At Hamilton we primarily investment in collective investment vehicles. These allow investors to pool money together and access a diversified portfolio of assets.
While they all share this core idea, their structures, mechanics, and histories differ in important ways.
1. OEICs (Open-Ended Investment Companies)
Structure & Mechanics
A UK-registered company with a fund manager appointed to run it.
Investors buy shares directly from the fund, priced at the Net Asset Value (NAV) once a day.
“Open-ended” means the number of shares can expand or contract depending on demand.
Money flows in → fund issues new shares and invests it.
Money flows out → fund cancels shares and sells investments to repay investors.
History & Evolution
Introduced in 1997 to align the UK market with European structures like SICAVs.
Designed to simplify the older unit trust model.
Quickly became the default for new UK retail funds.
Current Trends
Still widely used for active strategies, including equity, bond, and multi-asset funds.
Facing competitive pressure from low-cost passive funds and ETFs.
Some providers consolidating ranges to reduce duplication and costs.
 "Understanding Collective Investment Vehicles | Hamilton Financial")
2. Investment Trusts
Structure & Mechanics
A public limited company listed on the London Stock Exchange.
Investors buy and sell shares on the exchange, not directly from the trust.
“Closed-ended”: fixed number of shares, which trade based on supply and demand.
Can borrow money (gearing) to boost returns, but this increases risk.
Share price can be higher (premium) or lower (discount) than the Net Asset Value (NAV).
History & Evolution
Originated in the UK in 1868 with the Foreign & Colonial Investment Trust.
Gave small investors access to diversified global portfolios.
Long history of specialist expertise, e.g. in emerging markets or infrastructure.
Current Trends
Out of favour recently due to higher interest rates, widening discounts, and lower retail demand.
Some trusts have merged or wound down as the sector is consolidating.
Remains strong in specialist areas where closed-ended capital is an advantage.
3. ETFs (Exchange-Traded Funds)
Structure & Mechanics
A fund listed on a stock exchange, traded like a share throughout the day.
Most ETFs are open-ended, using a “creation/redemption” process with authorised participants (big banks or brokers) to keep prices aligned with NAV.
Typically track an index, using physical replication (buying the actual securities) or synthetic replication (using derivatives).
Very transparent — holdings usually published daily.
History & Evolution
First launched in the US in the early 1990s (SPDR S&P 500 in 1993).
Spread globally, quickly becoming popular due to low cost and efficiency.
Originally they were simple passive tracker funds.
Current Trends
Now evolving rapidly:
Thematic ETFs (AI, clean energy, robotics, healthcare).
Income ETFs (targeting dividends or high yield).
Active ETFs, combining the liquidity of ETFs with fund manager skill.
ESG ETFs, reflecting demand for responsible investing.
ETFs are now the fastest-growing segment of the fund industry.
 "Understanding Collective Investment Vehicles | Hamilton Financial")
4. Unit Trusts
Structure & Mechanics
A trust rather than a company, investors own “units” in the trust.
Open-ended like OEICs: units are created or cancelled based on demand.
Historically used dual pricing: a buying price (offer) and a selling price (bid).
Valued daily at NAV, though now simpler and more OEIC-like.
History & Evolution
First appeared in the UK in the 1930s, becoming the dominant retail fund structure.
Overtaken by OEICs from the late 1990s onwards, partly due to simpler single pricing.
Current Trends
Declining in use with many converted into OEICs.
New launches are rare; mainly legacy holdings remain.
5. Other Collective Vehicles
Hedge Funds
Structure: Usually limited partnerships; investors commit capital to a fund managed by a general partner.
Mechanics: Use leverage, derivatives, and short selling. Often charge “2 and 20” fees (2% annual, 20% performance).
Evolution: From niche in the 1950s to a $3 trillion+ global industry.
Trend: Institutions dominate; retail largely excluded due to risk and regulation.
Private Equity Funds
Structure: Closed-ended limited partnerships with long lock-in periods (often 10 years).
Mechanics: Invest in private companies, improve them, then sell. Capital is “called” over time.
Evolution: Grew rapidly from the 1980s.
Trend: Increasing retail access via listed private equity trusts.
Property Funds
Structure: Can be open-ended or closed-ended.
Mechanics: Hold direct real estate assets, which are hard to sell quickly.
Evolution: Open-ended property funds faced liquidity crises (Brexit 2016, COVID-19 2020).
Trend: Shift towards closed-ended investment trust models to avoid liquidity mismatch.
Fund-of-Funds / Multi-Manager
Structure: A fund that invests in other funds.
Mechanics: Provides diversification across managers, styles, and asset classes.
Evolution: Popular in the 2000s as an outsourcing solution.
Trend: Less fashionable today due to higher costs compared with building low-cost ETF portfolios.
Comparative Snapshot
Vehicle
Structure
Open/Closed
Mechanics in Practice
Current Dynamics
OEIC
UK company
Open-ended
Issues/cancels shares daily at NAV
Active strategies, pressure from ETFs
Investment Trust
Listed company
Closed
Fixed shares, traded on exchange, can use gearing
Out of favour, consolidation, but specialist strength
ETF
Listed fund
Open-ended
Creation/redemption keeps price near NAV
Fast growth, active & thematic innovations
Unit Trust
Trust structure
Open-ended
Units priced daily, historically dual pricing
Declining, converted into OEICs
Hedge Fund
Partnership
Closed
Complex strategies, high fees, lock-ins
Institutional focus, retail largely excluded
Private Equity Fund
Partnership
Closed
Invests in private firms, long-term capital calls
Growing via listed vehicles, still niche
Property Fund
Fund/Trust
Both
Real estate holdings, liquidity mismatch issues
Trend towards closed-ended
 "Understanding Collective Investment Vehicles | Hamilton Financial")
Hamilton Summary
The mechanics of each vehicle shape its strengths and weaknesses.
OEICs and unit trusts allow easy access, but must sell assets if investors withdraw.
Investment trusts and private equity funds benefit from permanent capital but may trade at a discount.
ETFs combine liquidity, transparency, and low cost and are now the most innovative segment.
The industry continues to evolve:
Investment trusts consolidating under pressure.
ETFs branching into active, thematic, and sustainable strategies.
OEICs still central to retail investing, but adapting to a more competitive world.
