Smooth Managed Fund Price Change

Information about price changes to our Smooth managed Fund range

On the 7/7/23 the price of the Pension and ISA Smooth Managed Fund 2 was adjusted by -4.78% to be 99.27p.

Putting the Fund Price Adjustment into context

High levels of inflation continue to be the dominant factor in the market. The good news is that inflation appears to have peaked and is falling. The bad news, however, is that it’s falling slower than many initially expected, despite the best efforts of central bankers around the world. We’re now in the position that more interest rate increases are expected to be needed to tackle the inflation problem, and this action may tip countries into recession either later this year or in 2024. In spite of these challenging conditions equity market returns have been fairly resilient. The same, however, cannot be said for fixed income assets, where most major global government and corporate bonds have performed poorly due to the higher levels of inflation resulting in higher yields.

Just a reminder - what is a Fund Price Adjustment?

The price of the Smooth Managed Fund increases daily by the Smooth Growth Rate.

The Pension and ISA Smooth Managed Fund 2 Smooth Growth Rate is equal to the Bank of England Base Rate plus 3.75% per year.

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 Funds please get in touch in the usual way or visit our Smooth Managed Funds page