Change of pricing for Marlborough funds

On 1 April 2019 11 Marlborough funds will change from dual-pricing to single pricing.

The 11 funds are:

• Marlborough UK Micro-Cap Growth
• Marlborough Nano-Cap Growth
• Marlborough Special Situations
• Marlborough UK Multi-Cap Growth
• Marlborough Extra Income
• Marlborough Global Bond
• Marlborough Bond Income
• Marlborough High Yield Fixed Interest
• Marlborough Cautious
• Marlborough Balanced
• Marlborough Global

Why is this happening?

Marlborough are making the change to make the fund prices more straightforward and easier to understand for investors. The change won’t impact the funds’ performance and there’s nothing investors need to do.

What’s dual and single pricing?

Dual-pricing is where the price to invest in a fund is higher than what sellers receive. The difference between the two is called the ‘spread’. Some funds, such as those investing in smaller companies, emerging markets or property, can have large spreads.

Spreads discourage short-term investing, which can be difficult and costly for the fund to manage. Spreads are used to cover the costs funds incur when investors buy and sell the fund.

Single pricing is where the price to invest in a fund is the same as the price sellers receive. It’s the most commonly used way to price funds in the UK.

However, single-priced funds still incur same the costs as dual-priced ones when investors buy and sell. To cover these costs, the 11 Marlborough funds will use ‘swing’ pricing, which is used by most single-priced funds.

What’s swing pricing?

Swing pricing is where the fund price changes depending on whether more investors are buying or selling. If more investors buy the fund than sell it, the price will move (swing) up, making it more expensive. This covers the transaction costs of buying more shares, bonds, etc.

If more investors sell the fund, the price will fall (swing down). The fund pays out less to sellers, using the money saved to cover the transaction costs of selling assets.

Swing pricing is fair for existing investors, as the transaction costs are passed to the investors causing them by buying and selling the fund.