Doubting my understanding

[elephanthunt11]

Evening all,

I’ve recently put some money into a MMF as a placeholder for cash within my S&S ISA. (MMF Link below)

Now, I know nothing is risk free but - a drop of .42% goes against my understanding of the behaviour of a MMF, in that it is exceedingly rare, and almost half a % in a day is virtually unheard of (to my knowledge).

Either - I’ve grossly misunderstood something here (that which I’m unaware of) or…. I don’t know, maybe I’ve missed something altogether…? Help me out here guys

https://www.vanguardinvestor.co.uk/inve ... s/overview

[Newroad]

Hi ElephantHunt11.

From your link, click on Price & Performance - and then click on 12 Months. All will become clear.

In short, what you are seeing is the paying of a monthly distribution (aka dividend/interest etc). Time the drop you have observed by 12, that is approximately the annual rate (noted as 4.63% currently).

Regards, Newroad

[elephanthunt11]

Hi ElephantHunt11.

From your link, click on Price & Performance - and then click on 12 Months. All will become clear.

In short, what you are seeing is the paying of a monthly distribution (aka dividend/interest etc). Time the drop you have observed by 12, that is approximately the annual rate (noted as 4.63% currently).

Regards, Newroad

Hi Newroad,
That was what I initially thought - maybe there’s a delay between the price drop and the payout in my brokerage (HL) which made me think ‘ah it’s not that’ etc

I’ll give it some time..

[EthicsGradient]

Hi ElephantHunt11.

From your link, click on Price & Performance - and then click on 12 Months. All will become clear.

In short, what you are seeing is the paying of a monthly distribution (aka dividend/interest etc). Time the drop you have observed by 12, that is approximately the annual rate (noted as 4.63% currently).

Regards, Newroad

Hi Newroad,
That was what I initially thought - maybe there’s a delay between the price drop and the payout in my brokerage (HL) which made me think ‘ah it’s not that’ etc

I’ll give it some time..

See the "Distributions" tab of your link. It says
Distribution type Distribution rate (per unit) Record date Payable date
Income Distribution £0.0042 30 Nov 2023 29 Dec 2023
...
That means that the distribution goes to the holders of the fund on 30 Nov (at the end of the business day), and is paid out on 29 Dec. So after 30 Nov (ie Friday 1st Dec), you expect the price to drop by £0.0042 (relative to the small increase it gets most days), because the eligibility for the monthly distribution has just disappeared. If you bought the fund during December, you won't get your first distribution until the end of January - but if you sell it during April, you will still get one at the end of April.