Midday valuation for funds with US holdings

finellah

Obviously there also other differences in holdings, but Fundsmith Sustainable Equity which doesn!!!8217;t hold Facebook AFAIK was up 0.59% today. I had assumed that the difference might be Facebook related and that yesterday!!!8217;s after hours drop had been taken into account in Fundsmith Equity. I haven!!!8217;t read it all, but the prospectus does mention in section 19 regarding calculation of NAV that they use the !!!8220;most recent prices which it is practicable to obtain!!!8221;

aroominyork

From HL news on the stock: “Facebook's stock futures were down almost 19% to $177 ahead of Thursday's opening bell.” So hopefully that accounts for the fall. The prospectus has no text similar to the Baillie Gifford American quoted by bowlhead.

bowlhead99

aroominyork wrote: »

The prospectus has no text similar to the Baillie Gifford American quoted by bowlhead.

Although you can see(19.3c) below:


19.3
Scheme Property which is not cash (or other assets dealt with in Section 19.4) shall be valued as follows and the prices used shall (subject as follows) be the most recent prices which it is practicable to obtain:
(i)
any transferable security:
(a)
if a single price for buying and selling the security is quoted, at that price; or
(b)
if separate buying and selling prices are quoted, at the average of those two prices; or
(c)
if, in the opinion of the ACD, the price obtained is unreliable or no recent traded price is available or if the most recent price available does not reflect the ACD!!!8217;s best estimate of the value, at a value which in the opinion of the ACD is fair
and reasonable ;
(ii)
property other than that described in (i) above shall be valued at a value which, in the opinion of the ACD, represents a fair and reasonable mid-market price

londoninvestor

aroominyork wrote: »

From HL news on the stock: “Facebook's stock futures were down almost 19% to $177 ahead of Thursday's opening bell.” So hopefully that accounts for the fall. The prospectus has no text similar to the Baillie Gifford American quoted by bowlhead.

The thing is that the fund price rose from Weds 25th 12noon to Thurs 26th 12noon - which is surprising in view of Facebook's move...

londoninvestor

bowlhead99 wrote: »

Out of curiosity I looked at the prospectus for that one at the time (the umbrella fund of which it's a part prices at 10am UK), so I still have it in my cache, though I didn't bother posting at the time due to going out for a beer instead...

Do you know if all the sub-funds of an umbrella fund have to price at the same time? I'm mildly curious about why so many US and Asian funds price at 12 noon (and a few at 10 am) when this means the ACD has to do the work of inferring a price when the market is closed. But if they have to do so because of a shared umbrella, that could explain it?

Prism

I would say we have an answer for Fundsmith at least. It looks like they use out of hours prices. Today the fund price went up about 50%. I doubt that would be the case if yesterdays 20% FB drop and 3% Paypal drop were applied in todays price.

Linton

londoninvestor wrote: »

That's an absolutely true statement providing that, as I expect, the fund price is reflective of the underlying stock prices as of 12noon. So the fund manager needs to either take a trading price for the stock at 12noon, if a liquid price exists, or do something to adjust the last closing price for the market move between closing time (say 9.30pm) and 12noon.

My point was that if it were true the fund price at 12noon is just based on the 9.30pm closing prices of the stocks, without adjustment, then in that case I could profit from the fact that I can trade at yesterday's price. (I could arbitrage the fund against an ETF for example.)

No, you always trade at tomorrow's (or later) prices. If you put in an order to buy it would take a few days before you get your fund units.


If you want to trade funds it makes more sense to use IT's which are continually updated.

aroominyork

Prism wrote: »

I would say we have an answer for Fundsmith at least. It looks like they use out of hours prices. Today the fund price went up about 50%. I doubt that would be the case if yesterdays 20% FB drop and 3% Paypal drop were applied in todays price.

Agreed, though 0.52% not 50%!

Prism

aroominyork wrote: »

Agreed, though 0.52% not 50%!

Yes, i clearly voted the X (xtreme) class version of the fund. 0.52% is a touch more realistic