Prices when buying Funds on a Saturday

bigadaj

Audaxer wrote: »

Thanks, so if I buy today I would only be able to work out how many units I have actually got for my investment once the new price is published after 9pm on Monday.

You do get real time pricing on etfs, as well as investment trusts and share.

For a long term bug and hold investor then the fund price is less important from one day to the next of course.

soulsaver

If you make the cut off time, you'll USUALLY get the next valuation point but it won't be guaranteed - it'll be in the platform terms.. in case they're swamped by orders in exceptional circumstances.
I go to the trouble to point this out as it has happened to me a few times... and always in their favour.. call me cynical.

bowlhead99

Audaxer wrote: »

Thanks, so if I buy today I would only be able to work out how many units I have actually got for my investment once the new price is published after 9pm on Monday.

If you place an order to buy today, your request to subscribe into the fund will be with your broker in plenty of time for them to get it over to Vanguard before the 10am Monday deadline (the "cut-off time") imposed by Vanguard, and so Vanguard will accept it as an order to issue new shares in the fund to you when they next calculate the fund value after that point.

The next valuation point for orders making the 10am Monday cut off will be 'as of' 9pm Monday. In other words, once the US stockmarket has closed for the day they can work out the value of all of the underlying funds that VLS invests into, which allows them to say what a unit of VLS is 'worth'. People who have placed orders before 10am Monday to exit the fund will be able to have their shares redeemed at that price. People like you who have placed orders before 10am Monday to buy newly issued shares in the fund will have those shares issued at that price.

So, once they have calculated the price at that Valuation Point, it's the price which will be used for all the pending orders. However, it takes time to work out the value. There is not some maths wiz watching the markets keenly at 9pm who then says five seconds later OK all the underlying assets of the funds that VLS invests in are worth £x so VLS's share of value of those funds is worth £y and and the whole of VLS's assets and liabilities must be worth £z and so a share is worth £1.68123 for the acc version and let me get on the phone right now and tell marketing to publish this price by 9.01pm without anyone checking my work. There is a fund accounting process.

So at some point the next morning the accountants will have done that work and they can publish the price that was calculated using data as of Monday 9pm. Usually by the end of the next business day, i.e. Tuesday, you can say with certainty that all the registers of ownership will be updated and the formal contract notes stating how many units were issued or redeemed at what price for what total cash, can be calcluated and issued through the platform.

Although, your broker/platform will take time to react to the incoming information and might still not have saved off your contract note to your online account even if he has the information to do so, because he wants to put the incoming data on a pretty letterhead and make sure it is all checked and validated.

So, eventually you will know how many shares you were given (which you might be able to work out from the price data published on the Vanguard website before you actually see your own contract note). And it will be a couple more days before the money that your broker had put aside in your account to settle the purchase will actually flow to Vanguard to clear the trade.

But regardless of when the information is published and your contract note is printed and your online list of holdings is updated in your platform's account, you will have been benefitting from any ups and downs in the global markets ever since Monday 9pm because that is the valuation point used to 'let you in' to the fund. People who miss the Monday 10am cut off will not get to join or leave the fund at that Monday 9pm valuation, they will get the Tuesday 9pm valuation or Wednesday 9pm valuation or whatever valuation they qualify for depending on what day's cut-off point their order hits.

Thrugelmir

soulsaver wrote: »

I go to the trouble to point this out as it has happened to me a few times... and always in their favour.. call me cynical.

Why would they single you out for particular treatment? :think:

bowlhead99

Thrugelmir wrote: »

Soulsaver wrote:

I go to the trouble to point this out as it has happened to me a few times... and always in their favour.. call me cynical.

Why would they single you out for particular treatment? :think:

It would be an easy complaint to put a value on if you are getting continual failures to execute a trade or order in a timely manner and being caused financial loss ; brokers have a duty of best execution.

However, it's unlikely to be anything personal. Markets have been going up for last eight years. Over that two thousand business days there were more ups than downs. Statistically if you miss a cutoff and have to trade the next day instead it is more likely that it will be at a higher price than a lower one.

That's not 'in their favour' from the broker''s / platform's point of view because you have deployed the same amount of money and obtained fewer shares and if you end up with worse growth because of it you will have lower values of assets on their platform compared to what you could have got if they had obtained a better price for you. They want to have more assets under administration because it is good for their own business valuation and potential future income from their ever-wealthier clients.

If you are continually meeting the broker/platform's published cut-offs but they are failing to get the order in to the fund manager on time because of being 'swamped with orders' it may make sense to find a fund supermarket or broker platform who is better resourced (and may be more expensive).

oldfella

I had this discussion about VLS with Halifax SD recently. They confirmed that orders had to be in before 0915 to get that days pricing.

AnotherJoe

soulsaver wrote: »

If you make the cut off time, you'll USUALLY get the next valuation point but it won't be guaranteed - it'll be in the platform terms.. in case they're swamped by orders in exceptional circumstances.
I go to the trouble to point this out as it has happened to me a few times... and always in their favour.. call me cynical.

Why is it "in their favour"? It doesn't make any difference to them what price you buy at.

Audaxer

oldfella wrote: »

I had this discussion about VLS with Halifax SD recently. They confirmed that orders had to be in before 0915 to get that days pricing.

When I first phoned Halifax SD during the week I was also told about the 9:15am cut-off, but I understood from that call that I would get the price on the website on the night I was calling if my order was in before 9:15am the next day - that is clearly not the case.

Thanks all for clarifying how the pricing works when you buy funds as I couldn't find that info on the Halifax website either.

oldfella

yes thats it, you order before 9.15, you get the next price set after that time.

bowlhead99

Audaxer wrote: »

When I first phoned Halifax SD during the week I was also told about the 9:15am cut-off, but I understood from that call that I would get the price on the website on the night I was calling if my order was in before 9:15am the next day - that is clearly not the case.

Thanks all for clarifying how the pricing works when you buy funds as I couldn't find that info on the Halifax website either.

As said by others, if you lock your order in with your broker by 9.15am(if that's the time you're broker sets) ahead of the 10am cut-off, you will definitely qualify for the next available published price.

But what you can't do is qualify for their *last* available published price.

Imagine, the price at 9pm Thursday is £2.00 based on the value of all the underlying assets at that time. Then thermonuclear war breaks out at midnight. Global stockmarkets halve in value overnight. You wake up at 9am and think hmmmm, I better sell my holdings at £2.00 as recently published, if I get my order in by 9.15am Friday they'll let me do that and screw all the other guys stuck in their fund. No they won't, the idea is b0ll0cks.You will get what the value is that they *next* publish.

Just the same as if all the world's global markets go up 20% in value between end of last working day and midday the next, they are not going to let you buy in at that last published price for only £2 a share when the assets are clearly worth £2.50.

They will value those assets, decide what a share of them is now worth, and let you buy a share for that price that they consider it's worth. Forward pricing is the way to be fair - not letting new units be issued or old units be redeemed at a price that's clearly not going to be what the assets are now worth, after you've had the benefit of seeing an old price for the units and then the huge market movements since