Pricing

Question 1

What determines the price of authorised unit trusts (AUTs) and OEICs?

Answer 1

The net asset value (NAV) of the fund’s underlying investments.

Question 2

What is single pricing?

Answer 2

Using the mid‑market price of underlying assets to produce one single price for both buying and selling units.

Question 3

What is dual pricing?

Answer 3

Using bid prices for selling and offer/ask prices for buying, creating separate buy and sell prices.

Question 4

When must the pricing methodology be disclosed?

Answer 4

In the fund prospectus.

Question 5

Why might dilution levies be used?

Answer 5

To recoup dealing expenses and commissions when single pricing does not cover costs.

Question 6

What is the creation price?

Answer 6

The maximum price a manager can charge for new units, including NAV, dealing costs, stamp duty, and initial charge.

Question 7

What is the cancellation price?

Answer 7

The minimum selling price when the fund manager repurchases units, based on bid prices.

Question 8

Does the fund manager have flexibility when setting the actual buying price?

Answer 8

Yes, they may charge below the maximum buying price.

Question 9

Where are most fund prices published?

Answer 9

Online, trading platforms, and in spreadsheet‑format newspapers.

Question 10

Examples of explicit charges in CIS funds?

Answer 10

Initial charge and annual management charge (AMC).

Question 11

Examples of less explicit fund charges?

Answer 11

Broker commissions, legal/audit fees, custodial/depositary fees, specialist legal/tax advice.

Question 12

What is the Ongoing Charges Figure (OCF)?

Answer 12

A mandatory UCITS charge covering all ongoing expenses except initial/exit charges or performance fees.

Question 13

What is the Total Expense Ratio (TER)?

Answer 13

AMC plus other charges such as trustee, custodian, depositary, auditors, registrar.

Question 14

How can investors buy or sell AUT/OEIC units?

Answer 14

Directly with fund manager, via broker/adviser, or through a fund supermarket/platform.

Question 15

What happens after an investor buys units?

Answer 15

The fund group records ownership of units/shares in the fund’s share register.

Question 16

What is the typical settlement time for collective investments?

Answer 16

Historically T+4, moving toward T+1 in line with market standards.