Fund valuations and selling
Discussion
Couple of questions I'm struggling to find answers for on Google and I don't have any friends/family with the knowledge on this topic to help out so PH it is 
Basically, I have two funds inside my S&S LISA held with AJ Bell - For clarity, they are:
- Vanguard FTSE Dev Wld ex UK Eq Idx Inc (only recently released I've been buying Inc rather than Acc, amateurism showing)
- L&G Global Technology Index I Acc
The Vanguard fund is valued the following morning of the stock markets' close and AJ Bell tend to update this valuation in my account around 9-10AM the same day (the following morning of the stock markets close), the L&G fund is updated the same day, sometime later in the evening.
What I want to know is if I chose to sell all holdings in both funds, will I receive the value of the funds at that time or when the transaction is complete (e.g. 3 days later) or somewhere in between?
Also, are my funds valuations a direct sum/calculation of the performance of each stock within the fund - Or is it more murky, i.e. they have their own valuations based on how many people are investing/selling off their stake in the fund/s?
Apologies as I feel these are fairly basic questions.
Basically, I have two funds inside my S&S LISA held with AJ Bell - For clarity, they are:
- Vanguard FTSE Dev Wld ex UK Eq Idx Inc (only recently released I've been buying Inc rather than Acc, amateurism showing)
- L&G Global Technology Index I Acc
The Vanguard fund is valued the following morning of the stock markets' close and AJ Bell tend to update this valuation in my account around 9-10AM the same day (the following morning of the stock markets close), the L&G fund is updated the same day, sometime later in the evening.
What I want to know is if I chose to sell all holdings in both funds, will I receive the value of the funds at that time or when the transaction is complete (e.g. 3 days later) or somewhere in between?
Also, are my funds valuations a direct sum/calculation of the performance of each stock within the fund - Or is it more murky, i.e. they have their own valuations based on how many people are investing/selling off their stake in the fund/s?
Apologies as I feel these are fairly basic questions.
Most funds have ‘forward’ pricing which is based on based on the valuation at the close of business on the day you instruct the sale.
Mostly funds are valued in the way you describe ie. the sum of current values of the fund’s holdings based on latest price and exchange rates. Other factors include expenses eg. fees, income eg. dividends.
A fund can contain an adjustment factor such as swing pricing or dilution levy. These are put in place to protect existing unit holders when there are a large number of redemptions or subscriptions. There are also some pricing strategies that offer similar protection when the fund holds less liquid instruments eg. property. On a typical equity fund you won’t see these too often.
Mostly funds are valued in the way you describe ie. the sum of current values of the fund’s holdings based on latest price and exchange rates. Other factors include expenses eg. fees, income eg. dividends.
A fund can contain an adjustment factor such as swing pricing or dilution levy. These are put in place to protect existing unit holders when there are a large number of redemptions or subscriptions. There are also some pricing strategies that offer similar protection when the fund holds less liquid instruments eg. property. On a typical equity fund you won’t see these too often.
LeoSayer said:
Most funds have ‘forward’ pricing which is based on based on the valuation at the close of business on the day you instruct the sale.
Mostly funds are valued in the way you describe ie. the sum of current values of the fund’s holdings based on latest price and exchange rates. Other factors include expenses eg. fees, income eg. dividends.
A fund can contain an adjustment factor such as swing pricing or dilution levy. These are put in place to protect existing unit holders when there are a large number of redemptions or subscriptions. There are also some pricing strategies that offer similar protection when the fund holds less liquid instruments eg. property. On a typical equity fund you won’t see these too often.
Thanks LeoSayer - I'm considering selling off both funds soon so I'll be looking out for a good window of opportunity (Black Friday, maybe?), too much anxiety for the short term as I plan to use my LISA to buy a house in the next 1-2 years.Mostly funds are valued in the way you describe ie. the sum of current values of the fund’s holdings based on latest price and exchange rates. Other factors include expenses eg. fees, income eg. dividends.
A fund can contain an adjustment factor such as swing pricing or dilution levy. These are put in place to protect existing unit holders when there are a large number of redemptions or subscriptions. There are also some pricing strategies that offer similar protection when the fund holds less liquid instruments eg. property. On a typical equity fund you won’t see these too often.
The price (value) you get is the price prevailing at the time the deal is actually done, not the time you click/phone to place the deal.
As already mentioned above, the price you get will be at the next pricing point - for instance close of business that day or, say, midday the next day. It varies between different funds.
The Settlement Date three days (or whatever) later is simply the date when the mechanics of the sale/purchase are actually carried out. i.e. The day you receive your money for a sale.
For CGT purposes (Capital Gains Tax) the date that matters is the date the sale/purchase is agreed - the contract date - the date when the deal is priced - the date that will be shown on your contract note. This can be significant if, for instance, if you are dealing close to the end of a financial year (tax year 5 April) or trying to crystallise a CGT position and then buy the same thing back again (30 days interval).
As already mentioned above, the price you get will be at the next pricing point - for instance close of business that day or, say, midday the next day. It varies between different funds.
The Settlement Date three days (or whatever) later is simply the date when the mechanics of the sale/purchase are actually carried out. i.e. The day you receive your money for a sale.
For CGT purposes (Capital Gains Tax) the date that matters is the date the sale/purchase is agreed - the contract date - the date when the deal is priced - the date that will be shown on your contract note. This can be significant if, for instance, if you are dealing close to the end of a financial year (tax year 5 April) or trying to crystallise a CGT position and then buy the same thing back again (30 days interval).
95JO said:
Thanks LeoSayer - I'm considering selling off both funds soon so I'll be looking out for a good window of opportunity (Black Friday, maybe?), too much anxiety for the short term as I plan to use my LISA to buy a house in the next 1-2 years.
You might reduce your risk by selling 1/12 every month for the next year rather than picking one window? Crystal ball stuff to be honest.95JO said:
What if I sell now (Saturday)? - Will I get my current valuation?
The answer already given doesn't change, you'll get the next fund pricing point - probably some time on Monday.IMO it's best to avoid giving instructions on a Friday p.m. or on a Saturday because the longer the interval before your deal is placed the greater the risk of things changing. Having said that, many providers will allow instructions to be cancelled up to quite a late stage. However, it's much it's better to make your decisions at the right time and then let the process run.
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