Swing pricing policy

“Swing pricing is one technique aimed at protecting a fund’s performance and thus the interest of existing investors from the dilution effect of frequent trading. It is primarily used to address dilution, protecting existing investors from experiencing lower fund performance as a result of dealing costs arising from the capital activities of other investors.

If the net capital flow exceeds a predefined percentage of a fund’s net asset value (threshold) then swing pricing is triggered. The swing factor is a pre-determined percentage by which the net asset value will be swung (in basis points) and is based on the estimated average costs of trading. Each fund, even where there may be similar investment strategies, may have different thresholds and swing factors, or none at all. Threshold levels depend on certain parameters such as, but not limited to, the liquidity of the underlying market in which the fund invests, cash management and types of instruments that are used to manage in- and outflows. The swing factor levels are based on the estimated trading costs of the asset classes that a fund invests in.”