Smooth Managed Fund Price Change

Information about our Smooth Managed Fund price change

On the 12/03/2020 the price of the Pension Smooth Managed Fund was adjusted by -7.1% to be 96.86p and the price of the Bond Smooth Managed Fund was adjusted by -4.8% to be 94.89p.

Putting the Fund Price Adjustment into context 

Despite an emergency cut in interest rates, stock markets around the world continue to fall this week, with some markets down over 30% as Coronavirus becomes a global pandemic. 

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 the Pension fund and BoE Base Rate plus 4% per annum for the Bond fund.

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.