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Buying/Selling Funds
Hugh M
Posted: 09 August 2017 07:13:10(UTC)
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My beef about fund managers has nothing to do with charges. I decide on a fund based on returns achieved after charges.

My beef is that I recently sold a Polar Capital Fund. Sell instruction was placed with the platform on Sunday and was actioned first thing on Monday. As pricing is done at 16.00 and selling at 17.00, I expected to get the price at 16.00 on Monday. However, the sale did not take place until after 16.00 on Tuesday.

I have recently (8 Aug) bought 2 funds. Baillie Gifford fund buy order was placed first thing in the morning. The purchase completed the same day at the price at 10.00 on 8 Aug. Smith & Williamson fund purchase is "placed" but not completed on 9 Aug 08.00. These are both Asia Pacific funds.

Wouldn't it be nice to know when a buy/sell instruction would be actioned?

I have experienced several instances of similar nature. Some managers being quick to respond and others very tardy. It is not the fault of the platform which has an automated progress updater for all deal instructions.

Tim D
Posted: 09 August 2017 08:31:24(UTC)
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I've noticed this too on ATS' platform. Their guidance does say

Quote:
Funds are usually priced once a day (although some are priced weekly) and have a cut off time for placing orders each day ahead of that pricing point. This is known as forward pricing and means you will never know your trading price in advance. If you place your order after the daily cut off time you usually trade at the next day’s price. We will confirm your price in your Contract Note which is generated after your order is completed.


I've not made a systematic study, but most fund orders do execute same day (I do make a point of getting them in before 11:00 if I'm buying/selling anything). However some do seem to hang around for a day or two more, and some years ago I remember a Vanguard order taking several days. Not sure where the hold up is. You seem very sure it's not the platform, but if the fund is advertising "Dealing frequency: Daily", "Valuation point: 16:00" then I'd hope that's what they provide and not "Dealing frequency: when we can be bothered".

I note that if I use ATS' reinvestment mechanisms to top up holdings instead of doing a normal fund order (reinvestment is cheaper), I don't think I've ever seen those go same day and they typically take 2-3 days before firing (which is actually quite useful if you're redirecting multiple divis into one reinvestment target and the divis turn up spread out over a few days).

I always wondered if the platforms were sitting on these things because they might try and match buyers and sellers on the same platform - and save themselves a few pennies keeping the trades "in house" - or because they're trying to aggregate multiple buyers and sellers into one order and the longer they leave it bigger it gets and the less the overheads are as a proportion.
King Lodos
Posted: 09 August 2017 15:22:21(UTC)
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That's what you give up with open-ended funds .. They can take as a long as they want to process your order – and stop you selling or buying when they want too .. Vanguard tend to be quite slow .. Ruffer only execute trades on Wednesdays (afaik).

Liquidity is what you give up .. Which is why they're entirely intended to be long-term holdings .. It's only that fund dealing's become as quick and cheap as it has that people are tempted to market time with them a bit.

Liquidity can be an issue with anything .. When there just aren't enough buyers in the market, you can place a sell when markets are at the top, and find you've sold when they're at the bottom .. Huge issue for anyone actively trading anything – often one we don't learn about until after we've been through a real market crash .. My advice with slower to execute trades is to buy and sell in smaller chunks, and don't make big moves, unless you intend to hold for long periods.
Alan Selwood
Posted: 09 August 2017 16:00:33(UTC)
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If you give an instruction to a platform or broking firm to buy or sell, they are bound by regulations to ensure prompt execution.

So if the platform hangs on to a deal till many hours after it could reasonably have put the deal through to the fund manager, it is liable to you for any resulting shortfall.

You should gather full details of the trade you placed (date, time, fund, number of units), and submit it as a COMPLAINT to the platform, with wording such as:
"I placed the following deal through you on ... date at ... time, and it did not arrive at the fund manager until .... time/date. Because of your delay in providing timely execution of my instructions, I have been financially disadvantaged, because the price moved against me, causing me a loss of £/p. Please reimburse my account with the amount of the shortfall within 7 working days. If you are unable to do this, please send me by first class post a Deadlock Letter that I can submit to the regulator."

Then keep copies of all documents relating to this transaction ready for submission to the regulator.
10 users thanked Alan Selwood for this post.
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GeneralZod
Posted: 09 August 2017 16:29:55(UTC)
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Excellent response Mr Sellwood.
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Guest on 17/08/2017(UTC)
Jay Mi
Posted: 09 August 2017 18:39:31(UTC)
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Barclays usually seem to take a day longer than Hargreaves when buying Funds.
It's worked both for and against me at times. But I don't worry much about as I palm on holding them for the long term.
Jon Snow
Posted: 09 August 2017 23:49:19(UTC)
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Alan Selwood;49673 wrote:
If you give an instruction to a platform or broking firm to buy or sell, they are bound by regulations to ensure prompt execution.

So if the platform hangs on to a deal till many hours after it could reasonably have put the deal through to the fund manager, it is liable to you for any resulting shortfall.

You should gather full details of the trade you placed (date, time, fund, number of units), and submit it as a COMPLAINT to the platform, with wording such as:
"I placed the following deal through you on ... date at ... time, and it did not arrive at the fund manager until .... time/date. Because of your delay in providing timely execution of my instructions, I have been financially disadvantaged, because the price moved against me, causing me a loss of £/p. Please reimburse my account with the amount of the shortfall within 7 working days. If you are unable to do this, please send me by first class post a Deadlock Letter that I can submit to the regulator."

Then keep copies of all documents relating to this transaction ready for submission to the regulator.


What would you do if the delay/deal worked in your favour though!

I've just (about 2 hrs ago) placed a sell order on some UTs we hold.

Our platform is HL, they state that all orders received by 08:00 hrs will be submitted to the fund managers that day.

The UT I'm selling values at 17:00 hrs each day, so I expect to get the sell price as of 17:00 hrs on 10 August, which I won't know until 11 August and I won't know the actual deal price until I get the contact note and cash, which is usually between 2 and 5 days after the deal.

In this case I've dealt with them before (Royal London) and they're pretty good with timescales that matter, sale date and cash to you, the paperwork is a day or two later.

I got excited about this a few months ago, now I understand the process a bit more I don't consider there is a rip off going on, although there could be....it was called front-running in the olden days. I don't think this happens now.

However if something doesn't seem right to you by all means complain. Imho, and in the first instance a simple "can you please explain why XYZ happened when I thought ABC would happen" may get a reply that reassures you, if not then maybe Mr Selwoods suggested approach (nuke 'em) could be adopted.
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Guest on 12/08/2017(UTC)
GeneralZod
Posted: 15 August 2017 10:04:58(UTC)
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Yes, yes, this annoys me greatly too. Example of this: as most of my eager followers are aware, I made changes to my portfolio last week - either Wed or Thu morning. It is now Tuesday morning, 11am, and many have still not gone through. The Vanguard ones have not settled, for instance, and it's damn annoying as thousands of pounds of my heard-earned cash are floating around somewhere in space when they should be sat inside Vanguard 2045 making me serious retirement dollar. This is 2017, not 1712, and you'd expect, with modern technology being what it is, that someone can buy into a fund or switch from a fund and it to be done in a speed that's a little quicker than it would take for someone to boat it from Southampton to NYC. Are the fund supermarkets to blame? Well, I'm with Cavendish and whenever I ask them about this, I'm told it's the fund companies themselves and they all have different dealing dates and times etc.

Hmmmm.

Again, my issue here is it should be made clear as these major delays throw strategy to the wall. Zod strategy, anyway. For instance, a clever dick like Zod may have recognised that ole' Kim J was going to cause some serious stock market worries last week by threatening to launch a few missiles, so ole' Clever Dick withdraws dollar from his funds as he doesn't want to see them losing big cash. However, over the weekend, Clever Dick believes Kim J is not going to release any missiles anytime soon but is nevertheless delighted to have cash parked his money as his £20k investment would have lost £1200 in four days had he not. So, ole Clever Dick now buys BACK IN to the fund BUT....as the useless fund managers need about a week to clear his money, by the time he buys back in, he's... (you can see where this is going). Annoying.
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Keith Cobby
Posted: 15 August 2017 10:27:56(UTC)
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Another advantage to investment companies as you know the dealing price.
chubby bunny
Posted: 15 August 2017 11:43:08(UTC)
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GeneralZod;49818 wrote:
Yes, yes, this annoys me greatly too. Annoying.


With Fidelity/Cavendish, and I assume the other fund supermarkets, you sell at today's price and buy at tomorrow's. Vanguard may be slow, but when the transactions finally show up in your account, you should see that the prices match those of the dates you sold/bought on.

What you're talking about is trading, not investing. If you want that kind of flexibility then you need to be in individual shares/ETFs/ITs on a share dealing platform, though selling and buying back one holding is going to cost you at least £10 in dealing charges.

You seem to change your mind every week. If a bit of political willy waving is enough to make you sell, I see your portfolio going nowhere fast. Pick a strategy and stick to it. If you feel the urge to tinker, slap yourself in the face with a wet fish.
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AJW
Posted: 15 August 2017 14:56:40(UTC)
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Some interesting responses. Faster dealing times would always be appreciated for obvious reasons, but as Chubby says above you sacrifice that flexibility for increased investment access at lower cost when investing with funds. Shame, really.
King Lodos
Posted: 15 August 2017 15:11:30(UTC)
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Yeah, funds are really not designed for market timing .. With something like Vanguard 2045, your returns are going to come from decades of compounding – whether fund transactions were same-day or took a few months, just won't make any difference.

In fact almost everything that happens in the space of a year is just people repricing things – your actual long-term returns are going to come from much more steady underlying trends like productivity growth .. And you can only profit from this kind of growth if you're willing to accept that prices will wobble around a lot.

Trading is a completely different thing .. When you've got a random line, it's betting that it will go one way and not another .. Everyone can make money long-term investing, but trading is a zero-sum game of winners and losers (and fees) .. @Zod, you need to read Jack Bogle's The Little Book of Common Sense Investing – or you're going to find yourself in a whole world of problems at some point

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srg751
Posted: 15 August 2017 15:58:23(UTC)
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[quote=GeneralZod;49818

Again, my issue here is it should be made clear as these major delays throw strategy to the wall. Zod strategy, anyway. For instance, a clever dick like Zod may have recognised that ole' Kim J was going to cause some serious stock market worries last week by threatening to launch a few missiles, so ole' Clever Dick withdraws dollar from his funds as he doesn't want to see them losing big cash. However, over the weekend, Clever Dick believes Kim J is not going to release any missiles anytime soon but is nevertheless delighted to have cash parked his money as his £20k investment would have lost £1200 in four days had he not. So, ole Clever Dick now buys BACK IN to the fund BUT....as the useless fund managers need about a week to clear his money, by the time he buys back in, he's... (you can see where this is going). Annoying. [/quote]




SRG751 Posted: 11 August 2017 07:56:26 #

Then put your money into a handful of geographically spread mid cap and tech funds, leave them until you retire, topping up on ten percent dips or more along the way. ...you'll enjoy the dips as it'll allow you to buy more for less.

But you won't will you Zodders, you'll sell on that first 10% dip, and you'll re enter at a higher price somewhere else into another fund..




Well well well, what a surprise !


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Jay Mi
Posted: 15 August 2017 19:14:27(UTC)
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GeneralZod;49818 wrote:

For instance, a clever dick like Zod may have recognised that ole' Kim J was going to cause some serious stock market worries last week by threatening to launch a few missiles, so ole' Clever Dick withdraws dollar from his funds as he doesn't want to see them losing big cash. However, over the weekend, Clever Dick believes Kim J is not going to release any missiles anytime soon but is nevertheless delighted to have cash parked his money as his £20k investment would have lost £1200 in four days had he not. So, ole Clever Dick now buys BACK IN to the fund


Are you trying to time the market?
What will you do if you get it wrong on one occasion?
Are you a short term trader or a long term invester?

Have more patience, you seem to react to volatility, want instant results and want to try and market time.
Things go down aswell as up, if they go down and you receive a dividend and it's reinvested at a lower price, when(if) it goes back up you'll benefit. You'll compound it if you stay invested too. If you trade too often, how much will you lose out on missed dividend?s, you'll lose out on a spread in buy/sell price.

Stick with what what you've chosen(and hopefully researched), an re-evaluate after a year or two. If it's poorly performing, is it the sector as a whole, or are their better funds which you could switch into, there's no guantee what you switch on will keep performing as it has in the past.

One fund I invested in dropped about 20-25% in about a month(£1600), after I invested. I could of sold out and switched elsewhere. I didn't, I topped up whilst it was falling (averaged down), I'm now up about 5% on it, not great, compares to others I'm invested in, but if I'd of switched at a loss, it's unlikely I would of picked a perfect an investment that would of matched the gains the fund then had. I chose the fund as a long-term investment and stuck with it. I was disappointed at seeing it drop 25%, but I didn't panic or overreact and sell (crystallise a loss), I stuck with it to hopefully benefit from its future gains.

Zod, have a look a what your original investment plan is. Stick with it, your returns will benefit from it.
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King Lodos
Posted: 15 August 2017 19:29:20(UTC)
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The big risk in bull markets – as I think this site's Diary of a Dumb Investor demonstrated – is they give you a false sense of being clever or being in control.

The portfolio, of a few UK stocks and specialist funds, did fine when everything was going up – and would've given anyone the impression they'd made smart decisions .. But as soon as we got a bit of a correction, in 2015 (early 2016?), it suddenly seemed horribly unbalanced, and didn't seem to have much of a strategy behind it.

Up-markets are as easy as buying stocks and ignoring them .. It's everything else that gives people problems
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dd
Posted: 15 August 2017 20:26:03(UTC)
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I hold ITs and just a few funds. I haven't checked it out precisely on every occasion due to time constraints, but when I suffered such a delay in buying or selling a fund, I understand that I had received the correct price but the company had effectively not done the corresponding paperwork (or equivalent). That could deal with the sale in Zod's case but not with his purchase and I agree, it is very annoying when the sale cash is not made available for many days beyond the normal 2 day settlement.
I usually hold a small amount of cash which enables me to do a correspondingly-sized swap without having to wait for sale proceeds. It is not sufficient for a large swap transaction though, in my case.
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Jon Snow
Posted: 15 August 2017 22:21:52(UTC)
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Ignoring market timing and liquidity issues the benefits of dealing in funds cf. ITs are no/low spread and in my case with HL no transaction costs. The downsides are you're potentially blind to the buy/sell price you'll get and in most cases you'll pay a platform fee to hold them. Not wishing to reopen the funds vs. ITs debate.

So now I tend to hold ITs and trade funds when I want to make changes.

This is what HL have to say on the mystical art of fund pricing –

“If I want to deal at today's price, when do I have to place the deal by?

Providing the fund values at midday or later, deals for the same day's price will need to be placed by 8am online. If you are dealing over the telephone, we would need the order by 5pm the previous day. We may be able to place a deal on the same day for a midday or later valuing fund up to 9am, but this cannot be guaranteed.

How do I know what price I will get when I deal?

The vast majority of funds price each working day at noon. When you place a deal it will be traded at the next available valuation point, typically noon the next working day. This means that you will not know the exact price that you will buy or sell at when you place the deal.

You can however view the latest fund price on the fund factsheet. The price will always have a 'prices as at' date stamp to show when the price is from. Fund prices are updated overnight, and will display the last available price.”

So that's cleared things up...



King Lodos
Posted: 16 August 2017 01:22:20(UTC)
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But of course if day-to-day prices are an issue AT ALL .. you need to buy ETFs or ITs, which you can trade directly on the market

I'm not aware of any guarantee you get funds on the day your order goes through .. Some fund managers just don't do transactions certain days, and funds (like we saw with UK Property) can hold up your orders to protect other investors, e.g. where there's not the liquidity to buy or sell at reasonable prices

It's an issue for me – flash-crashes are a possibility, and there's always the possibility you put your order in, and there's a mini one-day crash (like 5%) and that's when my order goes through ... I think my Marlborough Micro-caps order was very slow to execute around Brexit, and that sold wiping out maybe a year of returns? So I tend to buy and sell in chunks of 10-30%, and leave ETFs for bigger trades

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srg751
Posted: 16 August 2017 06:04:06(UTC)
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Ask yourself this;
"If I wake up in the morning and turn on the news to find out that old Kim Jong has 'gone and done it', would I rather be in an IT, or on OEIC" ?

And then ponder if that ten quid dealing fee might have been worth the insurance. ( especially if you're the type of investor that jumps around weekly from sector to sector, chasing momentum).
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King Lodos
Posted: 16 August 2017 06:30:43(UTC)
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I'm not a big fan of ITs for crises either, because you get exposed to so much retail investor behaviour, on top of market behaviour .. It's two layers of potential volatility.

I think ETFs would be about the best, but there's always the risk of markets going down out of trading hours, and stops being hit and selling out WAY too low.

Really the only hedge is being long gold/Swiss franc/maybe Bitcoin, and having cash

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