property funds playing dirty games

dipsomaniac

i must admit to being a little confused by the amount that some of the funds have dropped. i didn't think that moving to a cancellation price would have such a dramatic affect on the price as the normal spread between creation and cancellation price is around 6.5% with an initial charge of 6% that would leave approx 0.5% difference when changing dealing basis.

to answer your question, if you only pay a 0.25% initial charge it will be possible to make a quick profit if the price is swinging by 6% on a daily basis. but as i stated earlier retail funds are not normally the best vehicles for day trading. however, if you had unlimited free switches between cash and US/JAP technology equities that would be a different question with a midday forward pricing fund.

Stompa

I wonder if you're too late with the New Star Property Fund - my Skandia version of the fund had risen by 4.8% when I checked this morning - so presumably the same has happened with the New Star fund itself?

Mind you, I'd be surprised if it doesn't happen all over again.

jamesd

mroller, that may be normal pricing already. You could always phone New Star or HL to seek clarification that only the selling price is changing by 6%.

Stompa

Stompa wrote: »

I wonder if you're too late with the New Star Property Fund - my Skandia version of the fund had risen by 4.8% when I checked this morning - so presumably the same has happened with the New Star fund itself?

Mind you, I'd be surprised if it doesn't happen all over again.

Well, that didn't last long. It went up for 1 day and has now dropped back down again.

eatmyfish

mroller wrote: »

I have read this aticle below in the FT today, it's so unfair, how comes they are allowed to do this?

http://www.ft.com/cms/s/8cf36d50-2f19-11dc-b9b7-0000779fd2ac.html

I checked my account with HL this morning and saw the dip, initially I thought it was a mistake, and then I read the article and knew what happened.

basically, the have shaved 6% off the value of the fund :mad:

They are allowed to do this because you signed a contract that let them LOL Property's a crap investment anyway as you've just discovered...

mroller

dipsomaniac wrote: »

i must admit to being a little confused by the amount that some of the funds have dropped. i didn't think that moving to a cancellation price would have such a dramatic affect on the price as the normal spread between creation and cancellation price is around 6.5% with an initial charge of 6% that would leave approx 0.5% difference when changing dealing basis.

to answer your question, if you only pay a 0.25% initial charge it will be possible to make a quick profit if the price is swinging by 6% on a daily basis. but as i stated earlier retail funds are not normally the best vehicles for day trading. however, if you had unlimited free switches between cash and US/JAP technology equities that would be a different question with a midday forward pricing fund.

I think you misunderstood me, I was not thinking of day trading. I am just wondering if i could profit from the switch in Pricing.
- Normally they use "offer" pricing.
- They switched to "bid" pricing to counter outflows. Reducing the value of the units by 6%.
- They are going to switch to "offer" pricing sometime in the future. raising the value of the units by 6%

I might give them a call monday morning indeed, but call center staff usually do not have a clue, so I guess the best is to try.

Thanks everybody.

dipsomaniac

if you are going into the market for a day/couple of days for a quick profit you are day trading.

i need to look at this in more detail as i didn't think switching the price to a cancellation basis could reduce the price by 6%. it doesn't with equity based funds but i can see why property funds may be different. the NU property fund was holding 25% cash at one time so was well placed for a run of selling, which has been expected for a while.