new HL fund £1
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Herbalus
Posts: 2,634 Forumite
HL have launched a new fund with a fixed price of £1 per unit until launch on 2nd May.
https://www.hl.co.uk/funds/hl-funds/hl-select/hl-select-global-growth-shares?utm_campaign=AI025_HL_Select_Global_launch&theSource=AI025&Override=1
I know HL funds are generally considered poor value and rely on marketing to more unsophisticated investors. My question is what the £1 price relates to.
If this is the unit price, I don’t see what benefit it is by being £1. If they sell 1000 units and so raise £1000 and buy £1000 of shares, each unit remains at £1 underlying value.
But if they double the unit price to £2, they sell 500 units and raise £1000 to buy the same shares, each unit is worth twice as much so you haven’t overpaid for the units.
What am I missing? Is the £1 price a marketing tactic? As most people think in terms of money to invest as opposed to determining to buy a specific number of units and then finding out how much money that is.
https://www.hl.co.uk/funds/hl-funds/hl-select/hl-select-global-growth-shares?utm_campaign=AI025_HL_Select_Global_launch&theSource=AI025&Override=1
I know HL funds are generally considered poor value and rely on marketing to more unsophisticated investors. My question is what the £1 price relates to.
If this is the unit price, I don’t see what benefit it is by being £1. If they sell 1000 units and so raise £1000 and buy £1000 of shares, each unit remains at £1 underlying value.
But if they double the unit price to £2, they sell 500 units and raise £1000 to buy the same shares, each unit is worth twice as much so you haven’t overpaid for the units.
What am I missing? Is the £1 price a marketing tactic? As most people think in terms of money to invest as opposed to determining to buy a specific number of units and then finding out how much money that is.
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Investing "at launch price" is as you say, just a marketing tactic.
Further down the road, when it's doubled or tripled in value over ten years, people who are having to stump up £2 or £3 a share might say ,"ooh, wouldn't it have been nice to have invested in this at the launch price!". Of course, it doesn't specifically matter if that launch price was £1 or 50p or £100, if it's going to go up on value by x% between launch and a certain date, you will still get the x% no matter whether they are measuring in fractions of a pound or a pence or hundred pounds.
And it will have only been a good thing to have invested in that fund if it turns out to be better at what it does than a rival fund which you would have otherwise picked, regardless of what price the rival fund is currently showing.
If you invest on day one, you can put a pound in and the fund's assets at that point will literally be just your pound in the fund bank account. You are not getting in at some magic discount to what the fund's assets will be worth. Then you will get the fund's first day of management fee and admin cost accrual and the first investment purchases which might swiftly become worth less than the money the fund paid for them. So by day two, the subscription price may no longer be a pound - might well be less than a pound. Not ideal if you just paid a pound to get in
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Another cash cow fund for HL to sell to people that dont know any better.My question is what the £1 price relates to.
Most funds launch at 100p.If this is the unit price, I don’t see what benefit it is by being £1.
Correct. There is no benefit. It is pure marketing aimed at people that wouldnt know better. Using a bit of the privatisation style (where most did grow quickly after privatisation. Of course, none of that is comparable to a fund launch price.
HL are very good at marketing and that is what they are doing here. Some will fall for it.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Another cash cow fund for HL to sell to people that dont know any better.
Most funds launch at 100p.
Correct. There is no benefit. It is pure marketing aimed at people that wouldnt know better. Using a bit of the privatisation style (where most did grow quickly after privatisation. Of course, none of that is comparable to a fund launch price.
HL are very good at marketing and that is what they are doing here. Some will fall for it.
TER of 0.6% not too bad for an active fund. Can't see anything particularly bad here.
It certainly isn't in rip off territory.0 -
It is certainly not a rip off. However, it is an attempt to drill more from investors. 1.10% going to HL (yes they have costs to come out of that) instead of 0.45%.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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You're not missing anything, The unit price has to be something, it might as well be £1 as anything else. As you've noticed if it was double that your £1,000 would buy half the number of units but you'd still have £1,000 of underlying sharesWhat am I missing? Is the £1 price a marketing tactic?
The thing about this launch is that right now you'd be buying blind as there isn't much concrete information other than it will be global growth and they are looking at 30 to 40 companies, probably large cap. That's quite a concentrated portfolio, not a great deal more than Fundsmith, where the performance of any individual company could have a large effect on the fund as a whole. Does anybody think HL's analysis and stock selection would be better or as good as Smith's? I'd want a lot more disclosure before putting any money into it0 -
There looks to be an element of "When the ducks quack feed them" about the timing of this fund launch, appearing as it does to share some optical DNA with successful and, more importantly, popular funds such as those run by Smith and Train. A good strategy for attracting AUM you might think. Blue Whale similarly appears to me as an anatidae comestible vehicle...
I suspect that if so-called high quality stocks had enjoyed a sub-par or worse 5 years, this fund wouldn't be launching now, but what do I know?
NB don't let my cynicism put anyone off; donning my HL shareholder's hat then clearly I'd like to see the money pouring into this and other HL funds where they trouser most of the fees!0 -
Yes I fell for all their clever marketing when they launched the HL Select UK Growth Shares fund. I was mug enough to get in there at launch and buy at £1, and now it's grown 35%, compared to around 20% for the sector. What a mug I am.
But I haven't learnt. I'm getting in at the launch of this one too.0 -
Excellent. Thanks all.
I was one of those who didn’t know any better. But now I do 0
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