KIIDs

Information and access to Key Investor Information Documents

Discounts explained

How are Elson discounts applied on ISAs?

On an ISA we will reinvest all of our initial commission together with any Investment company discount which will reduce the buying price (offer price) and bring it closer to the selling price (bid price).

  • Example:

    Mr Smith wants to invest £11,880 in the XYZ Investment Company's ISA which has an initial charge of 5%. The offer price of the units is £1 and the bid price is 95p.

    If Mr Smith invests direct, where no discount is given, his £11,880 buys him 11,880 units @ £1 each. The value of his units immediately after purchase would be £11,286, i.e. 11,880 units @ 95p each. By allowing us to handle his investment, we will sacrifice our 3% initial commission and pass on an additional 2% discount we have negotiated with the XYZ Investment Company. This means Mr Smith will save 5% in charges.

    His £11,880 will now buy 12,505.26 units at a discounted price of 95p i.e., £1 less 5%. The value of his units immediately after purchase will now be £11,880, i.e., 12,505.26 units @ 95p – an increase in value and thereby a saving of £594 on an £11,880 investment.

How are Elson discounts applied on Unit Trusts?

On a Unit Trust we will reinvest part of our initial commission together with any Investment company discount which will reduce the buying price (offer price) and bring it closer to the selling price (bid price).

  • Example:

    Mr Smith wants to invest £10,000 in the XYZ Investment Company's Unit Trust which has an initial charge of 5%. The offer price of the units is £1 and the bid price is 95p. If Mr Smith invests direct, where no discount is given, his £10,000 buys him 10,000 units @ £1 each. The value of his units immediately after purchase would be £9,500, i.e. 10,000 units @ 95p each.

    By allowing us to handle his investment, we will sacrifice 2% of our 3% initial commission and pass on an additional 2% discount we have negotiated with the XYZ Investment Company. This means Mr Smith will save 4% in charges. His £10,000 will now buy 10,416.66 units at a discounted price of 96p i.e., £1 less 4%. The value of his units immediately after purchase will now be £9,895.83, i.e., 10,416.66 units @ 95p - an increase in value and thereby a saving of £395.83 on a £10,000 investment.

How are Elson discounts applied on OEICs?

On an OEIC we will reinvest part of our initial commission together with any Investment company discount which will reduce the charge on a one for one basis.

  • Example:

    Mr Smith wants to invest £10,000 in the XYZ Investment Company's OEIC which has an initial charge of 5%. The purchase price of the units is £1. If Mr Smith invests direct, where no discount is given, his £10,000 buys him 9,500 units @ £1 each. The value of his units immediately after purchase would be £9,500, i.e. 9,500 units @ £1 each.

    By allowing us to handle his investment, we will sacrifice 2% of our 3% initial commission and pass on an additional 2% discount we have negotiated with the XYZ Investment Company. This means Mr Smith will save 4% in charges. His £10,000 will now buy 9,900 units i.e., 5% charge discounted by 4%. The value of his units immediately after purchase will now be £9,900, i.e., 9,900 units @ £1 - an increase in value and thereby a saving of £400.00 on a £10,000 investment.

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Elson Associates does not offer advice as to the suitability of investments. If you are unsure whether an investment is suitable for you, you should obtain expert advice. Past performance of an investment is not necessarily a guide to its performance in the future. The value of investments or income from them may go down as well as up. You may not necessarily get back the amount you invested.

Elson Associates Plc  5 Queen Street  Kings Hill  West Malling  Kent  ME19 4DA  UK

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