Smooth Managed Fund Price Adjustment

Information about price changes to our Smooth Managed Fund range

On the 23/10/23 the price of the Pension and ISA Smooth Managed Fund was adjusted by -5.24% to be 119.57p.

On the 23/10/23 the price of the Life Smooth Managed Fund was adjusted by -4.87% to be 115.18p. 

Putting the Fund Price Adjustment into context

The downward price adjustment on the Smooth Managed Life, Pension, and ISA funds, is reflective of the combined performance of the different asset classes the funds are exposed to. Whilst multi-asset funds provide diversification of risk and opportunity, the reality is that the weaker performing asset classes over a given period will create a drag on overall performance.

Over the past year, whilst most equity markets have delivered modest returns, fixed interest markets have struggled to deliver positive returns and UK commercial property has posted significant negative returns.

Fixed interest yields have risen to some of the highest levels since the 2008 Global Financial Crisis, resulting in weak performance for capital values. This has been caused by fresh concerns around inflation, thanks in part to the surge in oil prices, and indications that central banks may keep interest rates higher for longer.

In addition to fixed interest markets, the continued increase in interest rates has also resulted in downward adjustments in UK commercial property valuations, as borrowing costs increase.

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Just a reminder - what is a Fund Price Adjustment?

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

The price of the Smooth Managed Fund increases daily by the Smooth Growth Rate, which is equal to the BoE Base Rate plus 5% for Pension/ISA and 4% for Bond per annum (capped at 10%pa and 9%pa respectively). 

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, this 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