Change of Pricing Policy of the underlying fund of P02 Vanguard US 500 Stock Index
04 April 2019
Friends Provident International Limited (“Friends Provident International”) has been notified by Vanguard Investment Series plc (“The Company”) of a change of pricing policy for the underlying fund into which P02 Vanguard US 500 Stock Index invests. This change will come into effect on or about 20 May 2019 (the “Effective Date”).
The Company have confirmed the following:
The pricing of shares in each sub-fund of the Company (the “Fund”) is, and will continue to be, carried out on a single pricing basis. This means that a single price is applied to any transaction, regardless of whether an investor is purchasing or redeeming shares. The single price is based on the valuation provisions in respect of the underlying investments (as detailed in the Prospectus) less liabilities i.e. the net asset value (the “NAV”).
Change to the Swing Pricing Policy
Following a review of the Swing Pricing Policy, it has been decided to amend the policy through the introduction of cashflow thresholds which need to be reached in order to apply Swing Pricing (a “Swing Threshold”). This means that if the net cashflow into or out of a Fund on a dealing day is below the relevant Swing Threshold for that Fund, Swing Pricing will not be applied.
Since introducing Swing Pricing in 2017, the impact of costs arising from investors transacting in the Company has been analysed, as well as the impact on each Fund’s performance, including, in regard to Funds that track and index, tracking error. Based on this analysis, the Directors have been advised that the introduction of Swing Thresholds will continue to protect continuing investors from the effects that dealings in the shares of a Fund may have on the value of that Fund, as well as enabling investors to better measure how effectively the Fund is performing relative to its benchmark.
In addition, the Directors have been advised that the introduction of Swing Thresholds is better aligned with investor demand than the current approach without thresholds and that this will encourage further investments into the Company, enabling existing investors to benefit from the economies of scale of a larger Fund. The Directors have also been advised that the application of Swing Pricing with thresholds is more in line with market standards.”
Should you have any questions regarding these changes, please contact International Funds & Investments.