What is a Fund?
A Fund is a pool of money sourced from a large number of different investors. The investors themselves do not make any decisions in regards to how the Fund’s assets will be invested, this lies with the Fund Manager.
Funds are suitable for investors who do not have the time, expertise or desire to construct and maintain an investment portfolio. However, the investor does have a large degree of choice when it comes to choosing a Fund, as each will have different objectives, risks levels, fees and a number of other distinguishing features. The two main types of Fund are Unit Trusts and Open Ended Investment Companies (OEICs).
When you invest in a Fund, you receive a number of units or shares linked in value to the underlying worth of the Fund’s investments. The price changes daily and the Slater Funds are valued at 12 noon. To work out this price per unit/share, the Fund Manager adds up the total value of the investments in the Fund, minus fees, and divides by the number of units/shares in issue. More information on how our Funds are valued can be found in their Prospectus.
You can invest directly with Slater Investments or through an online platform; a one-stop-shop where you can buy a variety of investments, including Funds, off the shelf. Whilst platforms are much lauded for their simplification of holding multiple investments, they come with additional charges of their own, so it is important to take the additional effect of these charges into consideration before making an investment. Slater Investments has agreements with a number of platforms, a list can be found at the bottom of this page.
As the theory goes, if the Fund’s underlying investments increase in value, so do the value of your units. However, past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. Investors may not receive back their original investment.
Single Priced Funds
All the Slater Funds are single priced. This means that a single price is applied to any transaction in the particular Fund, regardless of whether an investor is purchasing or redeeming shares/units. The single price is based on the mid-market valuation of the underlying investments less liabilities of the particular Fund. This is known as the net asset value of the Fund (the “NAV”).
The actual cost of purchasing or selling shares/units in the Fund may be higher or lower than the mid-market value used in calculating the relevant share/unit price. This is because the single price at which investors buy or sell their shares/units does not necessarily reflect the dealing costs arising when investing new money into the Fund or selling assets in the Fund’s portfolio when investors leave.
These costs may include dealing charges, commissions, taxes and the effect of dealing prices other than mid-market price. Such dealing costs are generally payable by the Fund, and significant flows in or out may have a materially disadvantageous effect on all of the investors in the Fund, including those who are not responsible for generating the costs. This is known as dilution.
We believe in protecting the interests of existing or remaining investors in the Fund by taking steps to minimise the effect of dilution and apply a dilution adjustment to the price of shares (also known as “swing pricing”) which protects continuing shareholders from the dilutive effect that comes from large new investments or redemptions. Swing pricing is designed to ensure that the Fund is priced in a manner which treats all investors fairly.
How is the swing price calculated?
We will calculate the NAV for the Fund and then, if considered appropriate, swing the NAV-based single price according to the rate of the applicable dilution adjustment. The determination to swing the share price in respect of the Fund will be made following a consideration of the net dealing activity (i.e. purchases or redemptions) in the Fund on that dealing day. An adjusted price will be the price of shares/units in the Fund for all deals that day. Please note, we may, in our discretion, decide not to swing the price on any day if we determine that continuing investors in the Fund will not normally be materially adversely affected. Full details are available in each Fund’s Prospectus, which can be found here.