How does SSP function?

When calculating the net asset value with the SSP method, the incidental costs caused by subscriptions and redemptions for buying and selling the investments (bid-ask spreads, broker’s fees in line with the market, commissions, levies, etc.) are also taken into account.

The net amount resulting from the difference between subscriptions and redemptions is decisive for adjusting the portfolio, and thus also for the incidental costs arising. The transaction expenses caused by subscriptions and redemptions on the day of trading are to be borne by those investors who gave the order for these transactions.

If the subscriptions on a certain trading day exceed the redemptions, then the fund management pays the transaction expenses incurred through the excess of subscriptions in addition to the “valuation asset value” calculated. This sum is called the “modified net asset value”. On the other hand, if the redemptions on a certain valuation day are greater than the subscriptions, then the transaction expenses caused by the excess of redemptions will be deducted from the “valuation asset value”.

The surcharge or discount on the transaction costs incurred on the subscriptions or redemptions is made at a flat rate in each case and refers to an average value from a previous period of one year as the maximum.

If the fund is on the market for less than one year, depending on the fund’s special features, this factor is fixed in such a manner that a representative value results.

Summary

• SSP is fair because it leads to a fair charging of transaction costs to the originator.
• SSP protects long-term investors in the fund from a dilution of performance caused by transaction costs.
• With SSP, the swing factor (performance dilution protection) is already included in the published NAV.

From this it follows that there are no changes for fund investors in everyday dealings with fund prices. If you have any questions, we would ask you to please get in touch with your customer service officer.