Smooth Managed Fund Price Change

Information about our Smooth Managed Fund price change

Pension Portfolio - on the 09/03/2020 the price of the Pension Smooth Managed Fund was adjusted by -6.72% to be 104.19p

Select Investment  - on the 10/03/2020 the price of the Life Smooth Managed Fund was adjusted by -5.2% to be 99.69p

Putting the Fund Price Adjustment into context 

Positive market sentiment at the start of the year has given way to concerns about the global economy.  This has been reflected in a significant market sell-off in recent days, with some equity markets down 20%. 

This has been driven by concerns that Coronavirus is becoming a global pandemic – reflected most dramatically in the Italian Government's decision to extend emergency lock down to the whole nation. 

The mood has been further compounded by major drop in the oil price, even though the immediate catalyst for this was not a collapse in demand and slowing global growth, but rather a Saudi decision to increase production.  

Just a reminder - what is a Fund Price Adjustment?

The price of the Smooth Managed Fund increases daily by the Smooth Growth Rate, which is equal to the BoE Base Rate plus 5% per annum for Pension Portfolio. BoE Base Rate plus 4% per annum for the Select Investment Bond  

Each day, the price of the Smooth Managed Fund is compared to the value of the underlying assets i.e. the unsmoothed price. If the difference between the two prices is greater than 6.5% an adjustment is made to bring the Smooth Managed Fund within 1.5% of the unsmoothed price.

Therefore, when markets perform poorly the underlying assets may lose value, which can trigger a downward Fund Price Adjustment. Equally, in an environment where markets are performing well we may see an upward Fund Price Adjustment. 

This means that over a long-term time horizon, investors will receive similar performance to the underlying holdings. Crucially, however, the client’s investment journey will be much smoother because they are not exposed to daily price movements.