We take a look at how to make sure you invest in the OEIC that will earn you the best returns for your hard earned money.
Picking the best performing OEIC to invest in can be the difference between growing your nest-egg and never really seeing it get off the ground.
However, while they are often talked of as a relatively secure way of investing you still need to make sure that your money will earn the best return possible.
In order to compare the best performing OEICs, you need to understand how they earn you money:
How do OEICs pay investors?
When you invest in an OEIC your money is pooled with other investors' into a single fund. The OEIC manager then invests the fund according to the OEIC’s investment strategy to try and grow its overall value.
If successful this would see your individual OEIC shares rising in value, this is known as capital growth.
The investments a fund makes can also pay dividends or a fixed yield. These profits are shared equally among an OEIC’s investors according to your shares in the fund, called distributions.
By comparing the capital growth as well as the distributions paid to investors, you can build a picture of which have been the best performing OEICs and funds in recent years, although doing so is by no means a guarantee of similar success in years to come.
Getting the best OEIC prices
Although their status as long term investments (typically around 5-10 years) mitigates the effect of OEIC prices somewhat, you should still consider OEIC fund prices when picking your investment.
Even funds boasting the best OEIC performance can be undermined by their high share prices – making them expensive to invest with. Plus, you could be priced out of buying into some funds by a high minimum or monthly investment.
The way you invest can also dictate the impact current OEIC prices have on your decision. For example, investing a lump sum when share prices are high would buy fewer shares, so you’d be better off investing month by month if the fund allows.
On the other hand, if fund prices are temporarily low a large initial deposit would buy you a greater number of shares and thereby maximise your potential for profit.
If you are free to invest upfront or on a monthly basis you will have greater freedom when comparing high performing OEICs, however, if it is a case of one or the other then an OEIC's current price may have a greater influence over your decision.
How to choose the best OEIC fund
You need to consider a range of factors beyond a fund’s current or recent performance to determine which is the best investment for your hard earned cash, including the risk you’re prepared to take on and the markets an OEIC invests in.
Utilise your own knowledge as well as that of financial experts to choose which OEIC you invest in. Choosing the best performing fund in an up-and-coming market could offer greater profits than plumping for OEIC fund performance in an established industry.
However, emerging markets are inherently more risky and as with all investments you could lose you could lose up to or all of your original deposit.
Picking the best OEIC fund for you will involve weighing up the level of risk you are willing to take on, the market you want to invest in, and the matching the account fees with the way you want to invest.
Once you have prioritised these factors you can use our OEIC performance comparison table to compare the best performing OEICs and find the right fund for your money.