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What is 'additional bid-offer spread'?

saveonarola
Posts: 186 Forumite

I'm about to make my first purchase of BlackRock Global Property Securities Equity Tracker through Bestinvest. These are the Class A units (ACC).
On Trustnet, these are quoted with a bid-offer spread of around 5%, but unless I'm mistaken this is the initial charge, which Bestinvest discounts.
However, Bestinvest quotes an 'additional bid-offer spread' of 0.18%. What is this, and shouldn't this be called the 'initial charge'? Seems a bit cheeky to me, unless I'm missing something.
https://select.bestinvest.co.uk/fund-factsheets/brgpseta/blackrock-global-property-securities-equity-tracker-a/overview
On Trustnet, these are quoted with a bid-offer spread of around 5%, but unless I'm mistaken this is the initial charge, which Bestinvest discounts.
However, Bestinvest quotes an 'additional bid-offer spread' of 0.18%. What is this, and shouldn't this be called the 'initial charge'? Seems a bit cheeky to me, unless I'm missing something.
https://select.bestinvest.co.uk/fund-factsheets/brgpseta/blackrock-global-property-securities-equity-tracker-a/overview
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Comments
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Class A is the commission version. About 0.35% p.a. goes to the platform. You should aim for class D version if you can which is cheaper by 0.35% p.a.
There is a small bid/offer spread on this one.What is this, and shouldn't this be called the 'initial charge'? Seems a bit cheeky to me, unless I'm missing something.
It is a unit trust and not an OEIC. It is not single priced but has a difference between the buying (offer) and selling (bid) price.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
It is a unit trust and not an OEIC. It is not single priced but has a difference between the buying (offer) and selling (bid) price.
But is the spread between bid and offer price fixed? I had imagined that this would vary, so I'm surprised to find it quoted on the Bestinvest website as though it's a fixed figure.0 -
There's something a bit weird about some of the transaction dates and prices on Best Invest, for this specific fund I made a fund switch from a First State property fund between 01/10/12 and 05/10/12 to this Blackrock tracker. Original £100 First state investment was worth £100.89 when sold. The Blackrock purchase/switch then took place at some point after that with that £100.89
From BI I have the following for the Blackrock purchase.
Trade - Settlement - Units - Cost(£) - Price(p)
09/10/12 - 15/10/12 - 86.31 - 100.89 - 116.90
The closest I can get to that price for this fund within those dates according to morning star is 116.50p on the 09/10/12
The additional 0.18% spread must be included in BI's 116.90 price because the units and cost tally.
On my £100.89 example that should indicate an 18p spread which still leaves 0.22% or 22p unaccounted for (I'm assuming morning star prices are universal for units in any given fund)'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
You may find that the problem is something called "creation price". A provider can charge something extra if it creates new units. Not all do but some charge a lot. If I remember correctly Artemis are one of the worst culprits.0
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another example that does tally
Liontrust UK smaller companies Inc - Additional bid/offer spread 3.56% on BI website
Trade - Settlement - Units - Cost(£) - Price(p)
26/10/12 - 01/11/12 - 17.62 - 100.00 - 567.41
3.56% spread on £100 is £3.56
Morning star price on 26/10/12 is 547.20
17.624 units @ 547.20 = £96.44 which is the £100 invested less their bid/offer spread'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
I've just been back on the Bestinvest website, and the 'additional bid-offer spread' on that BlackRock fund has now gone up to 0.34%!
The way the information is presented on their website, it looks like a fixed charge, but evidently it does vary, as I thought it must.
So, am I right in assuming that this is a normal part of buying a unit trust, and that it would be the same spread through any other broker?0 -
See my post #50
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See my post #5
Thanks, le loup. I suppose what I'm getting at is whether this is just a normal cost of buying and selling this kind of fund, or whether I ought to be wary. Does this range - 0.18%-0.34% - seem reasonable? It's not a huge amount, given that it's an upfront rather than an ongoing charge, but I'm really trying to reduce costs to a minimum. The only thing is, this is the only property tracker fund (as opposed to etf), and dealing fees on an etf would be prohibitive at my level of investment.0 -
It's the price you pay SOME investment managers.
Invesco Perpetual, for example, I have never paid or received more than the bid/offer price and I have been buying and selling their funds for years. On the other hand I have bought a few Artemis funds and they ALLWAYS pop a little extra in the bag.0 -
Invesco Perpetual, for example, I have never paid or received more than the bid/offer price and I have been buying and selling their funds for years. On the other hand I have bought a few Artemis funds and they ALLWAYS pop a little extra in the bag.
I've just spoken to Bestinvest and they said that fund managers vary the spread sometimes in order to manipulate fund flows into or out of the fund, to prevent liquidity problems.
They told me the 'additional bid/offer spread' quoted on their site is not an extra charge, but is simply the difference between the bid price and the creation price.
You say that you've never paid more than the bid/offer price (do you mean the creation price, rather than the offer price?), but seeing as this is fixed by the fund manager, how can you know whether it's fair or not?
If the 'additional bid-offer spread' quoted by Bestinvest for this BlackRock fund is simply the difference between the bid price and the creation price, I don't see the difference between that and Invesco Perpetual quoting a certain price to buy into their fund. Am I being really thick?0
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