This is one of the pricing methods for Unit Trusts.
Bid / Offer prices are two prices quoted for a unit trust. An investor can buy at the offer price and sell or redeem at the bid price. The Bid / Offer price multiplied by the total number of units gives you the redemption proceeds / buy amount respectively.
The bid price is usually lower than the offer price. The difference between the bid and offer is the spread, which is equivalent to the sales charge. In Singapore, the spread is usually between 2% and 5.5%.
Example of bid/offer pricing
Investment amount S$5,000
Bid/offer spread 5%
Bid price S$9.50
Offer price S$10.00
Total units issued at S$10.00 per unit = S$5,000 / 10 = 500 units
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