Several Nordea equity funds will start to apply partial swing pricing

Partial swing pricing is a way to assign the fund’s trading costs to those unitholders whose trades in fund units create the costs. The purpose of partial swing pricing is to protect the net asset value (NAV) per unit for long-term unitholders and to improve the equal treatment of unitholders on days on which the fund experiences significant net subscriptions or redemptions.

With the new pricing method, we aim to align our procedures concerning different fund groups. The impact of the change on our personal customers will be limited. The change will be made automatically, so you don’t need to do anything. If you wish to redeem your fund units as a result of this change, you can do so free of charge until the end of the trading day on 29 May 2024.

As of 30 May 2024, the partial swing pricing method will be applied to the following equity funds:

In addition to the above-mentioned funds, the partial swing pricing method will be applied to the Nordea European Smaller Companies Fund as of 13 June 2024.

Trading costs explained

An equity fund invests its unitholders’ assets mainly in equities. When you subscribe for fund units, the portfolio manager has to buy new equities for the fund in order to invest the assets gained from the subscriptions. Correspondingly, when you redeem fund units, the portfolio manager has to sell equities in the fund to obtain money to pay for the redemptions. These transactions result in trading costs incurred by the fund.

How does partial swing pricing work?

The aim of partial swing pricing is to assign the fund’s trading costs to those unitholders whose trades in fund units create the costs. In practice, this means that the NAV per unit will be adjusted up or down for all customers on the trading days on which the net subscriptions or redemptions exceed a predefined threshold. The adjustment is made on a daily basis using a swing factor, the maximum value of which is 1.75% of the NAV per unit.

If there are more subscriptions than redemptions and the net subscriptions exceed a predefined threshold, the NAV per unit is adjusted slightly up on the day in question. This means that the customers subscribing for the fund pay a little bit more for the fund units they buy on the day. The adjustment provides the fund with a small excess amount of cash that can be used to cover the trading costs resulting from the equity trades executed by the fund.

Correspondingly, if there are more redemptions than subscriptions and the net redemptions exceed a predefined threshold, the NAV per unit is adjusted down. Customers selling their fund units on the day get a slightly lower price for them, leaving the fund with some extra cash to cover its trading costs.

Partial swing pricing promotes the equal treatment of all unitholders, as the assets needed to pay for the fund’s trading costs are derived from the trades of the customers making subscriptions and redemptions. If we did not adjust the NAV per unit as described above, the fund’s trading costs would impact the value of all unitholders’ fund units.

Do you have any questions?

The funds’ rules, key investor information documents and other information are available at www.nordea.fi/funds.

If you have questions or if you want to hear more about other investment alternatives, please contact us. If you are a personal customer, you can reach us on 0200 70 000 (local rates apply), Mon–Fri 8.00–18.00. The easiest way to call is from Nordea Mobile by selecting Help and ‘Call now’. This way your identity will be verified automatically.