Commentator – Fiona Lintott, Director Client and Investor Services, Russell Investments
Q1: What is your view on spreads – should retail funds have buy/sell spreads and why/why not?
All Russell Investment Management Limited Funds apply buy-sell spreads.
A buy-sell spread is expressed as a percentage of the value of the application or withdrawal.
The buy-sell spread represents a reasonable estimate of the transaction costs that apply when buying and selling assets in a fund. These costs typically include brokerage, government taxes, commissions, market impact and bank charges.
The buy-sell spread is retained by the fund and contributes towards the transaction costs associated with the fund buying or selling assets.
The buy-sell spread aims to ensure that the non-transacting investors in the fund are not disadvantaged by those investors joining or leaving the fund.
Q2: Do you see any future changes re spreads on your funds i.e. adding or removing them? Is there any pressure, competitive or regulatory, that is likely to influence the future of spreads on your funds?
The spreads are reviewed on a regular basis to ensure they remain appropriate and are amended from time to time as the cost of transacting or market conditions change. This may result in an increase or decrease to the spreads.