Can you clarify what you mean by "middle man trading companies" and "online traders"?

What type of companies/traders are they? Do they have local offices (in SG)? Can you name examples?

We can see actually Msia is going to improve the UT industry...government trying to push the service charge to be lower, and EPF is going to reduce the requirement for EPF investment. Currently, I understand that many Sporeans like to invest using their CPF, but over here, only those who have RM55k in account 1 can withdraw EPF to invest. For those who just work for few years, definitely don't have such big amount in EPF.

Next year, EPF investment, service charge can be up to 3% only. This is really a good step to promote UT to all Msians.

The problem of EPF fund invested into UT one, they don't allow EPF contributors to invest in global fund or regional fund only local funds are allowed. You won't get any diversification in local fund as almost all local equities funds have more and less the same kind of portfolio, can't run away several stocks one like TNB, TM, Maybank, Genting, PBBank, IOI etc. Don't see much different between them, may be weighting and positioning a but different from each others.

This post has been edited by cherroy: Dec 11 2007, 03:11 PM

Okay, maybe I have confused you. the 2 that I buy from:

www.fundsupermart.com - largest UT in SG

www.poems.com.sg -- Philip's on-line electronic mart system

In SG stock market, people know who they are. regularly appearing on Monday morning chinese TV program about SG stock and opinions. They also sell UT. They are actually middle man company selling on behalf for the various asset fund management... you can buy DBS UT from them at even lower rate than what DBS offers.

These 2 sites contains many info and fact sheet , who owns what and both have a chart too to see the pattern the fund progresses. POEMS is slightly better.. Of course, as member you see even more of chart tools etc.. .aids to assist you in determining pattern

Both these sites permit online trading ... that's what I meant about online trader.. I hope I didn't mislead you or I could have use the wrong term here.. .if so, my apology. You can buy from this site too by opening an account. Just like I can buy online into MY, Thai, US, HK stock anytime during trading hours of the country.

Why not try the 2 sites on your own and discover what's there.. Fundsupermart has more on UT and what you need to know about, including a predictive scheme that helps you determine the kind of risk you can take. All online, that's the reason why its cheaper... than going to agent. I had been with them for ~ 8yrs, buying/selling without any problem... Quite safe for us here I would say..

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Added on December 11, 2007, 11:42 pmOh, that's good news for investors.. In SG, CPF (refer to ordinary account) is broken down in 2 categories...

1. Managed product (your entire CPF saving)
2. Stock (some % of 1)
3. Gold (some % of 1)

you can used whatever balance in CPF to buy UT provided the fund permits CPF purchase. Some higher risk funds are only availble using CASH. Othewise, there is no restriction. However, you have to keep aside some for HDB payment.

Not forgetting, CPF actually consists of 2 part. ordinary acc and Special acc...

Ordinary accounts get 2.5% interest and is mobile, anytime withdrawn out for whatever valid reasons.

Special Account, gets 4% interest, can only be used for low risk investment like certain UT certified by MAS. can't any how invest..

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Added on December 11, 2007, 11:45 pmh, that's limiting your spectrum.... if all selling some what the same thing.. then its hard. However, like buying UT related to SG, I still have a choice to so call choose the best performing fund but monitoring their chart performance and pattern... likewise, you too can unless its not available to you.

This post has been edited by bbmars: Dec 11 2007, 11:48 PM

EPF caps unit trust service charges at 3%

PETALING JAYA: The Employees Provident Fund (EPF) has capped service charges at 3% for investments in unit trusts.

EPF chief executive officer Datuk Azlan Zainol said the move would come into effect from Jan 1 next year.

"Members of EPF currently pay up to 6% in service charges. They will pay 50% less in service charges when the move comes into effect.

"Fund management institutes cannot impose service charges beyond that," he said in a statement Wednesday.

He added that service charges by local investment funds currently were relatively higher compared with other countries like Singapore, the United Kingdom, Japan and the United States.

"We decided to cap the service charges in the interest of our members and the fund managers.

"A study commissioned recently by EPF showed that one of the major factors affecting the investment returns for our members is the high service charges imposed by the fund management institutions," he said.

URL: http://thestar.com.my/news/story.asp?file=...0456&sec=nation

The 3% service introduced by EPF has been ojected by FMUTM, see, told you all already, UT industry is a well protected industry, fund houses are not willing to give out their protected and fat profit of it. Mostly they oppose the move as they said it will hurt their income. They didn;t care how general public 'suffer' the 5-6% charges, they only care about their profit.

Kinda disappointed with their comments, never look for the customers and public benefits. If other countries fund house can earn healthy profit from the 1-2% service charges, why they need 5-6% to stay profitabilit as claimed by them the reduction will hurt their profit.

I think they want retain their agents and also their fat profit. Once agents commission is cut, most will either sleep or quit the industry. To the UT company, they rather retain agents than hire since they need not pay anything to the agents. Commission comes from the public who buy.

Hey come on la...wat is 5-6% service charge compared to >10% return p.a? Do u wanna look juz @ the black dot or the whole white paper. If u really wanna kutuk, why not blast @ the insurance agent better? How many of u know their commission? 4% max from UT agent compared to 30% commission. Who should be regulated more?

This post has been edited by bafukie: Dec 14 2007, 12:15 AM

I think they object this is because of the EPF troublesome procedure. As I know, EPF always reject application to withdraw money to invest UT, they are too particular with the forms and etc...This increase the workload and admin work of agent and UT companies. Recently, PM imposes penalty of RM50 to agent if the application of EPF investment is rejected.

Anyway, Cherroy, where you get the info about the objection of FMUTM about this service charge?

Is the >10% guaranteed? how about making loss time? Insurance agent also get fat profit from the commission, no doubt about that(But it is a bit out of topic). But currently we are looking and discussing about UT industry and to promote UT investment among the public which in Malaysia still sginficant lower portion of the total investment for the public. It only do good for the market to have more funds in the market rather than retailers blindly invest in unknown territory.

5% + 1.5% annual management means that whenever you invest, you already lose 6.5% for the first year, If the fund making 10% for the year then investors only left with 3.5% for the first year. Remember UT doesn't mean surely profit one, it can make a loss, look at recent launched funds, some did register a more than 10 or 20% losses in the first year.
No doubt it is a long term investment, but taking out 6.5% from it while the investors' money are at risk sounds not fair while fund house won't lose a single cent even they made the wrong decision on investment.

Don't get me wrong here.
What I am not satisfy off is not agents of fund house making profit from the service charges, they still need to make a living out of it, that's fair.
It is the attitude (objection as mentioned) that don't care of investors benefits at all that really disappointing, instead they should always look for lowering service charges to promote the popularity UT investment. If the lowering charges does have significant impact for more UT investment in the future, in the end of the day, agents and fund houses earns more from it rather than less.


http://biz.sinchew-i.com/node/7720?tid=5

This post has been edited by cherroy: Dec 14 2007, 11:15 AM

cherroy u got me wrong. My unit trust funds earns a CLEAN ie NET return of >10% p.a till date. Of course, one of the criteria is to look for good funds or i term it 'best of the best' by doing research myself. No doubt there are funds that register -20% p.a and there are some that earn >20% clean p.a in the first year only to register > -10% p.a the next. So be wise in choosing and more importantly think out of the box

hi.. want to ask.. which one is better between this two opt..

a) Invest when a particular UT Fund about to declare their divident and gain the pro-rated bonus

OR

b) Invest after they declare their divident (means buy unit with lowest price)

and anyone here can help me with the UT price history for the time they declare the divident? I want the price before they declare, how much they declare and the price after they declare.. thx..

One must know the last few years of stock market performance (signficant bull run more than 50%) or UT performance, 90% won't be repeating in the next 2-3 years, not every year market will have bull run one.

Don't you think 5-6% is too high already? Fund house can easily make more money by lowering the initial service charges as discussed before. The high service charge is really a big obstacle for public to invest more in it.

Especially when choosing the new fund (old fund, not much problem, we had historical track record to judge the managers performance), for newly lanuched fund, how are you going to know or judge or predict their performance, just based on the name of the fund? Just like China fund, one only knows they will invest in China market or China related company but we don't know which company they are going to invest, how do we choose or judge then? Even market indices can be go up but their invested stock can go down. Just like DJ still stay quite high but Citigroup share has dropped more than 50%.

I had invested UT also, just now don't have already after sold off, my invested fund make more than 30% (net) last year or should be beginning of this year), but for me to re-invest back, the high service charges has make me think twice this time around as equities market won't easily have 20% or more in the next 1-2 years, (although it is not impossible, just more difficult), might as well a negative return if US subprime and credit crunch issue worsen.
Even if market does go up 20% in 2 years time, after deduct (for global fund) 6% + annual management fee 1.8x2 = 9.6%. Total return for 2 years = 20 - 9.6 = 10.4%. It become only 5.2% pa. which other alternative safer investment tool also can achieve that kind of return rate one, why we want to invest in UT anymore in this kind of situation?

When fund generate net 10% return rate for you, they are actually make at least 17% or more already. Don't you think it is unfair for the profit ratio? Make 17% while you only get 10% while the fund house takes 7% while it is your money at risk, not theirs. While making loss time, they still charge the same or gain the same, but investors bare all the losses.

Not mean to disagree with your opinion. Just in investment tool comparison, the charges of 5-6.5% is really really high, moreover, FMUTM think not high though which is really disapppointing.
I know it is possible to get 3% initial service charges provided you invest in large sum (50k or above) which they can give special discount one (quite norm), but it is the small investors that are a bit being 'ripped off' in term of risk and reward ratio.

If fund make loss then charges lesser may be a bit fair, while if funds make significant profit then only charge higher, sound more fair, right?
It is the risk return ratio is not quite right if they insist to charge high initial fee, no matter how the fund performance is.

Just my 2 cents,
Cheers.

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Added on December 15, 2007, 2:01 pmActually both are the same, as dividend declared or unit split or bonus unit had no real material effect on fund NAV as discussed in fund section before.
But
b) has some advantage as dividend or distribution need to be taxed.

This post has been edited by cherroy: Dec 15 2007, 02:22 PM

Do a search through this forum - someone has already given detailed examples of how this work. Short answer is, it makes no difference to the net worth of your investments.

As for price history, some Fund manager websites are better than others in providing this sort of information.

PS: I see someone is quicker in replying...

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Added on December 15, 2007, 2:32 pmVery good point - fund house makes profit with no risk.

About the "fund house takes 7%", can you explain where this comes from? Is it some sort of industry standard?

This post has been edited by howszat: Dec 15 2007, 02:32 PM

I think the 7% is from the service charge.

Remember, whenever your fund starts to earn...lets say 1%.... actually the fund have already made 7.5% (6.5% is for service charge).

Just a rough figure.
Global fund charges 6.5% (some 5%) with annual management of 1.8% means for the first year they will take away your money 6.5% + 1.8% = 8.3%. Local fund mostly charges 5%.
Bare in mind, annual management fee is deducted from the fund NAV daily.

They are making profit without risk, that's the main important point. That's why they are eager to launch as much fund as possible.
It is much better than running banking business, as in banking business, the loaned out money still carry the risk of default. In UT, none except those administration fee and company set up expenses.
That's why I don't see any reason why they can't lower the initial charges. If don't want UT holders to switch fund more often, as too frequent in and out of money in the fund can actually disrupt the fund manager strategy, they can do a penalty charges (effective become 5%) if sell a fund let say within 3 months, while those long term investors (more than 1 year just example) are being charged at lower rate (let say 2-3%).

I had seen many agents (not meant all, some are good agents as well) always tell customers to sell those old fund which had making money already one in order to buy the new one. Bare in mind not switching but buy another different fund. But they didn't tell this kind of move, you will loss 5% already.

This post has been edited by cherroy: Dec 16 2007, 10:29 AM

6.5% for active managed fund still can understand but they are also charging 2-3% for index fund

This post has been edited by robertngo: Dec 16 2007, 01:27 PM

I believe the service charge of UT will be reduced slowly and eventually goes to 3-4% level, especially when online trading for UT is introduced in future.

UT companies and agents need more sales to cover the loss if the service charge is reduced. Only when more and more Msian aware about UT, the demands of UT will be increased and eventually increase the sales of UT. By that time, UT service charge can be reduced further. Public Mutual will reduce its service charge next year, this is a good move. Service charge cannot be reduced much in short time, it should go slowly and let agents and investors to be adapted to it. More education to investors is still needed to make the UT industry stronger.

Hi,

There are signs US is going into recession. Would it be wise to invest in UT now? Maybe in bonds or money market as defensive.

Do remember that Unit Trust is long term investment...you are looking at investment period of 3 - 5 years. Though signs of slowing down in 2008 from US is not too encouraging, if you are risk taker and patient enuf, it might be a good time to invest into high/moderate risk fund at a bargain price. Else, bond fund will be a good defensive measure.