Swing pricing

When many investors enter or exit an investment fund at the same time, the fund has to buy or sell underlying investments. This involves transaction costs. Without an adjustment, the existing investors in the fund would bear those costs.

Swing pricing prevents this: the fund price is temporarily adjusted so that the transaction costs are borne by the investors who cause them. This is fairest for the investors who are invested in the fund and remain so.

This adjustment can also work in your favour. For example, if you sell on a day when, on balance, a lot of money flows into the fund, you benefit from the upward adjustment to the fund price and receive a higher price for your units.

For regular contributions, we therefore assume that the effect of swing pricing averages out to zero over time. The table below shows the maximum swing factor per fund and the expected net effect.