Understanding holding valuation

puk999

Hello,

On the 20th December I invested into two funds: AXA Framlington Biotech and Marlborough Special Situations Fund Acc. The amount invested into each fund was exactly the same £5,389.92.

When looking at the valuations of the funds within the account (a Fidelity SIPP with no initial charges), they are as follows:

AXA Framlington Biotech     20/12/13 5,386.24 GBP
Marlborough Sp Sit Fund Acc 20/12/13 5,348.20 GBP

That's a difference in the amount invested of £3.68 and £41.72.

I had expected the fund valuations to be different to the amounts invested due to them being unit trusts (bid/offer spread) but can't understand the valuations I'm seeing. I figured I'd buy at the buy price and the funds would be valued at the sell price. With the spread of the funds around 5%, then I'd expect to see lower figures here. Here are the buy/sell prices of the funds in question on the date in question (20/12/2013):

Fund                             Buy      Sell
AXA Framlington Biotech      £1.0610   £1.0050
Marlborough Sp Sit Fund Acc £10.0695   £9.5157

Hopefully someone can help me understand where the £3.68 and £41.72 come from, and perhaps explain a little more about the valuation of funds in relation to the buy/sell (or if you prefer offer/bid) prices.

I figure for me to manage this SIPP effectively I really need to understand these basic points! As an aside, most of the account value is not in these higher-risk funds.

JohnRo

I've tried similar things in the past and effectively got nowhere, and gave up trying.

It involves looking into the creation price, the quoted spread is largely irrelevant since it includes the initial charge which most brokers discount anyway.

I went through a long process of communicating with best invest about this very thing you're describing and even after all the calculations had been explained, discussed and (just about) understood they still didn't tally with the numbers I was seeing on the account I held.

They couldn't explain it either and said they'd forwarded it for clarification and would let me know why it didn't tally but of course never got back to me. I just sold up and moved the funds elsewhere - they were nice enough people but the level of detailed accounting there was inadequate imho.

puk999

Some of my original confusion has been cleared up. The bid-offer spreads I mentioned in my original post include the initial charge which I don't have to pay because the Fidelity SIPP doesn't have initial charges. All I have to pay is any additional bid-offer spread which is much narrower. This is great because I had expected to pay around 5% for investing in these funds! I mistakenly thought the initial charge was waived only on single-priced funds with an explicit initial charge percentage. These are the buy prices for the transactions made:

AXA Framlington Biotech     1.005687
Marlborough Sp Sit Fund Acc 9.590000

Which made the additional bid-offer spread (by my rough calculations) 0.68% and 0.77% for AXA and Marlborough respectively.

Feel a bit silly not previously realising the initial charge was also waived for dual-priced funds, but for once in my life this error worked in my favour :j