Unit Trust/OEIC settlement period

RoughRook

I'm curious as to how long it takes to sell units in a unit trust or OEIC, to then reinvest the funds into another fund, when using a platform such as Hargreaves Lansdown or similar.


I'm aware that there is a formal settlement period of 4 days, but does that mean if a sell order is placed early on a Monday morning, funds from that sale are not available until Friday for reinvestment into another fund i.e. the investor will be forced out of the market for at least 4 days?
Or does the 4 day settlement period mean that cash is not available to be withdrawn from the account until the Friday, should that be what the investor intends?


In summary, is it possible to place a sell order on a Monday morning, the sale proceeds being made available on the account the following day (Tuesday), for possible reinvestment (if decided) into another fund on that same Tuesday?


This is not a 'switch' order, but a 'sell' order with the freedom to decide whether to reinvest the cash proceeds, or not, on the following day. Is this possible?


Any clarification appreciated,
RR

dunstonh

I'm curious as to how long it takes to sell units in a unit trust or OEIC, to then reinvest the funds into another fund, when using a platform such as Hargreaves Lansdown or similar.

The settlement date will vary with the fund. T+2 or T+3 (2 or 3 days) is typical. Platforms that pre-fund deals will be quicker than those that do not. HL do not prefund I believe.

RoughRook

Thanks for the reply dunstonh.
I take it then that 4 days is the official delay, but in reality it is likely to be less.


Where can info on platforms' policy on 'pre-funding' be found. Would that be in their terms and conditions?


Thanks again,
RR

dunstonh

Where can info on platforms' policy on 'pre-funding' be found. Would that be in their terms and conditions?

Not sure you would find it in the T&C. It is more a feature than a term/condition. I believe pre-funding is not common on the DIY side (it requires money and DIY providers tend to be smaller scale and cant afford it).

RoughRook

Thanks dunstonh


I noticed that if a switch is made, then the fund switched into is bought on the day following the sale date of the initial fund i.e. T+1.


But if a fund is sold, with no switch instructions, then reinvestment cannot take place until cash is shown as 'cleared' on the account; that being T+2 or T+3


Have I assumed this correctly?


Thanks for your help,
RR

grey_gym_sock

i've sold a fund on HL before, and used to proceeds to buy another fund the next day (despite the settlement date being a few days ahead).

perhaps that means they do have pre-funding?

RoughRook

@Grey Gym Sock, Thanks for commenting.


Was that a single sell order on day one, with cash being made available on the account the very next day?


A single buy order then being placed on day two to purchase a new fund?


This was not a 'switch' type order that you placed?


Would be good if you could confirm. Thanks.
RR

grey_gym_sock

yes, 2 separate orders.

note that you need to place a fund order with HL by 8am if it's to be dealt on the same day.

RoughRook

@Grey Gym Sock, thanks for confirming.