MFM Bowland Funds

TomLikesSausages

we were considering putting some funds into MFM Bowland fund as part of our Stock and Shares ISA. We notice there is a bid price of 242.75 and an offer price of 262.43, a significant difference of 20.So if we did invest what price would we expect to pay. When it came to selling what would we expect to receive on today's prices.Usually with funds it only shows one price so we are not sure if MFM Bowland is a different concept.Any information on this subject will be appreciated as I am somewhat confused.

ColdIron

A brief look shows that this is a Unit Trust, these are often dual priced with a spread as you see, unlike the more modern OEICs. They are both 'funds' so no worries there. You should expect to pay £262.43 per unit plus any transaction charges if applicable and receive £242.75 per unit less any transaction charges

Prism

Its often referred to as an entry cost. You would pay 262.43 per unit to buy it today. If you sold it tomorrow and it hadn't moved in unit price you would get 242.75. Basically its a 7% charge to buy the fund. Sometimes a fund is referred to as 'soft closed' when it creates a barrier to entry like this. Sometimes its simply because they can get away with it as the fund is popular.

Wayne's_Woes

That is a huge difference of approximately 8%. is that percentage is what you would normally pay when you sell unit trust or OEIC holdings. Many funds do not gain that much in 2 years.

SurreyRoger

Basically you are charged between 7% and 8% to sell your MGM Bowland unit trust. Is this a normal percentage to sell units for all similar unit trusts. Is it the same if you sell direct or through someone like Hargreaves or Elsons.Associates who are both Investment Management companies

dunstonh

Most mainstream unit trusts have removed or heavily reduced their bid/offer spread. Nowadays, you only tend to see large spreads if you buy the fund direct from the fund house or it is soft closed.

MFM Bowland does not appear to have an unbundled share class on the UT. It is possible the spread will be rebated (in part or full) depending on how you are buying it. Being a niche fund you expect quirks.

Linton

The fund is pretty small (£16M) and obscure. It is currently mostly invested in UK Small Companies although its not in the UK Small Company sector, presumably because the manager has a wide remit. The performance compared with other UK Small Company funds is 2nd quartile, so OK but there are better choices.

What is its attraction?

SurreyRoger

MGM Bowland comes out on CityWire website as one of the top,performing investments in the UK section over the past year, so that is why I was looking at it. But now in view of the above comments it does not look such a good idea.I thought it might be part of the Marlborough group of funds.

Thrugelmir

As a small fund sizable unit redemptions could easily pose a liquidity problem. Interesting bag of investments. One to tuck away for the long term if purchased.

bowlhead99

SurreyRoger wrote: »

MGM Bowland comes out on CityWire website as one of the top,performing investments in the UK section over the past year, so that is why I was looking at it.

Unless you can avoid paying the spread you really have to review the performance on an 'offer to bid' pricing basis rather than just the standard 'bid to bid' which doesn't capture the cost of buying in at a premium. As Thrugelmir says, one for a long term hold if you want it.

Smallcap funds find it harder to make good deals if they themselves are massive because they can't deploy all their money into their best ideas, as the money just won't 'fit' into the small space very easily, with liquidity being a problem. So in order to spend the money they're given they would have to dilute their best ideas by spreading the money across lots of smaller companies which might be their relatively less-preferred opportunities. A big spread can discourage casual investors from piling in or out on a whim and growing or shrinking the fund size, making the manager's job harder or at least compensating them for doing it.

I thought it might be part of the Marlborough group of funds.

Well it is, and MFM stands for Marborough Fund Managers - who are, in regulatory parlance, the Authorised Investment Manager of all the funds they 'manage' (Authorised Corporate Director of a range of OEICs and Authorised Unit Trust Manager of the AUTs).

The actual Investment Adviser however, is Hargreave Hale. Like it is for Marlborough's well known Special Situations Fund (which Giles Hargreave has run for about 20 years), European and UK Multi-cap Funds, UK Micro-cap Fund, UK Micro-Cap fund among others.

Marborough Fund Managers do their Marlborough Emerging Markets Trust themselves, and some of their bond funds which have been run by Geoff Hitchin for three decades - though not the high yield one, which is run by Aberdeen Asset Management's high yield team. The US multicap is done by Boston. The funds-of-funds (Global, Cautious and Balanced) are run by Marlborough Investment Management, a separate team.

Ollie_Orpin

Is that the case with all UK Smaller Companies Fund. I put some funds into Old Mutual UK Smaller Companies last year and it has performed quite well .On City Wire's website it shows it is the best performing fund in this sector over 1,3 and 5 years.