May 19 2015, 08:05 AM
QUOTE(j.passing.by @ May 19 2015, 12:01 AM)
Back to Basics.
Annualized Rates and Service Charges.
... moving on from that recent post... "But the annualized rate (which is Compound Annual Growth Rate - CAGR) is 7.2%"
Yes, the annualized rate of 100% ROI in 10 years is 7.2%. This 7.2% would be in the annual report or product highlight sheet. But what is the actual rate after adding in the service charge?
Let's do some quick calculations on how 2 different service charges would affect the above 7.2%.
The 5.5% is what PM usually charges, and the 2.0% is commonly charged in a investment platform, and often less.
1 year.
0.0% service charge - 7.2%
2.0% service charge - 5.1%
5.5% service charge - 1.6%
the % ROI is what we calculated from the variance of NAVs (Assuming no distribution)Annualized Rates and Service Charges.
... moving on from that recent post... "But the annualized rate (which is Compound Annual Growth Rate - CAGR) is 7.2%"
Yes, the annualized rate of 100% ROI in 10 years is 7.2%. This 7.2% would be in the annual report or product highlight sheet. But what is the actual rate after adding in the service charge?
Let's do some quick calculations on how 2 different service charges would affect the above 7.2%.
The 5.5% is what PM usually charges, and the 2.0% is commonly charged in a investment platform, and often less.
1 year.
0.0% service charge - 7.2%
2.0% service charge - 5.1%
5.5% service charge - 1.6%
therefore the 2.0% annual mgmt. fees (service charge) should NOT be used in your calculation as they had been minused off in the daily NAV.
...the 5.5% Service Charges (initial Sales Charges) is ONE OFF thing...NOT an annual reoccurrence.....IT DOES NOT AFFECT the monies that are already invested. ONLY imposed on NEW monies that invested...therefore the 5.5% is only affected as shown on the above if the investor were to buy in new fund every year and that would affect the (7.2)% ROI calculation.....
Thus the ROI of the previously invested monies would not be affected...example (simple calculation)
previously invested RM 10000
new monies invested RM 1000
assuming 7.2% ROI for that year
The RM 10000 would get 7.2%
The RM 1000 would get 7.2%-5.5%
* just let the readers decide for themselves who is right and who is wrong*, shall we?
This post has been edited by MUM: May 19 2015, 08:42 AM
Quote
no need to hope.. got distribution or no distribution it will NOT growth my wealth in unit trust. I will NOT have any (Ringgit Malaysia) gain with distribution also.
....
you said it all..."They are entitled to their opinions, not here to convince anyone to our opinions - that our opinions are right, definitely don't bother to convince anyone whether or not UT is good or not, c'est la vie!",.... 
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