HL Invest at Launch - £1

zagfles

masonic said:

zagfles said:

EdSwippet said:

zagfles said:

As I said, people who don't understand this should probably get a POA for someone else to manage their money...

Not everybody is as clever as you are. HL are clearly trying to create the impression that £1/unit is somehow special. It is not.

Are they really? You obviously don't think it is. Did anyone here think £1 was a special bargain price? Or just a convenient launch price?

They've toned it down a bit from offers I can remember being marketed in the past when I was a client. Those old offers really did imply that the launch price was a special deal, and that clients would need to hurry to secure the launch price. This seems to have been pulled back to the line of what is acceptable without crossing it.

While it is good many have clarified to anyone under misapprehensions that there is no advantage in acting by 11:59, 7 March to invest at launch, and the launch price is not a special price, even more importantly these are expensive funds that will attract an expensive platform fee to hold, so not a great choice to hold at all, let alone at launch.

At present, it also appears there are no details of the intended asset allocation of the funds beyond a very general description of intent. Perhaps further details will be forthcoming, but anyone who feels willing to write HL a cheque at this stage probably ought not to be making their own investment decisions for their own safety.

There could actually be an advantage investing at launch.

At launch the fund will use the wall of money investors have given them (because they're gullible fools who've falled for their marketing and want to get the £1 price) to buy a shed load of equities in a limited number of companies.

All else being equal, that big purchase of shares will push the share price of those companies up.

Investing a day later means they'll create more units by buying more shares in those same companies, which all else being equal would mean they're more expensive. They are unlikely to be trading units rather than creating them, as people are unlikely to be selling units a day after buying them.

Obviously share prices will be affected by a million other things and even the wall of money from HL isn't going to make a massive difference in the share price. But it could mean investing at launch gets you a slight edge.

They've missed a trick in their marketing

Rollinghome

It's hard enough to evaluate existing managed funds, especially when the majority fail even to match their respective index.  Buying a fund such as that, while knowing so little about it, is like buying a pig in a poke, in a sack, locked in a black box.  Avoid, for all the reasons already given.

This is misleading selling straight from the traditional HL play book.  I'd hoped that HL's methods might become more respectable since RDR sort to bring their practices under control, the damage caused by the Woodford/HL scandal, and Peter Hargreaves stepped away.  Apparently not.

zagfles

Rollinghome said:

It's hard enough to evaluate existing managed funds, especially when the majority fail even to match their respective index.  Buying a fund such as that, while knowing so little about it, is like buying a pig in a poke, in a sack, locked in a black box.  Avoid, for all the reasons already given.

The funds are aimed at people who don't want to evaluate them, other than a broad risk level, they want to "leave it to an expert". Like people generally do with VLS funds etc, or an IFA etc.

The main reason for not buying them isn't that, or their supposed misleading launch price, it's that the charges are ridiculously high!

masonic

zagfles said:

masonic said:

zagfles said:

EdSwippet said:

zagfles said:

As I said, people who don't understand this should probably get a POA for someone else to manage their money...

Not everybody is as clever as you are. HL are clearly trying to create the impression that £1/unit is somehow special. It is not.

Are they really? You obviously don't think it is. Did anyone here think £1 was a special bargain price? Or just a convenient launch price?

They've toned it down a bit from offers I can remember being marketed in the past when I was a client. Those old offers really did imply that the launch price was a special deal, and that clients would need to hurry to secure the launch price. This seems to have been pulled back to the line of what is acceptable without crossing it.

While it is good many have clarified to anyone under misapprehensions that there is no advantage in acting by 11:59, 7 March to invest at launch, and the launch price is not a special price, even more importantly these are expensive funds that will attract an expensive platform fee to hold, so not a great choice to hold at all, let alone at launch.

At present, it also appears there are no details of the intended asset allocation of the funds beyond a very general description of intent. Perhaps further details will be forthcoming, but anyone who feels willing to write HL a cheque at this stage probably ought not to be making their own investment decisions for their own safety.

There could actually be an advantage investing at launch.

At launch the fund will use the wall of money investors have given them (because they're gullible fools who've falled for their marketing and want to get the £1 price) to buy a shed load of equities in a limited number of companies.

All else being equal, that big purchase of shares will push the share price of those companies up.

I know this comment is made partly in jest, but you could be right about it pushing the price up. However, it will push the price up for the fund's purchase too. When you place a large order that moves the price, you get the moved price. Often what happens is you get a bad price, then the equilibrium is re-established and the price falls back. More likely therefore, in my view, is that the fund will not get a good price when it takes all the money it has raised during the subscription period and dumps it into its chosen holdings. Those who buy later when the net inflows are smaller (or even better when there are net outflows) are more likely to secure a fairer market price for their underlying holdings. That assumes of course that these funds will be primarily invested in highly liquid large companies, rather than the sort of guff they managed to invest in indirectly via their MM funds.

zagfles said:

Rollinghome said:

It's hard enough to evaluate existing managed funds, especially when the majority fail even to match their respective index.  Buying a fund such as that, while knowing so little about it, is like buying a pig in a poke, in a sack, locked in a black box.  Avoid, for all the reasons already given.

The funds are aimed at people who don't want to evaluate them, other than a broad risk level, they want to "leave it to an expert". Like people generally do with VLS funds etc, or an IFA etc.

The main reason for not buying them isn't that, or their supposed misleading launch price, it's that the charges are ridiculously high!

Yes, but an IFA has the responsibility to ensure the investments selected for an investor are appropriate, and is on the hook for compensation if they are not. Whereas VLS does (and must) provide the investor with detailed information about their holdings and asset allocation. I don't think anyone here would advocate a newbie investor just blindly picking a VLS fund without understanding what it holds. If someone started a thread here and said they were invested in VLS and didn't know which one or what the difference between them was, they'd rightly get some feedback about not investing in something they don't understand. There would be an expectation someone investing in VLS would understand the percentage held in equities, that it was broadly market-cap weighted, and had home bias. At the very least the first two. These new HL funds do have some basic information about how they intend to invest, but the problem is that the fund house doesn't have the best track record for sticking to its mandate.

newatc

I might have been interested if they had set it at 99p 

zagfles

masonic said:

zagfles said:

masonic said:

zagfles said:

EdSwippet said:

zagfles said:

As I said, people who don't understand this should probably get a POA for someone else to manage their money...

Not everybody is as clever as you are. HL are clearly trying to create the impression that £1/unit is somehow special. It is not.

Are they really? You obviously don't think it is. Did anyone here think £1 was a special bargain price? Or just a convenient launch price?

They've toned it down a bit from offers I can remember being marketed in the past when I was a client. Those old offers really did imply that the launch price was a special deal, and that clients would need to hurry to secure the launch price. This seems to have been pulled back to the line of what is acceptable without crossing it.

While it is good many have clarified to anyone under misapprehensions that there is no advantage in acting by 11:59, 7 March to invest at launch, and the launch price is not a special price, even more importantly these are expensive funds that will attract an expensive platform fee to hold, so not a great choice to hold at all, let alone at launch.

At present, it also appears there are no details of the intended asset allocation of the funds beyond a very general description of intent. Perhaps further details will be forthcoming, but anyone who feels willing to write HL a cheque at this stage probably ought not to be making their own investment decisions for their own safety.

There could actually be an advantage investing at launch.

At launch the fund will use the wall of money investors have given them (because they're gullible fools who've falled for their marketing and want to get the £1 price) to buy a shed load of equities in a limited number of companies.

All else being equal, that big purchase of shares will push the share price of those companies up.

I know this comment is made partly in jest, but you could be right about it pushing the price up. However, it will push the price up for the fund's purchase too. When you place a large order that moves the price, you get the moved price.

That makes no sense. Say buying a million shares moves the price up 1p. What does the buyer of the million shares pay? If it's the full rise caused by their purchase, then nobody would ever buy a million shares. They'd buy half a million, which would push the price up by 0.5p, then another half million. Or 100,000, which would push the price up by 0.1p, then another 9 tranches of 100,000, etc, and could be taken to the nth degree.

Logically if the purchase of a million shares pushes the price up by 1p, then the purchaser of the million shares should pay 0.5p more.

But then someone coming along afterwards, eg someone who missed out of the "bargain" £1 launch price of a fund which chose to invest in those shares, would pay 1p more (in reality get less units because the fund unit price has gone up).

Often what happens is you get a bad price, then the equilibrium is re-established and the price falls back. More likely therefore, in my view, is that the fund will not get a good price when it takes all the money it has raised during the subscription period and dumps it into its chosen holdings. Those who buy later when the net inflows are smaller (or even better when there are net outflows) are more likely to secure a fairer market price for their underlying holdings.

Possibly. But we're talking about investing at launch or a day or two later. Not investing in an established fund.

Yes, but an IFA has the responsibility to ensure the investments selected for an investor are appropriate, and is on the hook for compensation if they are not. Whereas VLS does (and must) provide the investor with detailed information about their holdings and asset allocation. I don't think anyone here would advocate a newbie investor just blindly picking a VLS fund without understanding what it holds. If someone started a thread here and said they were invested in VLS and didn't know which one or what the difference between them was, they'd rightly get some feedback about not investing in something they don't understand. There would be an expectation someone investing in VLS would understand the percentage held in equities, that it was broadly market-cap weighted, and had home bias. At the very least the first two. These new HL funds do have some basic information about how they intend to invest, but the problem is that the fund house doesn't have the best track record for sticking to its mandate.

And the KIID for the new funds includes all that information. Why not put in a complaint to the FCA as someone else did earlier if you don't think it's detailed enough. But I suspect HL are fully aware of what details the FCA require in KIIDs

Johnjdc

zagfles said:

That makes no sense. Say buying a million shares moves the price up 1p. What does the buyer of the million shares pay? If it's the full rise caused by their purchase, then nobody would ever buy a million shares.

In point of fact large purchases often are handled differently, although a million shares probably isn't large enough. Well, £1m isn't anyway. 

Sometimes it's done a little bit at a time (an "iceberg order") but more often if we are talking £50m+ (really anything from 5-500 depending on the size of the company's shares being bought and sold) it's done via a large bank ringing round out of hours to match buyers and sellers rather than the way you or I might trade instantly at the market price.

masonic

zagfles said:

masonic said:

zagfles said:

masonic said:

zagfles said:

EdSwippet said:

zagfles said:

As I said, people who don't understand this should probably get a POA for someone else to manage their money...

Not everybody is as clever as you are. HL are clearly trying to create the impression that £1/unit is somehow special. It is not.

Are they really? You obviously don't think it is. Did anyone here think £1 was a special bargain price? Or just a convenient launch price?

They've toned it down a bit from offers I can remember being marketed in the past when I was a client. Those old offers really did imply that the launch price was a special deal, and that clients would need to hurry to secure the launch price. This seems to have been pulled back to the line of what is acceptable without crossing it.

While it is good many have clarified to anyone under misapprehensions that there is no advantage in acting by 11:59, 7 March to invest at launch, and the launch price is not a special price, even more importantly these are expensive funds that will attract an expensive platform fee to hold, so not a great choice to hold at all, let alone at launch.

At present, it also appears there are no details of the intended asset allocation of the funds beyond a very general description of intent. Perhaps further details will be forthcoming, but anyone who feels willing to write HL a cheque at this stage probably ought not to be making their own investment decisions for their own safety.

There could actually be an advantage investing at launch.

At launch the fund will use the wall of money investors have given them (because they're gullible fools who've falled for their marketing and want to get the £1 price) to buy a shed load of equities in a limited number of companies.

All else being equal, that big purchase of shares will push the share price of those companies up.

I know this comment is made partly in jest, but you could be right about it pushing the price up. However, it will push the price up for the fund's purchase too. When you place a large order that moves the price, you get the moved price.

That makes no sense. Say buying a million shares moves the price up 1p. What does the buyer of the million shares pay? If it's the full rise caused by their purchase, then nobody would ever buy a million shares. They'd buy half a million, which would push the price up by 0.5p, then another half million. Or 100,000, which would push the price up by 0.1p, then another 9 tranches of 100,000, etc, and could be taken to the nth degree.

Logically if the purchase of a million shares pushes the price up by 1p, then the purchaser of the million shares should pay 0.5p more.

But then someone coming along afterwards, eg someone who missed out of the "bargain" £1 launch price of a fund which chose to invest in those shares, would pay 1p more (in reality get less units because the fund unit price has gone up).

Often what happens is you get a bad price, then the equilibrium is re-established and the price falls back. More likely therefore, in my view, is that the fund will not get a good price when it takes all the money it has raised during the subscription period and dumps it into its chosen holdings. Those who buy later when the net inflows are smaller (or even better when there are net outflows) are more likely to secure a fairer market price for their underlying holdings.

Possibly. But we're talking about investing at launch or a day or two later. Not investing in an established fund.

Where this happens in practice and the fact can be determined (i.e. an RNS is published due to an ownership threshold being crossed by the purchasing investor), what is often seen is the behaviour you describe. The price is lifted by a smaller amount and remains there for a period of time during the day's trading as shares are mopped up within a price range, then the price falls back within minutes or hours, often before the end of the trading session. The consolidated trade is then published a bit later, giving the appearance of a jump in the price between lower value trades, which can trip up the unwary. In an efficient market, buying a day or two later would be sufficient time to allow the equilibrium between buyers and sellers to be re-established. You generally want to avoid buying during the same window as a large buy order is being filled, whether separately or as part of that buying activity. Where a price can remain high for a more extended period is in an illiquid market, or when the incoming investor is considered to have some special insight and the purchase itself drives positive sentiment about the company in question.

zagfles said:

Yes, but an IFA has the responsibility to ensure the investments selected for an investor are appropriate, and is on the hook for compensation if they are not. Whereas VLS does (and must) provide the investor with detailed information about their holdings and asset allocation. I don't think anyone here would advocate a newbie investor just blindly picking a VLS fund without understanding what it holds. If someone started a thread here and said they were invested in VLS and didn't know which one or what the difference between them was, they'd rightly get some feedback about not investing in something they don't understand. There would be an expectation someone investing in VLS would understand the percentage held in equities, that it was broadly market-cap weighted, and had home bias. At the very least the first two. These new HL funds do have some basic information about how they intend to invest, but the problem is that the fund house doesn't have the best track record for sticking to its mandate.

And the KIID for the new funds includes all that information. Why not put in a complaint to the FCA as someone else did earlier if you don't think it's detailed enough. But I suspect HL are fully aware of what details the FCA require in KIIDs

Was it not clear that those comments were in relation to what research a DIY investor should be doing, and what questions they should be able to answer before they invest, if they didn't want to be accused of not doing their research? I've not mentioned, nor have I considered at all, what the FCA considers acceptable, as that is a low bar indeed.

There is a huge gap between what breaches FCA regulations and what a sensible investor should do or not do. Until recently the FCA was happy with retail investors participating in mini-bond launches. They are still happy with investors classifying themselves as 'self-certified sophisticated' once they have made a couple of P2P loans in order to lift any restrictions around how much they can invest in non-readily realisable securities. If an IFA can complain to the FCA about retail investors being scammed and have nothing done about it for years until all of the money was long spirited away, then it would be futile to make any complaint about a KIID, even if it did break the rules. There is no regulatory requirement to include this sort of information in KIIDs, and often it isn't included in these documents, so I don't believe there is a breach in that regard.

I'm not sure if you are arguing that sensible DIY investors do not need to have an understanding of the underlying asset allocation within their portfolios (in which case we should probably just agree to disagree) or we are talking at cross-purposes. It seems we do agree that sensible investors should avoid the funds for other reasons (costs).

zagfles

Johnjdc said:

zagfles said:

That makes no sense. Say buying a million shares moves the price up 1p. What does the buyer of the million shares pay? If it's the full rise caused by their purchase, then nobody would ever buy a million shares.

In point of fact large purchases often are handled differently, although a million shares probably isn't large enough. Well, £1m isn't anyway. 

Sometimes it's done a little bit at a time (an "iceberg order") but more often if we are talking £50m+ (really anything from 5-500 depending on the size of the company's shares being bought and sold) it's done via a large bank ringing round out of hours to match buyers and sellers rather than the way you or I might trade instantly at the market price.

Right but I doubt the HL funds are going to be buying £50m+ in any single company's shares. So £1m or less s probably more realistic.

zagfles

masonic said:

zagfles said:

masonic said:

zagfles said:

masonic said:

zagfles said:

EdSwippet said:

zagfles said:

As I said, people who don't understand this should probably get a POA for someone else to manage their money...

Not everybody is as clever as you are. HL are clearly trying to create the impression that £1/unit is somehow special. It is not.

Are they really? You obviously don't think it is. Did anyone here think £1 was a special bargain price? Or just a convenient launch price?

They've toned it down a bit from offers I can remember being marketed in the past when I was a client. Those old offers really did imply that the launch price was a special deal, and that clients would need to hurry to secure the launch price. This seems to have been pulled back to the line of what is acceptable without crossing it.

While it is good many have clarified to anyone under misapprehensions that there is no advantage in acting by 11:59, 7 March to invest at launch, and the launch price is not a special price, even more importantly these are expensive funds that will attract an expensive platform fee to hold, so not a great choice to hold at all, let alone at launch.

At present, it also appears there are no details of the intended asset allocation of the funds beyond a very general description of intent. Perhaps further details will be forthcoming, but anyone who feels willing to write HL a cheque at this stage probably ought not to be making their own investment decisions for their own safety.

There could actually be an advantage investing at launch.

At launch the fund will use the wall of money investors have given them (because they're gullible fools who've falled for their marketing and want to get the £1 price) to buy a shed load of equities in a limited number of companies.

All else being equal, that big purchase of shares will push the share price of those companies up.

I know this comment is made partly in jest, but you could be right about it pushing the price up. However, it will push the price up for the fund's purchase too. When you place a large order that moves the price, you get the moved price.

That makes no sense. Say buying a million shares moves the price up 1p. What does the buyer of the million shares pay? If it's the full rise caused by their purchase, then nobody would ever buy a million shares. They'd buy half a million, which would push the price up by 0.5p, then another half million. Or 100,000, which would push the price up by 0.1p, then another 9 tranches of 100,000, etc, and could be taken to the nth degree.

Logically if the purchase of a million shares pushes the price up by 1p, then the purchaser of the million shares should pay 0.5p more.

But then someone coming along afterwards, eg someone who missed out of the "bargain" £1 launch price of a fund which chose to invest in those shares, would pay 1p more (in reality get less units because the fund unit price has gone up).

Often what happens is you get a bad price, then the equilibrium is re-established and the price falls back. More likely therefore, in my view, is that the fund will not get a good price when it takes all the money it has raised during the subscription period and dumps it into its chosen holdings. Those who buy later when the net inflows are smaller (or even better when there are net outflows) are more likely to secure a fairer market price for their underlying holdings.

Possibly. But we're talking about investing at launch or a day or two later. Not investing in an established fund.

Where this happens in practice and the fact can be determined (i.e. an RNS is published due to an ownership threshold being crossed by the purchasing investor), what is often seen is the behaviour you describe. The price is lifted by a smaller amount and remains there for a period of time during the day's trading as shares are mopped up within a price range, then the price falls back within minutes or hours, often before the end of the trading session. The consolidated trade is then published a bit later, giving the appearance of a jump in the price between lower value trades, which can trip up the unwary. In an efficient market, buying a day or two later would be sufficient time to allow the equilibrium between buyers and sellers to be re-established. You generally want to avoid buying during the same window as a large buy order is being filled, whether separately or as part of that buying activity. Where a price can remain high for a more extended period is in an illiquid market, or when the incoming investor is considered to have some special insight and the purchase itself drives positive sentiment about the company in question.

Simple supply and demand in an efficient liquid market would say that every extra purchaser (ie increased demand) would raise the price and every extra seller would lower it. So a big purchaser coming in should raise the price permanently, all other things being equal (which of course they aren't). Of course a raise price may increase sellers, but that could take a day or two...

zagfles said:

Yes, but an IFA has the responsibility to ensure the investments selected for an investor are appropriate, and is on the hook for compensation if they are not. Whereas VLS does (and must) provide the investor with detailed information about their holdings and asset allocation. I don't think anyone here would advocate a newbie investor just blindly picking a VLS fund without understanding what it holds. If someone started a thread here and said they were invested in VLS and didn't know which one or what the difference between them was, they'd rightly get some feedback about not investing in something they don't understand. There would be an expectation someone investing in VLS would understand the percentage held in equities, that it was broadly market-cap weighted, and had home bias. At the very least the first two. These new HL funds do have some basic information about how they intend to invest, but the problem is that the fund house doesn't have the best track record for sticking to its mandate.

And the KIID for the new funds includes all that information. Why not put in a complaint to the FCA as someone else did earlier if you don't think it's detailed enough. But I suspect HL are fully aware of what details the FCA require in KIIDs

Was it not clear that those comments were in relation to what research a DIY investor should be doing, and what questions they should be able to answer before they invest, if they didn't want to be accused of not doing their research? I've not mentioned, nor have I considered at all, what the FCA considers acceptable, as that is a low bar indeed.

There is a huge gap between what breaches FCA regulations and what a sensible investor should do or not do. Until recently the FCA was happy with retail investors participating in mini-bond launches. They are still happy with investors classifying themselves as 'self-certified sophisticated' once they have made a couple of P2P loans in order to lift any restrictions around how much they can invest in non-readily realisable securities. If an IFA can complain to the FCA about retail investors being scammed and have nothing done about it for years until all of the money was long spirited away, then it would be futile to make any complaint about a KIID, even if it did break the rules. There is no regulatory requirement to include this sort of information in KIIDs, and often it isn't included in these documents, so I don't believe there is a breach in that regard.

I'm not sure if you are arguing that sensible DIY investors do not need to have an understanding of the underlying asset allocation within their portfolios (in which case we should probably just agree to disagree) or we are talking at cross-purposes. It seems we do agree that sensible investors should avoid the funds for other reasons (costs).

This bit started with a PP commenting that HL aren't providing enough info to "evaluate" the funds, "Buying a fund such as that, while knowing so little about it, is like buying a pig in a poke, in a sack, locked in a black box."

So obviously referring to a far more detailed evaluation than the KIID which is clearly available on their website.

I'm arguing that they are aimed at investors who don't want to "evaluate" the funds in that sort of detail. And that investors in VLS etc probably look no more in depth than the bit I bolded of your quote above which is easily the level of detail in the KIID of the HL funds.

Anyway, I'm bored now. I only joined this thread to take the p out of the apparently scandalous way HL have set a launch price of £1 for a new fund and how stooopid anyone would be to fall for it. I'm surprised no-one has claimed they're trying to make out it's a privatisation like last time Seriously, someone did!

I did buy one of their previous £1 launches (HL select UK growth) back in 2016, how stoopid am I, it's gone up 60% against a sector average of 40%.  That'll teach me.

Perhaps this thread should continue on the PVW board, it's more on topic there