolios, taking advantage of their flexibility and simplicity compared to local managed funds. However, expats returning home need to be aware of how these investments are treated under Australian tax law, especially after the ATO’s updated guidance in March 2025.
How to Access OEICs as an Australian Investor
OEICs can be accessed in a few ways:
- Through international investment platforms that offer access to UK and European funds.
- Via Australian wealth managers or financial advisers with global capabilities.
- As part of SMSF international diversification strategies—though compliance with ATO rules is essential.
It’s worth noting that some OEICs are available in ‘feeder fund’ format via Australian-domiciled managed funds, providing a local wrapper for global assets. This can simplify tax and reporting but may add an extra layer of fees.
2025 Policy and Regulatory Updates
This year, the Australian Treasury and UK HM Treasury have issued joint guidance on ‘passporting’ managed funds, making it easier for compliant OEICs to be offered to Australian investors. The main points:
- OEICs must meet both FCA and ASIC disclosure standards when marketed in Australia.
- Australian investors benefit from clearer dispute resolution and compensation mechanisms, thanks to new cross-border agreements.
- The ATO’s 2025 ruling clarifies how income and capital gains from OEICs are taxed, reducing the risk of double taxation.
These changes mean OEICs are now a viable—and potentially attractive—option for Australians looking to broaden their investment horizons.
Conclusion: Are OEICs Right for You?
Open Ended Investment Companies offer Australian investors new ways to diversify internationally, with improved access and regulatory protections in 2025. However, they come with their own set of considerations—currency risk, compliance, and fees among them. As the global investing landscape continues to evolve, OEICs are worth a closer look for anyone seeking a broader, professionally managed portfolio.
