A fund is an investment that pools together the money from many individuals. Fund managers then use it to invest in a wide range of shares and/or bonds. Each investor is issued units, which represent a portion of the holdings of the fund.

Funds are popular with investors because they offer access to a ready-made investment portfolio run by an expert in their field. You can normally invest from £100 as a lump sum or £25 per month, and get instant access to a diversified portfolio for a much lower cost than purchasing the individual investments yourself.

Which accounts can I invest in?

You can hold any fund within the HL Stocks & Shares ISA, Junior ISA, SIPP and Fund & Share Account.

What is the difference between income and accumulation units?

The type of unit you hold determines how any income generated from the fund's underlying investments is treated. With income units, income is paid out to fund holders as cash. This could provide the investor with an income stream or the cash could be reinvested to buy additional units. With accumulation units income is retained within the fund and reinvested, increasing the price of the units. Generally, for investors who wish to reinvest income, accumulation units offer a more convenient and cost-effective way of doing so.'.

How are funds priced?

Funds are priced based on the value of their underlying holdings. Most funds will calculate and publish a price every working day. There is no continuous pricing of fund units throughout the trading day. The vast majority of funds price each working day at noon. The pricing system means that when you place a deal it will be traded at the next available valuation point, typically noon the next working day. This means that you will not know the exact price that you will buy or sell at when you place the deal. To check when your funds value please see the valuation point on the key features tab of the fund's factsheet.'.

What is the Minimum Cash Balance?

We look at your holdings at the end of each month and suggest a balance (your Suggested Minimum Cash Balance) that should be sufficient to meet any fees or any other outgoings that may arise for the next few months. Please note that it would be impossible to predict your fees accurately in all circumstances. The value of funds will rise and fall (and therefore so will your fees) and any significant increase in the value of your holding during a month may mean you have to adjust the balance of cash you hold. However, it should prove a good guide in most cases.

In this section

Funds

Fund FAQs

Here we seek to address some frequently asked questions about funds.

If you're unable to find what you're looking for, please do not hesitate to phone us on 0117 900 9000 or email us.

Investing in funds

The type of unit you hold determines how any income generated from the fund's underlying investments is treated.

With income units, income is paid out to fund holders as cash. This could provide the investor with an income stream or the cash could be reinvested to buy additional units.

With accumulation units income is retained within the fund and reinvested, increasing the price of the units. Generally, for investors who wish to reinvest income, accumulation units offer a more convenient and cost-effective way of doing so.
In the past most investors who held funds, such as unit trusts and OEICs, paid a single ongoing charge to the manager of their chosen funds. This charge often included an element of commission which the fund manager shared with brokers, such as Hargreaves Lansdown, to help pay for their service. We call these funds 'inclusive' funds.

FCA rule changes mean that when investors purchase a fund any commission must be rebated to the investor. As a result of these rules, fund management groups have launched new versions of their funds, often with lower ongoing charges, which do not include any commission. We call these funds 'unbundled' funds.
You can buy funds online or over the telephone. Please ensure you have read the fund's Key Investor Information Document (KIID) or Key Features first which is available from the individual fund factsheets on the website.

Online: If you're registered for online access, simply log in and select the relevant account, such as the HL ISA or SIPP and click the ‘Deal Now’ button. Search for your chosen fund investment and continue to the confirmation page.

If you're not already registered, you can set up online access by selecting the ‘Register’ tab at the top right of the screen.

Telephone: Provided you have set up your security details, you can call our stockbrokers on 0117 980 9800 Monday - Friday: 8am - 9pm.

Hargreaves Lansdown does not charge a dealing commission to buy or sell funds.
You can sell funds with the HL app, on our website or over the phone.

We do not charge a dealing fee to sell funds.

HL app instructions
1. Log in and select the account with the funds you want to sell, for example your ISA or SIPP.
2. Swipe left on the relevant fund and select 'Deal'.
3. Select 'Sell' or, if you want to sell everything in this fund, select ‘Sell entire holding’.
4. Choose how much you want to sell. You can either sell an amount in pounds or a number of units.
5. Select 'Continue' and check the details.
6. Select 'Place Instruction'.
You can check the progress of your deal in the 'Pending orders' section of the account menu.

The money will appear in your account as soon as the fund manager has confirmed your deal.

HL website instructions
1. Log in and select the account with the funds you want to sell, for example your ISA or SIPP.
2. Select the sideways arrow button in the 'Actions' column on the relevant fund.
3. Select the 'Sell' option and choose how much you want to sell. You can:
  - sell your entire holding (all of your units)
  - sell a specific number of units
  - choose a value in pounds
4. Select 'Continue' and check the details.
5. Select 'Place a deal now'.
You can check the progress of your deal in the 'Pending orders' section of your account.

The money will show in your account as soon as the fund manager has confirmed your deal.

Over the phone

To sell your fund(s) over the phone, please call our Stockbrokers on 0117 980 9800 between 8am - 4:30pm UK time. You will need your account security information.

How fund prices work

Unlike share prices which change in seconds, most fund prices are set just once a day, by the fund manager. This is usually at noon each working day, though it can be early in the morning, late at night or even once a week, this is called the 'valuation point'.

This means that no matter when you place a fund deal, you can never know in advance the exact price you will get. You will always learn what price you got after your deal completes.

If your chosen fund's valuation point is at 12pm you need to place your deal by 8am to get the price that will be set today. Deals placed between 8am-9am may go through if trading volumes allow.

You can find out when funds are priced on the fund's detail page. Search for the fund on our funds page or in the HL app.

Fund deal timings

These timings apply to funds with a 12pm valuation point. If your chosen fund’s valuation point is not at 12pm you will need to contact our Helpdesk on 0117 980 9800 to find out what price you will receive.
- Deal before 8am – your deal will be submitted for trading the same day. You will get the fund price from the same day.
- Deal 8am – 9am – your deal will be submitted the same day if trading volumes allow. You might get the fund price from the same day.
- Deal after 9am – your deal will submitted for trading the next (working) day. You will get e.g. tomorrow’s fund price.
If you are dealing over the phone, we would need the order by 5pm the previous day.

You can find out when funds are priced - their 'valuation point' - on the fund's factsheet. Search for the fund on our funds page or in the HL app.

Fund pricing

Unusually high levels of buying and selling may increase the fund’s dealing costs and affect the value of its assets. In this situation, to protect the interests of existing investors the fund manager may apply a ‘dilution levy’ which increases the cost of buying and selling. This is typically between 0.5% and 2% of the trade, and the proceeds are held within the fund.

Only a small number of funds have this charge levied, some funds only apply a dilution levy when there has been a particularly large inflow or outflow within the fund. The majority of funds allow for any charges to be absorbed by their own ongoing charge.
Timing fund deals to intra-day movements in the markets is notoriously difficult due to their forward pricing nature. One way to smooth entry points and benefit from pound cost averaging is to set up a regular investing instruction, whereby we automatically buy a set amount of a particular fund (or funds) each month.

Please remember that your long-term investment objectives should always take priority over any short-term fluctuations in price.

View more information on regular investing
Funds are priced based on the value of their underlying holdings. Most funds will calculate and publish a price every working day. There is no continuous pricing of fund units throughout the trading day.

The vast majority of funds price each working day at noon. The pricing system means that when you place a deal it will be traded at the next available valuation point, typically noon the next working day. This means that you will not know the exact price that you will buy or sell at when you place the deal.

To check when your funds value please see the valuation point on the key features tab of the fund's factsheet.
Different classes in a fund represent the different units the fund manager has created to suit certain types of buyers, for example, investors with HL or institutional investors such as pension funds and multi-manager funds. Each unit in the fund may have different costs and minimum investment levels. This can affect the performance of a particular class of the fund and is therefore reflected in the price.

A different class may also indicate whether it is an inclusive or unbundled version of the fund, and whether it is an income paying unit or an accumulation unit. Each of these classes may have a different price to reflect the differences in their charging structure and the way they treat income received from the fund’s underlying holdings.

There is no continuity across fund groups, class A for one fund is not necessarily the same as class A for another fund. 'A' is simply used to differentiate the fund from another unit of the same fund, class B or class Z for example.

As the UK's leading investment platform, Hargreaves Lansdown is able to achieve significantly reduced charges across some of the funds we offer.
Where a fund offers a choice between income and accumulation units, you will often see that the price of the accumulation units is higher. This is because any income received from the underlying holdings will be retained within the fund, where it is ‘rolled up’ over time and reflected in the value of the units on a daily basis. In contrast, income units are structured to pay out any dividends/distributions to the unit holders, whether on an annual, bi-annual, quarterly or monthly basis. It is therefore common to see the difference in the price of the income and accumulation units diverge over time.
The vast majority of funds price each working day at noon. When you place a deal it will be traded at the next available valuation point, typically noon the next working day. This means that you will not know the exact price that you will buy or sell at when you place the deal.

You can however view the latest fund price on the fund factsheet. The price will always have a 'prices as at' date stamp to show when the price is from. Fund prices are updated overnight, and will display the last available price.
There is no definitive advantage to either type of pricing. Dual pricing provides an effective mechanism to protect against dilution. When investors buy and sell units, the fund managers have to cancel and create units accordingly. (Sometimes they will buy units from sellers themselves, known as box management). The action of creating and cancelling units to meet supply and demand (inflows and outflows of money) create costs. A dual priced fund provides a mechanism whereby this cost is borne by the buyer or seller that causes the cost. With a single priced unit, this cost is borne by the fund itself, therefore affecting all unit holders of the fund. This is known as dilution.

Please remember that your long-term investment objectives should always take priority over any short-term fluctuations in price.
If you want your fund deal to go through in time for today's price, you will need to place it online by 8am. Deals placed between 8am-9am may go through if trading volumes allow.

Fund pricing

Unlike share prices which change in seconds, most fund prices are set once a day, at noon. Though some funds are priced early in the morning, late at night, or even once a week.

This means that no matter when you place a fund deal, you will never know the exact price you will get. You will only learn what price you got after your deal completes.

The time when a fund price is set is called its 'valuation point'. A fund’s valuation point can be found on its details page. You can find this by searching for the fund on our funds page or using the Search tool in the HL app.

Fund deal timings
- Deal before 8am – your deal will submitted to the fund manager for trading the same day. You will get the price at the fund's next valuation point.
- Deal 8am – 9am – your deal may be submitted the same day, if trading volumes allow. You might get the price at the fund's next valuation point.
- Deal after 9am – your deal will submitted for trading the next (working) day. You will get e.g. tomorrow's fund price.
If you are dealing over the phone, we would need the order by 5pm the previous day.
If there are a lot of investors either buying or selling en masse on a particular day, an investment fund will incur charges (such as commission for buying new holdings). Rather than taking the charges out of the fund (and potentially harming the value for the remaining investors) the FCA has given fund managers the option of 'swing pricing' - the fund can swing its valuation method from the mid price to the bid or offer price. This way, the fund can alter valuations to represent the true cost of producing or disposing of the extra units, in order to protect existing investors. We are unable to provide advanced notice of swing pricing.
OEICs normally have one price for buying and selling, although some OEICs are priced in the same way as unit trusts. The initial charge is simply added to this single price when units are purchased. Again we typically offer savings on the initial charge so you pay a lower price than investors who buy with no saving. Where we offer a full saving on the initial charge, buyers simply pay the fund’s single price which is set by the fund manager.
We negotiate special terms with many fund management groups which allow us to offer savings on the initial charge and reduce the price you pay per unit. In many cases we are able to offer a full saving. Please note that even if we offer a full saving, this will only reduce the price paid to the creation price, and won’t entirely eliminate the bid-offer spread.
Most unit trusts are ‘dual-priced’ – they have an offer (or buying) price, and a bid (or selling) price. The difference between them is known as the bid-offer spread, and is made up of the initial charge, the difference between the buying and selling price of the underlying holdings, and other costs incurred by the fund (for example stockbroking commission and Stamp Duty).

Normally, the prices are calculated as follows. The manager starts with the ‘creation’ price, which is the cost of creating a new unit. This includes the price of the underlying holdings which need to be purchased, plus all other dealing costs borne by the manager. The initial charge is added to the creation price to give the offer price, and the bid-offer spread subtracted from the offer price to give the bid price.

Please note that even if we offer a full saving on the initial charge, this will only reduce the price paid to the creation price, and won’t entirely eliminate the bid-offer spread.

Charges for holding funds

Fund charges can eat away at performance and your returns, so it’s important to weigh up performance potential against the cost of investing in a particular fund.

If there are two funds offering the same performance potential, charges become a greater consideration – especially when looking at passive funds.

We’ve created a charge comparison to help you quickly see the relative cost of investing in a fund against similar funds in the same sector.

How the charge comparison works

We break down each fund sector on our platform into funds with active and passive management.

We then order these sets of funds by their Ongoing Charges Figure (OCF) and score them.

There are five scores available, the lowest-charging get £, the highest-charging get £££££.

As an example, we divide funds in the UK All Companies IA sector into active and passive groups. We then order the funds in each group by the net charge paid by HL clients. We then give a £ to the cheapest 20%, ££ to the next 20% and so on.

Other considerations:
- When we say ‘group’ below we mean: all passive/actively managed funds in their IA sector
  The Investment Association is the trade body and industry voice for UK-based investment management. The IA sectors divide the funds universe to reflect the asset type, industry sector, or geographic regions funds are invested in.
- Where we’ve created sets of funds (e.g. the Wealth Shortlist) the charge comparison will still be based on a fund’s respective IA sector. You can filter by IA sector using our Fund Finder
- A fund’s net OCF is compared against its group – this is the charge after any discounts so we’re comparing what you pay on our platform
- Funds in groups with the same charge will be rated the same. In groups where lots of funds have the same charge, each rating of £-£££££ won’t necessarily have the same number of funds
- If all funds in a group charge the same, they would all get a £££ rating (i.e. ‘average’)
- If funds in a group split over two charges, they would be rated ££ and ££££ (i.e. lower or higher than average respectively)
- If a group contains fewer than five funds, (or the fund sector is ‘unclassified’) we won’t apply a rating
- Ratings are calculated for unbundled funds
  Funds launched after 6 April 2014. FCA rules mean that any commission paid by funds purchased from this date must be rebated to the investor. As a result, fund management groups launched new versions of their funds with lower annual management charges, which do not include any commission.
  only. This is the version of a fund available for new investors
Remember when investing with HL, our platform fee of up to 0.45% per year also applies.
Funds often levy an initial fee when you invest, up to 5.5%, and an ongoing charge, typically around 1%. Many brokers, including Hargreaves Lansdown, have negotiated savings on the initial charges for their clients.

Search for a fund and see the savings we can offer

We levy an administration charge to hold funds with HL. Our charge is tiered within bands and will be 0.45% per annum on the first £250,000 of funds within each HL account, 0.25% per annum on the value of funds between £250,000 and £1m, 0.1% per annum on the value of funds between £1m and £2m, and no charge on the value of funds over £2m.

The charge is based on the total value of funds (such as unit trusts and OEICs - not investment trusts or ETFs) held in each HL account. Please note these charges apply to each account separately.

Fund fees are calculated based on the values of holdings on the last working day of the month.

There is no charge to place fund deals online, by telephone or post.

Find out more about our charges
We look at your holdings at the end of each month and suggest a balance (your Suggested Minimum Cash Balance) that should be sufficient to meet any fees or any other outgoings that may arise for the next few months. Please note that it would be impossible to predict your fees accurately in all circumstances. The value of funds will rise and fall (and therefore so will your fees) and any significant increase in the value of your holding during a month may mean you have to adjust the balance of cash you hold. However, it should prove a good guide in most cases.
You can find full details of the funds charges, including the net ongoing charge (the ongoing charge for the fund less any saving offered by Hargreaves Lansdown), on the left-hand side of each fund factsheet.

To find the charges for your particular fund, log in online and select the account in which your fund is held, such as Stocks and Shares ISA. Then select the name of your fund holding and this will take you directly to the factsheet.

Alternatively, you can use this link to search for a fund. Once identified, please select the name of the fund and this will take you directly to the factsheet.

Fund classes

These abbreviations represent different units of the same fund which the fund manager has created to suit each type of buyer, such as investors with HL or institutional investors such as pension funds and multi-managers. Each unit in the fund may have different costs and also minimum investment levels.

There is no continuity across fund groups, class A for one fund is not necessarily the same as class A for another fund. 'A' is simply used to differentiate the fund from another unit of the same fund, class B or class Z for example.
In 2014 we started offering investors a new type of fund with lower annual management charges and lower or no loyalty bonuses. We call these 'unbundled' funds. We called the existing funds, with higher annual charges and higher loyalty bonuses, 'inclusive' funds. A conversion is the process of changing your fund holdings from 'inclusive' to 'unbundled' units.

Some investors will prefer to convert to the new type of 'unbundled' funds, while others will prefer to continue to hold 'inclusive' funds. We give our clients the choice.

You can compare the charges and savings of both unbundled and inclusive units.

There are no charges to convert and HMRC has confirmed that conversions will not count as disposals for capital gains tax purposes. You will remain invested throughout the conversion process.

Once you have given your instruction you can continue to trade in your inclusive fund, or cancel the conversion, at any time whilst your order is 'pending'. Once your instruction to convert has been passed to the fund group you will not be able to trade in the inclusive fund until the conversion is complete.

You can convert a single fund, all funds in an account, or all funds in your portfolio.

Find out more about converting funds

Download our factsheet on fund conversions

Income and dividends

When you buy a fund between ex-dividend dates any income which has been generated, but not yet paid out, is included in the price you pay for each unit.

Because of this, the first income payment you receive is made up of two separate parts. The first part is the income generated after you purchased the fund. The second part is the income which had been generated before you invested and included in the price you paid for each unit. As far as you are concerned this is not really income at all, it is a return of some of your initial investment, and your cost figure will be adjusted to reflect this return of capital. This is known as an 'equalisation' payment.
The historic yield is calculated by looking at the income the fund has paid over the last year and dividing it by the latest unit price.

The distribution yield reflects the amounts that may be expected to be distributed over the next 12 months, as a percentage of the unit price. It is based on a snapshot of the portfolio.

The underlying yield is the annualised income of the fund, net of expenses, as a percentage of the unit price. It is based on a snapshot of the portfolio.

As with all yields, this is an estimate of what investors could expect to receive, it is variable and not guaranteed

See our free Guide to Fund Prices, Savings and Yields for a more detailed explanation.
Funds will either make dividend distributions or interest distributions. If the fund predominantly holds shares, they will make a dividend payment. If the fund predominantly holds bonds, they will make an interest payment. You can establish how a fund makes distributions on the fund factsheet, available through the 'Fund prices & research' section of the website.

Passive/trackers

Not necessarily. Indices are often quoted without dividends whereas the tracker fund performance normally includes dividends. Tracker funds have management charges which are not incorporated in the index performance. Finally, the index performance is normally worked out as the performance at the close of market on a particular day, whereas most tracker funds are valued at midday. Over the long term, the fund performance should be very similar to that of the index, but in the short run they can deviate.
Yes. Most tracker funds come as either income or accumulation units. With income units, income is paid out to fund holders as cash. This could provide the investor with an income stream or the cash could be reinvested to buy additional units. With accumulation units income is retained within the fund and reinvested, increasing the price of the units. Generally, for investors who wish to reinvest income, accumulation units offer a more convenient and cost-effective way of doing so.
Often funds have an initial charge, which could be up to 5.25%. Hargreaves Lansdown, have negotiated savings on these charges. In most cases, you will pay no initial charge to buy a tracker fund through our service. For some funds - primarily Vanguard's tracker funds - the fund manager has set a dilution levy which is applied when the fund is bought or sold. This dilution levy covers the manager's costs when placing investments and cannot be discounted.

Find out more about our charges
A fully replicated tracker fund holds all the shares or bonds in its index. By using partial replication, a tracker fund aims to deliver the performance of the index without the cost of owning every single stock in the index. Full replication is more common in indices with a smaller number of holdings, or in bigger funds which have the scope to invest in a larger number of shares.
The job of the tracker fund is to follow the index and the manager will normally do this by buying the investments in the index, in the same proportions as the index. However the fund manager has some discretion over this process and may decide not to invest in certain holdings, for example if he feels that a company would be costly to buy whilst adding little to the fund's performance.

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