ISA SS Funds - Buy and Sell

nxdmsandkaskdjaqd

On some ISA SS Funds you see the price quoted as Sell : 254.88p | Buy : 270.43p

Could someone please explain how this works when buying and selling funds.

I assume that you buy at 270.43p and if sold a few moments later it would be 254.88p, therefore making a heavy loss in a short period of time. Is this right?

Regards

Robert

Linton

Correct. The difference would be taken as fees. This type of charging was very common but now most funds have a single buy/sell price and management fees are taken straight out of the fund.

nxdmsandkaskdjaqd

So if you had 2 funds and they were priced the 2 different ways, would they be the same in terms of cost and fees taken?

psychic_teabag

There is an extra complication in that the spread often includes an initial charge (eg 5%) which you can get discounted from, eg, a fund supermarket.

In your example, the spread is 6%. If the platform was offering a 5% "initial saving", the "real" purchase price is 257.88 (270.43 / 1.05). [Or at least I think that's the correct way to do the sum.]

And of course you can't sell a few moments later : funds are usually priced once a day, so you'd be selling the next day, when both buy and sell prices will have changed a little. (And they never tell you in advance what you will pay - the proces they show are from the most recent pricing point, but you will transact at the next pricing point.)

nxdmsandkaskdjaqd

How do the fund supermarkets rebate the 5% initial saving? Is the price adjusted low to take account of this?

270.43p minus 5%?