I'm very new in this and I'm a bit lost with index funds. I'm checking this out for example http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-international-index-trust-c-accumulation and it's selling at 134.50p (£1.34). However, this fund has stocks from big companies as Microsoft, Apple, etc. How come is the price so cheap? How is that price calculated?


1 Answer 1


I'm not familiar with British securities so here's some perspective regarding American securities.

We have a variety of equity investments which are surrogates for indexes. We can buy mutual funds, closed end funds (CEFs), or ETFs. The NAV (net asset value per share) is based on the total value of the holdings divided by the number of shares of the fund. The NAV can be high or low, depending on the number of fund shares issued.

For example, if the equity holdings are worth $100 million and there are 10 million shares then the NAV would be $10. OTOH, if there were 20 million fund shares, the NAV would be $5. If you were to buy $1,000 of these two funds, you'd own either 100 shares @ $10 or 200 shares @ $5. Your $1,000 investment would be the same percent of the fund, regardless of the NAV.

  • There are at least as many types of funds in the UK as in the US, but AFAIK they (and pretty much all pooled vehicles worldwide) operate on the same principle to strike a NAV per share, so you could remove the first line of your answer as well as the first sentence of the next paragraph, and make it more effective... and maybe spell out explicitly that one share of the fund can (and almost always does) represent tiny fractions of shares of its holdings.
    – David
    Jun 15, 2018 at 20:20
  • Rather than parsing out the structure of my answer, I think that it would be more helpful to the OP if you provided additional information, in particular, anything that would add to what I have written. Such a contribution might assist him in climbing the learning curve. Jun 15, 2018 at 22:09
  • Given it doesn't have any factual flaws, I don't feel well versed enough here to edit your answer for what I think are relatively cosmetic reasons, and don't think that my proposed edits warrant their own answer. I was under the impression that the purpose of the comments was exactly this: to propose improvements to the answer. You can, of course, reject my suggestions.
    – David
    Jun 15, 2018 at 23:21

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