HL Invest at Launch - £1

masonic

zagfles said:

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...

In a perfectly efficient liquid market, the price would always represent fair value of the company in question at that time. Any increased buying or selling demand that caused a movement in price would immediately be countered by traders capitalising on any price discrepancy so caused. In reality there would be some delay, but I disagree that it would normally take a day or two. Some minutes or hours, perhaps.

zagfles said:

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

Ok, well my comments were not in relation to that PP, and I was not taking any responsibility for, or supporting what they may have commented. I was making a different point of my own, so it is not surprising our exchange has been one of frustrated confusion. However, the text you have quoted is not an unreasonable characterisation of the current situation. I'm sure the information will be forthcoming in good time, but buying now is buying blind, and there is little to lose by waiting.

On the point about your previous experience investing at launch, I'm glad. People don't always pay for their mistakes. They lured me into Anthony Bolton's new IT, which didn't go quite so well