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Funds valuation point query
in Savings & investments
9 replies 122 views
I'm having some confusion with the valuation point for most funds. Basically I understand the valuation point is usually around 10am - midday. I recently sold some units around 9am from lloyds ready made investments fund. The reason I sold, aswell needing to sell in general anyway, was that the ftse all share tracker was showing that they had gone up a lot overnight and did indeed go up higher at midday (the valuation point) than they were at the previous midday. The bulk of the fund is this tracker. Therefore I thought the fund had made a gain since the day before. However, the price of the valuation that I received for the units I sold seemed to be based on the previous days valuation when the ftse was lower. Since looking into it further it appears that there is a one day delay in terms of the ftse all share index and the valuation of the fund with the fund valuation being in a sense one day delayed. The person on the phone told me most funds operate like this.
So I was just wondering is it not the case that this would be open to exploitation in volatile markets, because in a sense if you buy or sell at say 11.30am (just before the valuation point) you could be fairly sure of making a gain on the previous day as you would know that the valuation in half an hour will be based on the previous day and you would be able to see from the current ftse tracker whether tomorrows price would be higher or lower than the previous days price. Or would the bid/spread and fees make this not practical unless it was exremetly volatile markets (enough to make a bigger gain than the bid spread)?
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