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  • FIRST POST
    • Herbalus
    • By Herbalus 15th Apr 19, 2:52 PM
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    Herbalus
    new HL fund £1
    • #1
    • 15th Apr 19, 2:52 PM
    new HL fund £1 15th Apr 19 at 2:52 PM
    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 donít 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 havenít 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.
Page 1
    • bowlhead99
    • By bowlhead99 15th Apr 19, 3:08 PM
    • 8,602 Posts
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    bowlhead99
    • #2
    • 15th Apr 19, 3:08 PM
    • #2
    • 15th Apr 19, 3:08 PM
    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
    • lpgm
    • By lpgm 15th Apr 19, 3:14 PM
    • 279 Posts
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    lpgm
    • #3
    • 15th Apr 19, 3:14 PM
    • #3
    • 15th Apr 19, 3:14 PM
    If this is the unit price, I donít see what benefit it is by being £1.
    Originally posted by Herbalus
    Yes, they're selling shares at £1 a share. It's a nice round number. Don't you like it?
    • dunstonh
    • By dunstonh 15th Apr 19, 3:18 PM
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    dunstonh
    • #4
    • 15th Apr 19, 3:18 PM
    • #4
    • 15th Apr 19, 3:18 PM
    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). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ffacoffipawb
    • By ffacoffipawb 15th Apr 19, 3:34 PM
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    ffacoffipawb
    • #5
    • 15th Apr 19, 3:34 PM
    • #5
    • 15th Apr 19, 3:34 PM
    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.
    Originally posted by dunstonh
    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.
    Early Retirement in June 2019 (all being well)
    • dunstonh
    • By dunstonh 15th Apr 19, 3:59 PM
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    dunstonh
    • #6
    • 15th Apr 19, 3:59 PM
    • #6
    • 15th Apr 19, 3:59 PM
    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). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ffacoffipawb
    • By ffacoffipawb 15th Apr 19, 4:08 PM
    • 2,646 Posts
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    ffacoffipawb
    • #7
    • 15th Apr 19, 4:08 PM
    • #7
    • 15th Apr 19, 4:08 PM
    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%.
    Originally posted by dunstonh
    Cheaper for larger investors with more invested. This fund is not for me at this stage though.
    Early Retirement in June 2019 (all being well)
    • ColdIron
    • By ColdIron 15th Apr 19, 4:56 PM
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    ColdIron
    • #8
    • 15th Apr 19, 4:56 PM
    • #8
    • 15th Apr 19, 4:56 PM
    What am I missing? Is the £1 price a marketing tactic?
    Originally posted by Herbalus
    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 shares

    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 it
    • seacaitch
    • By seacaitch 15th Apr 19, 5:49 PM
    • 159 Posts
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    seacaitch
    • #9
    • 15th Apr 19, 5:49 PM
    • #9
    • 15th Apr 19, 5:49 PM
    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!
    • zagfles
    • By zagfles 15th Apr 19, 6:32 PM
    • 14,056 Posts
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    zagfles
    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.
    • Herbalus
    • By Herbalus 15th Apr 19, 6:58 PM
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    Herbalus
    Excellent. Thanks all.

    I was one of those who didn’t know any better. But now I do
    • AnotherJoe
    • By AnotherJoe 15th Apr 19, 7:49 PM
    • 13,407 Posts
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    AnotherJoe
    HL have launched a new fund with a fixed price of £1 per unit until launch on 2nd May.

    <snip> 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.
    Originally posted by Herbalus
    Thats not really the same thing. They are raising an amount of money. The end price is up to them.

    It has to be "a" price, and £1 is a nice, simple, easy one. If it launched at (say) 3.47p it wouldnt be very memorable "buy in now at £1" sounds much better than "buy in now at £3.47p" and is considerably better in an advert than "invest £1,000 and we'll tell you how many units that is in a few weeks".

    It also makes it very easy for buyers since "I'd like to invest £1,000" is easy to work out how many units, and no one will make a mistake buying units instead of amount or vice-versa.



    So yes its mostly marketing but there is some logic to it, it might as well be be £1 as anything else.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • A_T
    • By A_T 16th Apr 19, 9:05 AM
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    A_T
    Might be a good fund but I'd like to see what it's investing in first.
    • Doshwaster
    • By Doshwaster 16th Apr 19, 10:34 AM
    • 5,131 Posts
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    Doshwaster
    Most fund managers like to keep their unit price in the £1 to 10 range as it makes the numbers manageable. There are some exceptions - the Vanguard funds are all in the hundreds of pounds per unit.

    Not that it makes any difference in reality 100 x £1 is the same as 1 x £100.
    • Alexland
    • By Alexland 16th Apr 19, 4:26 PM
    • 4,884 Posts
    • 4,215 Thanks
    Alexland
    HL just keep pushing this soddin' fund in a relentless marketing effort. Am going to login tonight and switch off their 'research' emails. I've been doing that a lot recently with other fund manager emails that clutter my inbox. There are very few in the investment industry with anything interesting to say.
    • short butt sweet
    • By short butt sweet 16th Apr 19, 4:42 PM
    • 304 Posts
    • 252 Thanks
    short butt sweet
    personally, i wouldn't invest in a new fund unless it had a fixed price of £3.14 or £2.71 (approximately). not holding my breath, because the maths geek demographic is probably too small for it to be worth anybody's while launching such a fund.
    • Alexland
    • By Alexland 16th Apr 19, 4:50 PM
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    Alexland
    i wouldn't invest in a new fund unless it had a fixed price of £3.14 or £2.71 (approximately).
    Originally posted by short butt sweet
    Without any performance history I would want the advisor to show me an asset allocation pi chart before e could sell it to me. I wouldn't want to make an irrational decision.
    • dividendhero
    • By dividendhero 16th Apr 19, 5:26 PM
    • 605 Posts
    • 933 Thanks
    dividendhero

    I know HL funds are generally considered poor value and rely on marketing to more unsophisticated investors. .
    Originally posted by Herbalus
    I'm not convinced that's a totally fair comment.

    I've run the numbers for HL MM Income and Growth - it's 5 year performance is pretty close to CTY - a staple for many "sophisiticated investors"

    Add in the brand recognition of HL, 4.5% yield and monthly payouts, you can see it's appeal - certainly better than money stuck in a cash ISA earning next to nothing
    • Pension Geek
    • By Pension Geek 16th Apr 19, 5:45 PM
    • 160 Posts
    • 119 Thanks
    Pension Geek
    Without any performance history I would want the advisor to show me an asset allocation pi chart before e could sell it to me. I wouldn't want to make an irrational decision.
    Originally posted by Alexland
    i think thatís a good idea, it can be very complex.
    Not an expert, but like pensions, tax questions and giving guidance. There is no substitute for tailored financial advice.
    • dividendhero
    • By dividendhero 16th Apr 19, 6:12 PM
    • 605 Posts
    • 933 Thanks
    dividendhero
    Without any performance history I would want the advisor to show me an asset allocation pi chart before e could sell it to me. I wouldn't want to make an irrational decision.
    Originally posted by Alexland
    HL have been there and done it....

    https://www.hl.co.uk/funds/hl-funds/hl-select/hl-select-global-growth-shares/portfolio-breakdown
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