Important information
Please remember that the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. If you are unsure of the suitability of your investment please seek advice. Tax rules can change and the value of any benefits depends on individual circumstances.Funds are split into units. Each unit represents a tiny share of the fund’s underlying investments. When you invest in a fund, you receive a number of these units from the fund manager.
These units are created by the fund manager when an investor buys into the fund. For many funds there is no limit on the number of units that can be issued, so there is no limit on the number of people who can invest. This is why these funds are sometimes described as open-ended investments.
Every day, at a set valuation point (usually 12 noon) the fund manager will calculate the value of the fund, giving a price per unit. To work out this price, the fund manager adds up the total value of the investments in the fund and divides by the number of units.
Anyone wanting to buy or sell units in the fund will do so at the price calculated at the valuation point. It is worth bearing in mind that because trade instructions need to be with the fund manager before the valuation point, investors need to submit instructions to buy or sell units before the price is declared. As such they will not be aware of the price that they will receive before the deal is placed.