Comments on: Questions about the Fidelity MoneyBuilder UK Index Fund (MT) http://www.bishnet.net/tim/blog/2009/02/26/questions-about-the-fidelity-moneybuilder-uk-index-fund-mt/ "For a moment, nothing happened. Then, after a second or so, nothing continued to happen." -- HHGTTG Wed, 18 Jan 2012 09:29:45 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Del http://www.bishnet.net/tim/blog/2009/02/26/questions-about-the-fidelity-moneybuilder-uk-index-fund-mt/comment-page-1/#comment-45322 Del Sun, 20 Jun 2010 10:47:45 +0000 http://www.bishnet.net/tim/blog/?p=191#comment-45322 I just found this via Google when asking the same question you asked in point 1: how do dividends get reinvested? I'm still missing something! Suppose the dividend for a year is 5%. That 5% is reinvested into the fund. If, as you say, your existing units go up in value, how does that affect the tracker? The value of the FTSE has stayed the same, but now the fund is up by 5%. That would leave a tracking error wouldn't it? Clearly, this isn't actually what happens! I'm still trying to work this out. Any further explanation would be appreciated! I just found this via Google when asking the same question you asked in point 1: how do dividends get reinvested? I’m still missing something!

Suppose the dividend for a year is 5%. That 5% is reinvested into the fund. If, as you say, your existing units go up in value, how does that affect the tracker? The value of the FTSE has stayed the same, but now the fund is up by 5%. That would leave a tracking error wouldn’t it? Clearly, this isn’t actually what happens!

I’m still trying to work this out. Any further explanation would be appreciated!

]]> By: Monevator http://www.bishnet.net/tim/blog/2009/02/26/questions-about-the-fidelity-moneybuilder-uk-index-fund-mt/comment-page-1/#comment-44469 Monevator Sun, 06 Dec 2009 10:39:36 +0000 http://www.bishnet.net/tim/blog/?p=191#comment-44469 You mentioned in your other post the ability to buy small amounts of units with the Halifax Sharebuilder account for £1.50. It is indeed a great service, but there the fractional units start to drive you crazy if you ever have to account for capital gains tax. If your Moneybuilder fund is in an ISA, you'll be saved any such reporting for tax hassles anyway. (Reason enough to use an ISA - Hurrah!) You mentioned in your other post the ability to buy small amounts of units with the Halifax Sharebuilder account for £1.50.

It is indeed a great service, but there the fractional units start to drive you crazy if you ever have to account for capital gains tax.

If your Moneybuilder fund is in an ISA, you’ll be saved any such reporting for tax hassles anyway. (Reason enough to use an ISA – Hurrah!)

]]> By: Rimas Balsys http://www.bishnet.net/tim/blog/2009/02/26/questions-about-the-fidelity-moneybuilder-uk-index-fund-mt/comment-page-1/#comment-43982 Rimas Balsys Tue, 11 Aug 2009 02:27:17 +0000 http://www.bishnet.net/tim/blog/?p=191#comment-43982 I'm not a die-hard Fidelity fan (having worked in their stats & inv info dept), but I'm drawn to defend them here. There's no difference between your holdings' income being reinvested to increase the nav of the Fund as a whole, and your holding's income being reinvested to increase the nav of just your holding. Mathematically, the two have the same effect on your holding. Although everyone else benefits from your holding's income, you benefit from from everyone else's holdings' incomes. I’m not a die-hard Fidelity fan (having worked in their stats & inv info dept), but I’m drawn to defend them here. There’s no difference between your holdings’ income being reinvested to increase the nav of the Fund as a whole, and your holding’s income being reinvested to increase the nav of just your holding. Mathematically, the two have the same effect on your holding. Although everyone else benefits from your holding’s income, you benefit from from everyone else’s holdings’ incomes.

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