A Look Into Incredible Growth in Sustainable Municipal Debt Issuances
Jayden Sangha
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In this article, we will take a closer look at the nature of...
Be sure to follow our Mutual Funds Education Section to learn more about mutual funds.
Here’s a simple example: XYZ Fund has a price of $20 per share and the fund’s provider sets a swing factor of 0.1% of the NAV for net flows above or below 5% of the prior day’s price. If the fund experiences a net inflow of 10% of NAV, the price of the fund would be adjusted upward to $20.02 ($20 + ($20 * 0.1%)). The same situation would occur with a 10% outflow except that the price would be adjusted downward to $19.98. If a net flow of less than 10% occurs, swing pricing is not implemented and the fund’s price remains at $20.
In order to understand how NAV is determined, check here.
Swing pricing is an optional strategy for fund providers to use and can be applied on an individual fund basis. Whether or not swing pricing is implemented and whether full or partial swing pricing is used is the decision of the fund provider. Under rule 22c-2 of the Investment Company Act, the SEC provides discretion for fund boards to structure fees in a way that is appropriate for achieving anti-dilution goals. Swing pricing may be used for certain funds but not others.
To learn more about SEC’s rules to enhance the liquidity of open-end funds, check out our news article on SEC’s New Liquidity Management Rules.
When a partial swing pricing method is used, large flows could still occur that may not be large enough to initiate the swing pricing process. Again, long-term shareholders may feel some minor impact. Therefore, swing pricing policy needs to be monitored and reassessed on a continuous basis to ensure it remains effective.
While many larger financial institutions already have documented swing pricing policies in place, compliance dates have been pushed back to 2018 in order to allow smaller companies to get all the necessary infrastructure in place to comply with SEC requirements.
To familiarize yourself with regulations governing the mutual fund industry, read about the Investment Company Act of 1940.
Be sure to check our News section for weekly market updates.
Receive email updates about best performers, news, CE accredited webcasts and more.
Jayden Sangha
|
In this article, we will take a closer look at the nature of...
Kristan Wojnar, RCC™
|
Our subjects for this week center around making decisions, whether to outsource your...
Concerns about inflation have investors looking for safe and robust returns in the...
Mutual Fund Education
Justin Kuepper
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Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
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While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...
Be sure to follow our Mutual Funds Education Section to learn more about mutual funds.
Here’s a simple example: XYZ Fund has a price of $20 per share and the fund’s provider sets a swing factor of 0.1% of the NAV for net flows above or below 5% of the prior day’s price. If the fund experiences a net inflow of 10% of NAV, the price of the fund would be adjusted upward to $20.02 ($20 + ($20 * 0.1%)). The same situation would occur with a 10% outflow except that the price would be adjusted downward to $19.98. If a net flow of less than 10% occurs, swing pricing is not implemented and the fund’s price remains at $20.
In order to understand how NAV is determined, check here.
Swing pricing is an optional strategy for fund providers to use and can be applied on an individual fund basis. Whether or not swing pricing is implemented and whether full or partial swing pricing is used is the decision of the fund provider. Under rule 22c-2 of the Investment Company Act, the SEC provides discretion for fund boards to structure fees in a way that is appropriate for achieving anti-dilution goals. Swing pricing may be used for certain funds but not others.
To learn more about SEC’s rules to enhance the liquidity of open-end funds, check out our news article on SEC’s New Liquidity Management Rules.
When a partial swing pricing method is used, large flows could still occur that may not be large enough to initiate the swing pricing process. Again, long-term shareholders may feel some minor impact. Therefore, swing pricing policy needs to be monitored and reassessed on a continuous basis to ensure it remains effective.
While many larger financial institutions already have documented swing pricing policies in place, compliance dates have been pushed back to 2018 in order to allow smaller companies to get all the necessary infrastructure in place to comply with SEC requirements.
To familiarize yourself with regulations governing the mutual fund industry, read about the Investment Company Act of 1940.
Be sure to check our News section for weekly market updates.
Receive email updates about best performers, news, CE accredited webcasts and more.
Jayden Sangha
|
In this article, we will take a closer look at the nature of...
Kristan Wojnar, RCC™
|
Our subjects for this week center around making decisions, whether to outsource your...
Concerns about inflation have investors looking for safe and robust returns in the...
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...