Pressure to cut unit trust upfront fees

By DALJIT DHESI

PETALING JAYA: Pressure is mounting for unit trust upfront sales charges to be reduced as new players emerge.

The matter was also brought up by the Employees Provident Fund (EPF). In recent talks with the Federation of Malaysian Unit Trust Managers (FMUTM) and its members, EPF asked them to consider lowering the charges to facilitate investment in unit trusts.

Industry observers said with Tune Money and InterPacific Asset Management Sdn Bhd coming onstream, there was greater pressure to lower the upfront fees and this should bode well for the investing public.

It is also learnt that EPF, in the past two to three months, had proposed to FMUTM that the maximum sales charges for unit trust investment be capped at 3% as opposed to the average 5% to 6%.

Sources said FMUTM had appealed to the Finance Ministry, saying the EPF's proposed charges were too low and that the federation would consider lowering the charges gradually.

The dispute is expected to continue and the pressure is growing in every meeting between the EPF and the federation, according to an observer.

The latest player to join the unit trust league is InterPacific, which currently does not impose any upfront sales charges. Tune Money, meanwhile, plans to launch funds online with zero or minimal sales charges.

With the entrance of these players, competition is getting intense and fund houses will need to review their charges to ensure they are able to sustain the public's interest in investing with them, according to an industry observer.

By not imposing any upfront fees, a unit trust management company can fully invest their clients' money in the funds, they added.

Sources said many fund houses were not very keen on the EPF proposal to reduce the charges as it would affect their distributors' income, leading to lower sales volumes. At present, many of them sell funds via agents and banks (as third-party distributors).

It is estimated that 60% to 70% of unit trust management companies sell funds through agents and banks. As of May 31, there were 39 unit trust management companies with a total 462 approved funds.

An observer, however, said while the industry trends might lead to a gradual lowering of upfront fund charges, distributors could still succeed by growing their assets under management over the long term.

They could do this by being more productive and further elevating their capability to ensure long-term retention of customers, he added.

http://biz.thestar.com.my/news/story.asp?f...52&sec=business

anyone know when they gonna announce dividend for PAIF?

Anyone can help me.I've opened an PISBD on 6/9/07. When will i get the account number? thanks 4 replying.

thanks 4 all the reply

dear all,

I've been thinking of switching 18k unit of PAIF to PISBF (already reach my target, so want to lock profit). AFAIK, i will be charge RM25. Let say, after the switching i want to switch back the 18k unit from PISBF to PAIF, I will be charge RM25 rite? Is there any other fee? Still blur2.

Thanks for replying


This post has been edited by sphiroth: Sep 30 2007, 04:30 PM

Thanks for the reply. I'm thinking to park for a long time (at least until another correction) and I don't have money market account. If after I park in Bond and want to switch back to equity, do I still need to pay the 6.5% service charge or just RM25?

Meaning that, if I switch RM 5k worth of NAV from PAIF to PISBF i need to pay RM 25 and when I switch back RM 5k worth of NAV from PISBF to PAIF its free? Sorry coz asking so many question. Need to be clear in this.

same loaded unit = in term of amount of unit when switch

or

same loaded unit = in term of NAV value when switch?

Sorry bro, not quite understand.

So switching is in term of 'unit' and not NAV. Let say i switch 10k unit of PAIF (loaded unit worth RM5k NAV) into PISBF, then when i switch back to equity the MAX amount is RM5k worth of NAV of PISBF?

Yeah, I also think easier like this. Thanks for all the replies.