Understanding fund timing and pricing

dont_use_vistaprint

Hi, I recently opened a SIPP on interactive investor, I’m looking to buy some funds like VLS100 , when I checked the price, I see it gives a NAV. Is this the price I will get when I place a buy request on the platform?  or do I get the next available NAV.

Also I understand it takes a few days to complete the transaction, but they do guarantee the price at the time of making an order, rather than the time at order completion? 

Why does it take so long to complete a transaction in this platform? Is it faster if you buy VLS directly on Vanguard’s own platform ? When I buy stock or crypto on platforms like Revolut, it seems pretty instant.  is it because it is a fund rather than a stock ? Are stock buys and sells during trading hours instant on interactive investor

leosayer

This explains:
https://www.vanguardinvestor.co.uk/need-help/answer/when-will-my-order-be-placed

When you buy or sell a fund with forward pricing you don't get current price, you get the next one.

michaels

I have money in funds but really dislike the long delay and potential price change between submitting an order and the transaction going through. Now I just purchase the equivalent ETFs although I haven't bothered to move money already in funds.

dunstonh

Hi, I recently opened a SIPP on interactive investor, I’m looking to buy some funds like VLS100 , when I checked the price, I see it gives a NAV. Is this the price I will get when I place a buy request on the platform?  or do I get the next available NAV.

If you are buying the UT/OEIC version then it works exactly the same way as your Aviva plan.   It will get the price at the next dealing point.

If its the ETF version then these are priced in real time (although reality is what you see often lags) and can be dealt in real time.

Also I understand it takes a few days to complete the transaction, but they do guarantee the price at the time of making an order, rather than the time at order completion? 

Same as Aviva in respect of unit sales or purchases.   You get the unit price at the trade point.   The fact you get the settlement 2 or 3 days later doesnt change the price.

The only difference is in fund switches.  Aviva pre-fund switches. That means they will use their own money to purchase the new units simultaneously with the sale of the old ones.  It still happens at the next dealing point but without the 2-3 delay for settlement and a further day for the new buy transaction to take place.   I don't know if ii prefunds transactions.  ChatGPT says it doesn't, but AI is not a reliable source.  Hopefully someone in the know will confirm it.  If it doesn't pre-fund, it will remain out of the market longer due to fund switches and tax relief and have longer waits on withdrawals.

Why does it take so long to complete a transaction in this platform? Is it faster if you buy VLS directly on Vanguard’s own platform ? 

Vanguard doesn't prefund either.

 When I buy stock or crypto on platforms like Revolut, it seems pretty instant. 

If you buy assets that are pricing in real term during trading hours, then you pretty much get near instant trades.  e.g. Shares, ETFs and ITs 
You still have the settlement period with these though.

If you buy unit trusts, OEICs or pension funds, then they are traded once per day and for most funds, that means the next day by the time you place the order.

LHW99

 I don't know if ii prefunds transactions.  ChatGPT says it doesn't, but AI is not a reliable source.  Hopefully someone in the know will confirm it.  If it doesn't pre-fund, it will remain out of the market longer due to fund switches and tax relief and have longer waits on withdrawals.

II doesn't pre-fund.

Orders have to be placed one hour before the fund's cut-off to be traded that day - https://www.ii.co.uk/help/trading/investment-types/trading-funds

Trades then take around two (working) days to settle

https://www.ii.co.uk/help/trading/useful-information/trade-settlement-periods

When you place a trade, you get a little summary of how long to expect settlement in days before you confirm.

dont_use_vistaprint

I don’t understand the comment about the ETF version being in real time so there is a ETF version of vanguard’s VLS100 that you can buy and sell in real time for £3.99 per trade , If so, why isn’t everyone doing this it’s constantly going cheap and then making a new all-time high

FIREDreamer

dont_use_vistaprint said:

I don’t understand the comment about the ETF version being in real time so there is a ETF version of vanguard’s VLS100 that you can buy and sell in real time for £3.99 per trade , If so, why isn’t everyone doing this it’s constantly going cheap and then making a new all-time high

Think the nearest ETF equivalent is VWRL but it isn’t really the same due to the deliberate overweighting of UK in VLS100.

leosayer

In general, such funds are designed for buying and holding for the long term so being able to trade intra-day shouldn't make much difference.

Currently it's not possible to have ETF and normal fund classes of the same fund but that may change in the future. 

There are other differences such as the domicile (hardly any ETFs are UK based whereas many funds are) and the fees charged by platforms (some cap fees with ETFs but not funds). 

I find the best approach is to find the fund that best meets your needs whether it's ETF or not.

dunstonh

dont_use_vistaprint said:

I don’t understand the comment about the ETF version being in real time so there is a ETF version of vanguard’s VLS100 that you can buy and sell in real time for £3.99 per trade , If so, why isn’t everyone doing this it’s constantly going cheap and then making a new all-time high

Availability of the ETF is the first issue.

I know you have focused on VLS100, but most investors wouldn't use that, but use a global tracker instead.   Which is probably why Vanguard havent launched a VLS100 ETF but have with the other percentages (albeit in Euros).
 There are plenty of global ETFs. 

ETFs have their disadvantages as well as advantages.   The VLS ETFs are more expensive than the OEIC ETFs (0.25% ex ante plus 0.05% TC).    Sometimes the OEIC will be lower cost. Sometimes not.

Dealing charges exist on ETFs on most platforms (the trend is that dealing charges are falling and in some cases zero) but OEICs/UTs have no dealing costs.

There is no consumer protection on ETFs.   There is on OEICs/UTs (and even more on pension funds).

ETFs can also invest in ways that an OEIC cannot.  So, you need better knowledge and understanding of what the ETF is investing in and what mechanisms it is using compared to a UT/OEIC.

michaels

dunstonh said:

dont_use_vistaprint said:

I don’t understand the comment about the ETF version being in real time so there is a ETF version of vanguard’s VLS100 that you can buy and sell in real time for £3.99 per trade , If so, why isn’t everyone doing this it’s constantly going cheap and then making a new all-time high

Availability of the ETF is the first issue.

I know you have focused on VLS100, but most investors wouldn't use that, but use a global tracker instead.   Which is probably why Vanguard havent launched a VLS100 ETF but have with the other percentages (albeit in Euros).
 There are plenty of global ETFs. 

ETFs have their disadvantages as well as advantages.   The VLS ETFs are more expensive than the OEIC ETFs (0.25% ex ante plus 0.05% TC).    Sometimes the OEIC will be lower cost. Sometimes not.

Dealing charges exist on ETFs on most platforms (the trend is that dealing charges are falling and in some cases zero) but OEICs/UTs have no dealing costs.

There is no consumer protection on ETFs.   There is on OEICs/UTs (and even more on pension funds).

ETFs can also invest in ways that an OEIC cannot.  So, you need better knowledge and understanding of what the ETF is investing in and what mechanisms it is using compared to a UT/OEIC.

Useful Info, thanks.  Can you expand on the differences in protections?  Thanks

[I use MSCI global tracker, for which the cost ratio seems to be the same for the ETF and the fund]

dunstonh

Can you expand on the differences in protections?

Mainly no FSCS protection on ETFs.

[I use MSCI global tracker, for which the cost ratio seems to be the same for the ETF and the fund]

Following the RDR (2013), most UT/OEICs and ETFs are similarly charged.