Rathbones moves to single pricing on dual-priced funds

Jonathan Boyd
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Rathbones has decided to move to a single pricing structure on seven of its dual-priced funds in an effort to reduce the effects of ‘dilution’ on shareholders.

Both purchases and redemption of units in these funds will be based on this single price, with the change coming into effect on 21 January 2019.

The group intends to operate a ‘swinging single price’ mechanism for each fund, which is aimed at ensuring fair treatment of all investors in the vehicle by minimising the effects of ‘dilution’, the group said.

Under this mechanism, the price of each fund will swing in response to certain circumstances; once the single price on a fund is determined, a ‘dilution adjustment’ will be applied to the fund in accordance with its policy.

“For example, when there are net inflows to a fund, a dilution adjustment increases the price (price swings up) and when there are net outflows from a fund, the dilution adjustment reduces the price (price swings down),” the group explained in a note.

“However, regardless of whether the price is adjusted up or down, all investors buy and sell at the same price.”

The pricing changes affect the following funds:

  • Rathbone Ethical Bond, managed by Bryn Jones
  • Rathbone Global Opportunities, managed by James Thomson
  • Rathbone Income, managed by Carl Stick
  • Rathbone UK Opportunities, managed by Alexandra Jackson
  • Rathbone Spenser, managed by Clive Hexton
  • Rathbone Strategic Bond, managed by Bryn Jones
  • Rathbone Heritage, managed by five-strong team

The table below outlines the current dilution adjustment rates, although these are likely to be amended before the pricing basis is changed on 21 January. The updated rates will be included in the prospectus for each fund.

Fund affected Purchases Redemptions
Rathbone Ethical Bond Fund 0.403% 0.403%
Rathbone Spenser Fund 0.287% 0.037%
Rathbone Global Opportunities Fund 0.115% 0.105%
Rathbone Income Fund 0.531% 0.063%
Rathbone UK Opportunities Fund 0.388% 0.072%
Rathbone Strategic Bond Fund 0.246% 0.246%
Rathbone Heritage Fund 0.214% 0.062%

 

This article was first published on Investment Week