legal and general index funds

whitty59

Hi , I am investing in a HL vantage sipp and am dripping monthly into legal and general index funds.Why when the ftse has gained strongley in a day , do the legal and general index funds show a drop as surely they should reflect the market?

Aegis

Valuation is usually at noon, so you won't get the afternoon results included in the performance.

Also, be wary of the additional charges that HL levy on tracker funds with a low AMC. You may find it cheaper to use a different provider where no additional management fees are charged (the HSBC trackers with an AMC of 0.25% spring to mind, though there are probably others too).

sabretoothtigger

The fund prices released now reflect the prices on monday and markets fell on monday. Tuesday will show up in the prices released from midday weds onwards

If you buy or sell a fund tonight, you will get given the thurs midday onwards (hl show this as late as midnight or later) price not the one displayed now

Loughton_Monkey

sabretoothtigger wrote: »

The fund prices released now reflect the prices on monday and markets fell on monday. Tuesday will show up in the prices released from midday weds onwards

If you buy or sell a fund tonight, you will get given the thurs midday onwards (hl show this as late as midnight or later) price not the one displayed now

Are you sure of this?

I was under the impression (as I think aegis is) that the majority of funds release their price at around late afternoon. And for (say) late Tuesday, it would be based upon movements up to mid-day Tuesday - thus really reflecting the complete movement from noon Monday to Noon Tuesday.

Some pension funds tend to use 2 p.m. and don't release them until early evening.

I am not absolutely sure on this, which is why I ask if you are certain.

Whatever is right, I think the HL timing is correct. By placing a 'sell' on Monday (or in fact up to 10:00 a.m. Tuesday), they would sit on it until later that day when the 'new' price comes out.

I have a small 'gripe' (not with HL because I think they all do it) with a switch. When I place a switch order, they will perform the sell exactly as outlined above. But then they will wait a further day to do the 'buy'. So in other words, there is a 'missing day' in which the money is invested in nothing. If that happens to be a bumper day, and both funds are 'similar', then you lose a day's growth.

I'm not sure quite why they do this, since both prices are 'known' at the same time, so the exact amount of cash available for the new units is known. So I would have thought that 'simultaneous' switches would have been possible.

If, on the other hand, you have the cash sitting there, then the 'buy' will be performed on the same day as a 'sell' would have been performed.

datostar

Loughton_Monkey wrote: »

I have a small 'gripe' (not with HL because I think they all do it) with a switch. When I place a switch order, they will perform the sell exactly as outlined above. But then they will wait a further day to do the 'buy'. So in other words, there is a 'missing day' in which the money is invested in nothing. If that happens to be a bumper day, and both funds are 'similar', then you lose a day's growth.

I'm not sure quite why they do this, since both prices are 'known' at the same time, so the exact amount of cash available for the new units is known. So I would have thought that 'simultaneous' switches would have been possible.

If, on the other hand, you have the cash sitting there, then the 'buy' will be performed on the same day as a 'sell' would have been performed.

M&G do a simultaneous switch between funds. If the instruction is placed before 12 noon it's at the previous day's prices. If after 12 noon the switch takes place the following day. Either way there is no missing day, This applies where investments are held directly with the fund manager as opposed to via a broker.

Rollinghome

Aegis wrote: »

Also, be wary of the additional charges that HL levy on tracker funds with a low AMC. You may find it cheaper to use a different provider where no additional management fees are charged (the HSBC trackers with an AMC of 0.25% spring to mind, though there are probably others too).

H-L don't make any additional charge on either the L&G or the HSBC index trackers although they do charge an additional 0.5% pa for most others, presumably because they earn little or no commission on most tracker funds. The AMC is 0.40% for the L&G All-share tracker and 0.25% for the HSBC version.

I assume they don't make as much as they'd like out of those two either and no doubt why their "Investment Times" circular this month is largely dedicated to persuading their customers to switch to managed funds that pay full trail commision.

Unlike the majority of unit trusts it can sometimes be advantageous to buy trackers directly from the fund managers especially as L&G have been offering cashback via Quidco. There are a few other examples where by buying direct you can get a share class that has a lower AMC than offered by H-L or others because it doesn't include trail commission, Troy Trojan funds for example. For most though a discount broker like H-L will be the better option.

artha

Rollinghome wrote: »

Unlike the majority of unit trusts it can sometimes be advantageous to buy trackers directly from the fund managers especially as L&G have been offering cashback via Quidco. There are a few other examples where by buying direct you can get a share class that has a lower AMC than offered by H-L or others because it doesn't include trail commission, Troy Trojan funds for example. For most though a discount broker like H-L will be the better option.

Although probably not of use to the OP, a further advantage of buying trackers direct from L&G is that you can buy as little as £100 top up by phone up to a few minutes before the noon valuation if you are so inclined

Rollinghome

artha wrote: »

Although probably not of use to the OP, a further advantage of buying trackers direct from L&G is that you can buy as little as £100 top up by phone up to a few minutes before the noon valuation if you are so inclined

Absolutely. So as a tracker should closely follow an index you should have a good idea of the price you'll pay rather than buying completely blind.