Smooth Managed Fund - Price Change

Information about our Smooth Managed Fund price change

On the 28/05/2020 the price of the Pension Smooth Managed Fund was adjusted by +6.2% to be 103.8p.

On the 28/05/2020 the price of the Bond Smooth Managed Fund was adjusted by +5.3% to be 100.8p

Putting the Fund Price Adjustment into context

Despite the severe economic disruption caused by measures to counter Covid-19, investor sentiment has been buoyed by fiscal and monetary policy measures from authorities. Investors have also focused on a variety of positive news stories that suggest some pathway out of the current situation – whether detection testing, potential new vaccine developments or the lifting of lockdown measures. As a result, there has been a broad rally across many markets. Growth assets such as equities, are benefiting from improved sentiment, while defensive assets such as government debt and investment grade credit have strengthened as central banks cut policy rates and undertake quantitative easing.   

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 Pensions 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.

Find out more

For more information about our Smooth Managed Fund, please get in touch with us in your usual way, or visit the Smooth Managed Fund page