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An ICVC or Investment Company with Variable Capital is a type of open ended collective investment formed as a corporation under the Open-Ended Investment Companies Regulations of the United Kingdom. As an open-ended company the manager must create shares when money is invested and redeem shares as requested by shareholders. In the United States, a similar legal entity is called an open-ended mutual fund, or simply a mutual fund.

ICVCs are also known as Open-Ended Investment Companies or OEICs from the regulations that formed them; the terms are used interchangeably. In the UK ICVCs are the prevalent form of new open-ended investment.

• A board of directors usually headed by the Authorised Corporate Director (ACD) - An ACD is a FSA authorised firm that assumes full control of the board. The board's responsibilities include: dealing with the day to day operation of the company, managing the company's investments, buying and selling the ICVC's shares on demand, and ensuring accurate pricing of shares at net asset value.
• Depositary - The depositary is a firm (usually a bank) authorised by the FSA, independent of the ICVC and of the directors of the ICVC. The depositary has legal title to the ICVC investments and is responsible for their safe custody. The depositary can appoint sub-custodians to take custody of the assets but will remain ultimately responsible. The depositary has responsibility for ensuring compliance with the key regulatory requirements.
• The shareholders have the rights to the ICVC's assets.

Unlike a unit trust, an ICVC can act as an umbrella scheme holding various sub-funds each with their own investment goals. For example one ICVC may hold a subfund investing called UK Smaller Companies and another subfund called UK Equity Income. Each subfund has its own investment aims and is held separately from other subfunds within the same ICVC. This has some cost savings for the investment manager.

ICVCs are open-ended; the fund is equitably divided into shares which vary in price in direct proportion to the variation in value of the fund's net asset value. Each time money is invested new shares are created to match the prevailing share price; each time shares are redeemed the assets sold match the prevailing share price. In this way there is no supply or demand created for shares and they remain a direct reflection of the underlying assets.

First introduced via the Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996, which were made on 11 November 1996 and came into force on 6 January 1997. These regulations were enacted under provisions of the European Communities Act 1972 therefore were known as the ECA Regulations.

The SIB regulations, the Financial Services (Open-Ended Investment Companies) Regulations 1997 were approved by the SIB Board on 16 January 1997 and came into effect as from that date.

These regulations only allow investment in transferable securities (eg. listed securities, other collective investment schemes or certificates of deposit). This ensured that ICVCs fell within the scope of the UCITS directive (Undertakings for Collective Investment in Transferable Securities). (Source HM Treasury Archive)

With the advent of the a single regulator: the FSA the previous regulations were replaced by the Open-Ended Investment Companies Regulations 2001 made under Section 262 of the Financial Services and Markets Act 2000. These changes brought the formation of ICVCs under control of the FSA and removed the automatic inclusion of an ICVC under the UCITs directive allowing scope for non-UCITS investments (eg. money market funds, property funds and funds of funds). The changes ensure a level playing field for unit trusts and ICVCs. (Source: HM Treasury)

• Collective investment schemes
• Unit trusts
• Investment trusts

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