Vanguard Price Confusion

mgarl10024

Hi,

Probably a simple question, but I'm missing something!

On Charles Stanley, I'm looking for the price of the Vanguard Lifestrategy 100% Acc fund. My understanding is that the price is derived from the underlying assets, so on a given day (it is priced daily) there should be a single price (no bid-offer spread).

https://www.charles-stanley-direct.co.uk/ViewFund?Sedol=B41XG30 tells me that the "Latest Buy Price" and the "Latest Sell Price" is 15389.3

Google however says that it is 15175 (https://www.google.co.uk/finance?q=MUTF_GB%3AVANG_LIFE_100_J10ZSC).

HL agrees with Google at 15174.85 (http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-100-equity-accumulation/key-features

Yahoo agrees with HL and Google at 15175 (http://finance.yahoo.com/q?s=GB00B41XG308.L)

Then iii also has 15175, but then a "mid price" of 15389 - same as Charles Stanley (http://www.iii.co.uk/research/@GB%3A7:ACDV)

I'm looking at the GB00B41XG308 fund each time, so should be looking at the same thing across brokers.

I'm coming to the conclusion that Charles Stanley is just reporting a different price - a "mid price" - but what's that? Why is it so much higher? What price would I buy them at through Charles Stanley (should I use a different broker?). And why are they reporting things differently?

Thanks,

guymo

Looks to me as though the Charles Stanley price (which is the same as on Morningstar) is the most recent price, and that HL and Google are showing the previous day's price.

Vanguard's web site shows 15389
https://www.vanguard.co.uk/uk/portal/detail/mf/overview?portId=9232&assetCode=BALANCED##portfoliodata

and says that the day change was +1.41%.

15389 / 1.0141 = 15175.

Edit: just checked your Yahoo link and it even dates its price as April 8th so I think I am correct. HL are naughty and date their price as April 9th.

Edit: and then I scrolled down a bit on the Vanguard page and noticed that it confirms that 15175 is the April 8th price.

noggin1980

you won't get 15389.3 either, you'll get whatever the next days price is I believe. Or even Tuesdays if you buy too late. at least I think that's how it works.

edinburgher

noggin1980 wrote: »

you won't get 15389.3 either, you'll get whatever the next days price is I believe. Or even Tuesdays if you buy too late. at least I think that's how it works.

Yes, you'll get the price at the next dealing point. I thought it was 12:30 for CSD's Vanguard funds?

mgarl10024

Thank you all for your responses - makes a lot more sense now!

hamski

edinburgher wrote: »

Yes, you'll get the price at the next dealing point. I thought it was 12:30 for CSD's Vanguard funds?

I have my isa with halifax sharedealing, when will i see the most accurate price for vanguard funds.

badger09

hamski wrote: »

I have my isa with halifax sharedealing, when will i see the most accurate price for vanguard funds.

This is 'the horse's mouth'

I'm fairly sure it updates overnight

https://www.vanguard.co.uk/uk/portal/investments/all-products?productType=indexFund

collingbone614

I believe that when you buy or sell a fund, you get whatever the price is at 12 mid- day, if you are before the deadline. If you are after it, you get the price at 12 mid-day the next trading day.

It feels wrong, because what if you submit a large sell order on Friday night - which has hopefully not happened after too many pints - then over the weekend there is a massive world disaster. Terror attack, or natural catastrophe, or Russel Brand gains power, etc.

The market opens on Monday morning and before the mid-day dealing point, everything tanks. Your order then goes through at mid-day at significantly less than what you thought you might get.

This is an extreme example but you get the idea.

Can someone confirm on how order dealing really works..

gterr

I asked Charles Stanley Direct about this in particular. Apparently, the pricing point for Vanguard funds is 9pm. In order to catch this pricing point Vanguard must receive orders by 10am the same day. CSD must receive orders from customers by 9.15am in order to pass orders to Vanguard by the 10am deadline to catch the 9pm price point.


We are all counselled not to try timing the market. In the case of most funds, and certainly Vanguard, timing the market is almost impossible!


With iii I think the situation is worse. They have a deadline of 11am to pass orders on to the fund managers the same day. But 11am would be too late for Vanguard to use the same evening's pricing point. Presumably it would be the price at 9pm the following day that would be used.

Eco_Miser

That's how forward pricing works, except the price point is not always mid-day.

To avoid such large drops between placing an order, and it being executed, don't place the order until say half an hour before the deadline, and certainly not on a Friday afternoon.

bowlhead99

collingbone614 wrote: »

It feels wrong, because what if you submit a large sell order on Friday night - which has hopefully not happened after too many pints - then over the weekend there is a massive world disaster. Terror attack, or natural catastrophe, or Russel Brand gains power, etc.

The market opens on Monday morning and before the mid-day dealing point, everything tanks. Your order then goes through at mid-day at significantly less than what you thought you might get.

If you buy a closed-ended fund like an investment trust, or a share in an individual company (whether an investment company or some other type of company), you can buy or sell any time the market is open - you buy from other people who are willing to sell to you and vice versa, and you agree the price between yourselves. The company doesn't get any money if you buy or pay out money if you sell, so no other investors are affected by whatever price whatever time of day you agree with someone else on the open market. The stock market pricing every second of the business day is just run by supply and demand of the sellers and buyers.

However, with an open ended fund, if you 'sell' you are asking the manager to pay you out money from the fund's assets, and if you 'buy' you are asking the manager to admit you as a member of the fund and take your money and spend it on assets inside the fund in exchange for a share of ownership. Getting the price 'wrong' on this is something that could easily adversely affect the other investors of the fund if the price is not a fair reflection of what the assets which everybody has, are worth.

The manager can't be expected to know what the fund's assets are worth every second of every day; they will do the accounting and work out one price per day, and that 'fair' price will be the price that everyone can sell out at or redeem in at.

Clearly, for it to be actually fair, they can only action the buy and sell requests that are received with a long enough time BEFORE the price is calculated and published, rather than after. They can't tell you that the price, the fair value of the assets, is £101 at lunchtime today, and give you until tomorrow to decide whether you would like to buy in at £101.

Why? Because giving you time to put an order in after the price has already been worked out, would mean that people could wait until they see what has happened in the markets for the fund's key holdings, and if they had gone up, say "yes please, I'd love to buy this at £101 because with hindsight I know it is going to go up 2% overnight". Allowing you to come in at £101 when the assets were worth £103 would really screw over the existing members because you would always just put your huge order in late and share all the profits that should have belonged to the people whose money was actually invested in the assets during that time.

Similarly if they say the price today at a point in time when they add up all the assets is £101, they can't let you wait until tomorrow to decide if you would like to exit the fund at a known price of £101. If the market went up, you would never take the £101. While if the market went down to £98 then you and everyone else would always want to cash in your chips and leave, taking £101 with you, when the fund only has £98 per share in asset value. That would clearly screw over anyone who didn't exit, and the fund would run out of money if everyone did it together because all the million £101s couldn't be paid out of the £98 million of assets.

So, the only way a single daily or weekly or monthly valuation point price can practically work, is by people putting in their orders before some cut-off in ADVANCE of the price being known, not after the price is known.

So if Vanguard does its pricing at end of day (say 4pm New York time when Wall Street closes), based on the closing values of all the shares around the world that it holds, then it is not going to let you put in a new order or cancel an order after that point. For practical purposes it has to gather up all the orders ahead of that. So if you want to get in on a Lifestrategy fund the cutoff for orders is 10am UK time. You are right, if the market changes over the following hours, before 4pm NY (9pm UK), you will not get whatever price you estimated you would get at 10am UK, because that is not a fair price for the assets, and they need to make sure everyone pays or receives a fair price based on the valuation information.

So, the price may be lower or higher than you assumed, but what you get when you subscribe or redeem will reflect what the assets are actually worth at the time they value them. Not what the assets might have been worth before you placed your order. If they allowed an open ended fund to be operated when everyone could deal with hindsight, it would rapidly descend into farce.

So, you commit to buy or sell, and THEN they tell you what it is worth. Eco Miser is right that if you are the type of person who is watching the markets and trying to time their big decisions, you shouldn't place an order blindly on a friday night when the cut-off isn't until some time on Monday. However, dropping your order in online on Sunday before you go to bed, after first making sure world war hasn't broken out over the weekend, is probably fine.

If the shares are worth less on Monday because world war broke out after you went to bed, then you'll sell out (or buy in) for much less than Friday's price. Still, assuming world war is continuing for a few days at least, you might be glad you sold out at Monday's value rather than Tuesday's.