How the smoothing works
A Smooth Growth Rate is set for the fund which is used to grow the price of the fund. This rate is equal to the Bank of England base rate plus 5%.
The Smooth Managed Fund price will usually increase daily in line with the Smooth Growth Rate – we call this the smoothed price.
Fund Price Adjustment
Two prices are used, on a daily basis, to determine whether or not a Fund Price Adjustment needs to be applied:
The smoothed price of the Fund - This is the price that you pay to buy and sell units in the Smooth Managed Fund
The unsmoothed price of the Fund - The value of assets divided by the number of units in the Smooth Managed Fund
If the difference between the two prices above is 6.5% or more, we will automatically adjust the smoothed price so that the difference is 1.5%.
* These can be daily: If difference is 6.5% or more then gap is reduced to 1.5%.