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HL Investment Fund Spread 5.77%
Comments
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The HL site shows that the performance of the fund over the last 2 years had gains of 17.18% and 9.07%. So I would stick with the fund now that you've bought it as it still seems a good addition to a portfolio and hold long term despite the buy/sell spread.As such on the performance of the fund in the last few years i will be lucky to make my money back within a year.0 -
[FONT=Verdana, sans-serif]Assuming the 5.77% spread gives a profit to the fund over its actual costs, does that profit go into the fund's value or is it kept as extra income by the fund managers on top of normal charges?[/FONT]
[FONT=Verdana, sans-serif]If the profit goes back into the fund valuation then if you keep the fund for long enough you will benefit from others buying and selling in the future because the unit price will be topped up by this profit.[/FONT]0 -
[FONT=Verdana, sans-serif]Assuming the 5.77% spread gives a profit to the fund over its actual costs, does that profit go into the fund's value or is it kept as extra income by the fund managers on top of normal charges?[/FONT]
[FONT=Verdana, sans-serif]If the profit goes back into the fund valuation then if you keep the fund for long enough you will benefit from others buying and selling in the future because the unit price will be topped up by this profit.[/FONT]
It’s not profit. In simplistic terms, 5% of it is to cover stand duty land tax and the other 0.77% is to cover other costs of buying a commercial property."If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett
Save £12k in 2025 - #024 £1,450 / £15,000 (9%)0 -
I'd be slightly ashamed to make a complaint that I hadn't read the information before placing the trade. The good news is that you now own what you wanted to own. Whenever I have bought real life property then after paying stamp duty and solicitors fees I have always been about 5% down. That's life.0
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Caveat Emptor and K.I.S.S“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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george4064 wrote: »It’s not profit. In simplistic terms, 5% of it is to cover stand duty land tax and the other 0.77% is to cover other costs of buying a commercial property.
[FONT=Verdana, sans-serif]I can understand that being the case if there was only ever new investment in the fund.[/FONT]
[FONT=Verdana, sans-serif]However if, for example, the same number of units were sold as bought then there would be no change in the stock of commercial property owned and therefore no 5% stamp duty to pay.[/FONT]0 -
So, if I bought some shares at a different time when a property purchase was imminent, you would be happy for me to pay on your behalf?I think you need to do a bit more research on collective investments.
And, of course, if you don't like the terms, don't buy.0 -
[FONT=Verdana, sans-serif]I can understand that being the case if there was only ever new investment in the fund.[/FONT]
[FONT=Verdana, sans-serif]However if, for example, the same number of units were sold as bought then there would be no change in the stock of commercial property owned and therefore no 5% stamp duty to pay.[/FONT]
How do you work that out? The Government doesn't give you the stamp duty back when you sell a property.0 -
Malthusian wrote: »How do you work that out? The Government doesn't give you the stamp duty back when you sell a property.
[FONT=Verdana, sans-serif]If say £10,000 flows into the fund but also £10,000 is withdrawn there will be no new investment in commercial property and hence no new stamp duty incurred.[/FONT]
[FONT=Verdana, sans-serif]However there is still a 5.77% spread and since the admin cost ought to be minimal maybe some of that 5.77% spread ends up as profit for the fund.[/FONT]0 -
[FONT=Verdana, sans-serif]If say £10,000 flows into the fund but also £10,000 is withdrawn there will be no new investment in commercial property and hence no new stamp duty incurred.[/FONT]
[FONT=Verdana, sans-serif]However there is still a 5.77% spread and since the admin cost ought to be minimal maybe some of that 5.77% spread ends up as profit for the fund.[/FONT]
To the extent that the 5.7% exceeds the actual costs of administering the subscription and redemption process including the round-trip buy and sell, you are right, it is kind of a 'profit', or rather, it will cover more costs than the fund actually incurs as the investors churn, because some of the investor redemption money is covered by investor subscription proceeds and vice versa, without there needing to be why underlying asset sales.
Some funds may have the flexibility to offer swing pricing, moving the official price from a bid basis to an offer basis from time to time depending on the direction of net fund flows. Others may publish and stick to a system that has a spread between buy and sell which they enforce to make sure that joiners and leavers are discouraged from being short termist and flighty. They want to avoid liquidity issues in what is a very illiquid asset class, resulting in them both carrying a large proportion of cash and operating a spread that discourages leaving the fund on a whim .0
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