Hargreaves Lansdown - Forward Pricing

Stompa

If I make an online investment with HL I'm told: "Please note that Unit Trusts and OEICs are dealt on a 'forward pricing' basis, which means that it is not possible to confirm the price of the transaction until after the deal has been placed". Now my understanding is that valuations are typically made around midday, so is the implication that if I place the order before midday (or maybe an hour or two earlier) I puchase at that same days price, and at the next days price if the order is placed after midday?

Thanks

Aegis

I've yet to work out how HL calculate the price of your purchase. I believe that on the date the order is processed, they use the calculated price, but sometimes I seem to end up getting an adjustment in the number of units the next day, so I'm wondering if they add the details of a transaction the previous day to your account and update when they find out how much each of the units actually cost!

All very confusing really.

Stompa

Aegis wrote: »

All very confusing really.

Yes, that's why I was asking the question!

purch

The price of the Unit Trust/OEIC is set by the Fund Manager so therefore Hargreaves Landsdown, or any other 'broker', do not 'calculate' the price.

These transactions typically are rarely filled on the day you place the order, and the price will be the last valuation, less any initial charge.

Stompa

purch wrote: »

These transactions typically are rarely filled on the day you place the order, and the price will be the last valuation, less any initial charge.

Thanks. There's some further explanation here:

http://www.thisismoney.co.uk/investing/article.html?in_article_id=418182&in_page_id=166

in the section entitled "The mysteries of selling investment funds".

noahveil

purch wrote: »

the price will be the last valuation

Surely the next valuation ?

IIRC if you want the midday price of that day you have to place your order before circa 8 AM the same day.

Aegis

purch wrote: »

The price of the Unit Trust/OEIC is set by the Fund Manager so therefore Hargreaves Landsdown, or any other 'broker', do not 'calculate' the price.

These transactions typically are rarely filled on the day you place the order, and the price will be the last valuation, less any initial charge.

This is all true, but it doesn't explain why they will add units to your account, then will amend that figure the next day on a fairly regular basis. My prediction is that they use the calculated value from the previous day to give you a ballpark figure number of units, then they receive comfirmation from the fund manager of the actual number of units your money managed to make, and adjust your account accordingly.

Either that or it has something to do with the way they rebate the initial charges.

RayWolfe

I have NEVER experience a change in the number of units as you describe. I have been buying from H-L for 11 years.

Aegis

Hmm, maybe I should look into it a bit more closely next time then! I'm sure it's happened a lot with mine.

InMyDreams

I didn't get an adjustment of the number of units, but something funny did happen when I opened my H&L ISA last week with £3k. I opened the account on the Monday morning (applied on line before 10am). When I checked the account on the Tuesday to see if all had gone through, the value of my chosen funds was up £7.89, with the prices showing as Monday's prices, but when Tuesday's prices came through on the system my funds were valued at exactly £3k as they should have been. In other words, I had indeed bought exactly £3k of funds at Tuesday's prices, even though for some reason they were showing up early. Could something like this have been causing the confusion?

I then added to the account (on line) just before midnight this Tuesday and the transaction went through with Wednesday's prices, but didn't show in my portfolio until Wednesday's prices were actually showing too.

Don't know if any of that helps.

Stompa

InMyDreams wrote: »

Don't know if any of that helps.

Thanks, I think it just helps to confirm that the transaction will (probably) take place in the next day or two!