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Selling funds advice needed
B_Blank
Posts: 1,105 Forumite
When you sell a fund (OEIC or trust fund) what price do you sell it for.
This is important in a time of market volatility. Do I sell at the latest NAV price of the fund (which lags behind its true market value by a day), or does it sell for the NAV price after I send the sell order?
I hope this makes sends. If not let me know and I will clarify.
Advice welcommed. Thanks guys.
This is important in a time of market volatility. Do I sell at the latest NAV price of the fund (which lags behind its true market value by a day), or does it sell for the NAV price after I send the sell order?
I hope this makes sends. If not let me know and I will clarify.
Advice welcommed. Thanks guys.
I am not a financial expert, and the post above is merely my opinion.:j
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Depends on the fund. The only way to get a definitive answer is to read the prospectus that is relevant to the fund.
There are two pricing bases: forward and historic. With the forward basis your transaction will be priced at the NAV calculated at the next valuation point. With historic basis the transaction is priced at the NAV calculated on the previous valuation point.
I think that these days, most funds are priced on a forward basis.Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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Ark_Welder wrote: »Depends on the fund. The only way to get a definitive answer is to read the prospectus that is relevant to the fund.
There are two pricing bases: forward and historic. With the forward basis your transaction will be priced at the NAV calculated at the next valuation point. With historic basis the transaction is priced at the NAV calculated on the previous valuation point.
I think that these days, most funds are priced on a forward basis.
Thanks. Surely that is open to abuse though. Say tomorrow the market opens 10% lower so I decide to sell out. By what you say I would get the forward price which would reflect todays gains in the market?I am not a financial expert, and the post above is merely my opinion.:j0 -
I understand I think. The valuation time of 12pm is going to be accurate. So if you order a sell then you basically are hoping the market doesnt collapse before you gegt to sell them at 12pm the next day.
So if I sell now, I am hoping that the fund doesnt open lower tomorrow because then I would get that price and not the current price as of right now. The managers I expect like the foward pricing method because otherwise its leaves them open to being screwed.I am not a financial expert, and the post above is merely my opinion.:j0 -
Thanks. Surely that is open to abuse though. Say tomorrow the market opens 10% lower so I decide to sell out. By what you say I would get the forward price which would reflect todays gains in the market?
If anything, the opposite is true: you are likely to get tomorrow's fall priced in, whereas pricing on a historic basis would be likely to retain the gain. But then it will work the opposite way round in the event that the market rises.
Also to be taken into consideration is the time of the valuation point, which is once a day for OEICs/UTs (in the majority of cases, although some are less frequent). If the valuation point is midday then any falls in the morning would also be taken into account. Some fund platforms, e.g. Hargreaves Lansdown, also insist that buy and sell orders must be received before 8a.m.
But as you are, of course, investing on a long term basis, daily price movements should tend to become less relevant...;)Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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So lets say I cash out a uk domiciled US fund with basically 100% invested in large/huge cap companies. I could do that at 11.59 am uk time and its value will be reflective of tonights closing price on the s and p and djia?I am not a financial expert, and the post above is merely my opinion.:j0
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Also is the annual charge usually taken on a daily basis or in 1 big lump sum? If it were taken as 1 lump sum then what happens if you cash out before its been taken?I am not a financial expert, and the post above is merely my opinion.:j0
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So lets say I cash out a uk domiciled US fund with basically 100% invested in large/huge cap companies. I could do that at 11.59 am uk time and its value will be reflective of tonights closing price on the s and p and djia?
Again, depends upon what the prospectus says about the pricing basis and the time of the valuation point. If the time of the valuation point was 10am then your transaction would be actioned the following day. Also depends upon the platform though which you are placing the transaction: what their cut-off time may be.Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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You have to be careful with this as not all funds are traded daily and not all fund providers are as quick to process transactions as others. I find that major providers such as Artemis, IP etc usually are sorted that day for anything with HL by 08:00 whilst others will be a day later. To be fair things are much quicker now than they used to be :-)
Regards,
Mickey0 -
Thanks. Surely that is open to abuse though. Say tomorrow the market opens 10% lower so I decide to sell out.
A lot of people, including myself I'm ashamed to say, used this wrinkle to exit Japanese funds on the news of the tsunami. I got the instructions in before 8am, sold at the midday price, which was well before the Japanese markets opened and it all turned to boom boom.
I bought back in to mostly the same funds about a week later, which is a gamble that's still to prove its worth, but I am in at a lower price.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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