pricing timing differences

English translation: Lag between the launch of the fund and investment in assets

13:10 Jan 14, 2003

English language (monolingual) [PRO]
Bus/Financial / Fund report

English term or phrase: pricing timing differences

Said of a recently launched fund: "Whilst the Fund lagged the benchmark, some of this related to pricing timing differences on starting the Fund and was unavoidable."

Johanna Holmberg (X) KudoZ activity Questions: 536 (7 open) (10 without valid answers) (10 closed without grading) Answers: 50
Local time: 09:21

Selected answer:Lag between the launch of the fund and investment in assets

Explanation:
This refers to the fact that the performance of the fund starts to be measured from its launch by taking the value of the market index against which it is to be measured at that time.

However actual investment of funds is not instantaneous, so prices when the money is actually invested will be slightly different due to 'timing differences'.

This would be particularly marked for either a large fund or a fund investing in illiquid stocks as they would risk the stock prices shooting up if the market realises that there is a big buyer holding cash.

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Note added at 2003-01-14 16:03:35 (GMT)
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I agree with Ralf\'s comment. It would be useful to know if this is a tracker fund, where market depth is not usually an issue, or an active fund where (simplistically) being new should be an advantage as the fund can take a position without the need or expense of liquidating other assets to do so.

Selected response from:

Peter Coles
Local time: 08:21

Grading comment

Thanks for your help!
4 KudoZ points were awarded for this answer

SUMMARY OF ALL EXPLANATIONS PROVIDED

5 +1

Lag between the launch of the fund and investment in assets

Peter Coles

changes in market value over time

Marie Scarano

Answers

1 hr confidence:

changes in market value over time

Explanation:
Sounds to me like certain estimates were made in establishing this fund and in the meantime (time between these estimates were made and the actual starting of the program), the market was so volatile that it rendered these initial estimates invalid. In this way the fund got off to a slow start in giving results.

Marie Scarano
Italy
Local time: 09:21
Native speaker of: English
PRO pts in pair: 81

2 hrs confidence:

peer agreement (net): +1

Lag between the launch of the fund and investment in assets

Peter Coles
Local time: 08:21
Native speaker of:

English
PRO pts in pair: 47

Grading comment

Thanks for your help!

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