Property Feeder lost 5% on purchase?

bottleandahalf

Hi
I have just invested in a property feeder fund and it has dropped 5% on purchase.
I notice the buy price is 77p and the sell price is 73p.
Would anyone be so kind to explain as to why this is?
Thanks

AlanP_2

Bid - Offer Spread.

With some investments there is a difference between what a market maker will Sell At and what they will Buy At.

Same principle as when you buy foreign currency for holiday or whatever, the broker will display a Buy & a Sell price for the same "product".

bottleandahalf

AlanP wrote: »

Bid - Offer Spread.

With some investments there is a difference between what a market maker will Sell At and what they will Buy At.

Same principle as when you but foreign currency for holiday or whatever, the broker will display a Buy & a Sell price for the same "product".

Hi, I have heard about bid offer spread yeah, but 5% seems a lot?

masonic

bottleandahalf wrote: »

Hi, I have heard about bid offer spread yeah, but 5% seems a lot?

Spread is often larger when the underlying assets held by the fund are illiquid.

MarkBargain

bottleandahalf wrote: »

Hi
I have just invested in a property feeder fund and it has dropped 5% on purchase.
I notice the buy price is 77p and the sell price is 73p.
Would anyone be so kind to explain as to why this is?
Thanks

I got caught out with that myself recently. I bought five funds and the L&G one immediately dropped 5%. If I had known, I would have gone for a different one.

jimjames

bottleandahalf wrote: »

Hi, I have heard about bid offer spread yeah, but 5% seems a lot?

What amount were you expecting from the documentation? It should have been displayed before you bought it

MarkBargain

jimjames wrote: »

What amount were you expecting from the documentation? It should have been displayed before you bought it

I probably should have read more closely, but I am so used to all funds I invest in having the same purchase and sale price through Charles Stanley Direct that I didn't notice.

bottleandahalf

MarkBargain wrote: »

I probably should have read more closely, but I am so used to all funds I invest in having the same purchase and sale price through Charles Stanley Direct that I didn't notice.

SNAP! Haha. Exact same fund too mate. I never thought there would be a Bid - offer spread in a property fund.

Lesson learnt. (Hopefully)

MarkBargain

bottleandahalf wrote: »

SNAP! Haha. Exact same fund too mate. I never thought there would be a Bid - offer spread in a property fund.

Lesson learnt. (Hopefully)

My eyes always look at the Total Expense Ratio (TER) which at 0.63% looked good. The 5% is equivalent to eight years' fees in one hit on that one. As you wrote, lesson learnt.

slowpoke_rodriguez

MarkBargain wrote: »

I probably should have read more closely, but I am so used to all funds I invest in having the same purchase and sale price through Charles Stanley Direct that I didn't notice.

Before you commit to buying a fund from Charles Stanley you have to tick a box confirming you have read the specific fund terms, conditions and charges. It's about a minute's read...

JohnRo

slowpoke_rodriguez wrote: »

Before you commit to buying a fund from Charles Stanley you have to tick a box confirming you have read the specific fund terms, conditions and charges. It's about a minute's read...

They also email the date appropriate KIID as fund purchases are placed.

(That said the KIID's charges description doesn't detail the spread.)