Smooth Managed Fund Price Change


Information about our Smooth Managed Fund price change

On the 08/12/2020 the price of the Bond Smooth Managed Fund was adjusted by +5.7% to be 108.8p.

Putting the Fund Price Adjustment into context 

The global economy has proven to be more robust to the COVID-19 crisis than many initially anticipated. And although we are still searching for the new normal, there have been recent vaccine developments, namely by Pfizer, that brings into view the eventual end of the pandemic’s most serious impacts on economic life. This, in conjunction to the conclusion to the US presidential election, has vastly improved investor sentiment resulting in the strong performance of growth  assets, such as equities, over the previous months.   

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 4% per annum for the Life 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.