FOR PROFESSIONAL CLIENTS ONLY.
NOT TO BE DISTRIBUTED TO RETAIL CLIENTS.
Swinging single pricing
What is swinging single pricing?
All transactions into and out of a fund may result in the manager
buying or selling its underlying investments, thereby attracting
dealing costs which would otherwise be borne by the fund’s
current investors. As a result, long-term investors could be
adversely affected by other investors trading in and out of the
fund. This effect is known as dilution.
Swinging single pricing is a technique used across a number of
Insight funds to reduce the impact of dilution and help protect
existing investors. It aims to ensure that investors subscribing or
redeeming from a fund bear the trading costs – the underlying
bid-offer spreads and transactions costs.
How does swinging single pricing work?
Swinging single pricing
Outflows
Price swings down
Inflows
Price swings up
The direction of the adjustment depends on whether the fund is
experiencing net inflows or net outflows on the dealing day, while
the magnitude of the swing (the swing factor) reflects the level of
market spread in underlying assets and transaction costs within
the fund. However, regardless of whether the price is swung up or
down, all clients buy and sell at the same price. So, for example, if
the price for a fund is 100 and the fund’s swing factor is 0.25%, then:
• If the fund experiences net inflows, the price is swung up to
100.25
• If the fund experiences net outflows, the price is swung down
to 99.75
• If the flows net out, or there is no shareholder trading, the price
will remain at 100
Insight’s approach to swinging single
pricing
Insight’s approach to swinging single pricing is that we will
normally alter the price whenever there are net purchases or
net sales in a fund1; in certain funds a threshold is employed2.
The swing factor is applied to the NAV per share, based on the
mid price valuation of the underlying investments. The same
adjustment is applied to all share classes.
How is the swing factor calculated?
99.8
99.9
100
100.1
100.2
The Net Asset Value (NAV) of a fund is determined using the
latest available mid-market prices. However, an adjustment to
the NAV can be made if the fund experiences net subscriptions
or redemptions on a particular dealing day, to reduce the impact
of dilution costs.
1
2
The extent to which prices are swung is based on an estimated
dealing cost made up of a number of elements, including bid-offer
spreads, commissions and other transaction costs. Commissions
and other costs (e.g. transaction tax) will be based on an historic
analysis of actual trades. The estimated rates are reviewed and
updated periodically.
How often is swinging single pricing
activated?
A fund’s price is swung every day there are more buyers than
sellers, and vice versa. How often this happens varies across our
funds and depends on the level of dealing on the day for each
fund, however it would be reasonable to expect that the price is
likely to swing every time dealing occurs in a fund.
In exceptional circumstances, Insight reserves the right not to impose a dilution adjustment where it would, in its opinion, not be in the interests of the fund’s shareholders to do so.
The threshold is the level when net inflows or outflows reach a size where dealing costs become material.
Find out more
Institutional Business Development
[email protected]
+44 20 7321 1547
Client Relationship Management
[email protected]
+44 20 7321 1499
European Business Development
[email protected]
+44 20 7321 1928
Wholesale Business Development
[email protected]
0500 66 00 00
Consultant Relationship Management
[email protected]
+44 20 7321 1023
International Business Development
[email protected]
+44 20 7163 2367
@InsightInvestIM
company/insight-investment
www.insightinvestment.com
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The value of investments and any income from them will fluctuate and is not guaranteed (this may be partly due to exchange rate fluctuations). Investors may not get back the full
amount invested. This document is only directed at investors resident in jurisdictions where our funds are registered. It is not an offer or invitation to persons outside of those
jurisdictions. Insight Investment reserves the right to reject any applications from outside of such jurisdictions.
Issued by Insight Investment Funds Management Limited. Registered office 160 Queen Victoria Street, London EC4V 4LA. Registered in England and Wales. Registered number
01835691. Authorised and regulated by the Financial Conduct Authority. FCA Firm reference number 122259. 11515-10-15