Hi folks, I've got a very basic question... for unit trusts (UT), do the returns performance % include management charges? Or does that have to be factored in separately?

I asked a UT agent before, and he assured me the published numbers take management charges into account, but I can't find any B&W statement to that effect in the various prospectus' I've seen. Even fundsupermart doesn't seem to list that info in its FAQs or whereever.

p/s... I do know that initial sales charge and subsequent transaction charges aren't included inside. Any other "gotcha's" to watch out for?

Thanks!

This post has been edited by yokaze: Mar 21 2012, 11:56 AM

Yup, yup, that's what I was asking, sorry if it wasn't clear.

Ahhh, from your description I just realized that I've had a fundamental misunderstanding about UTs.

I had the vague misconception that UTs were treated like fixed deposits. I.e., the "performance charts" were like historical interest rates, and I wasn't sure whether the management fees had to be deducted separately or whether those were "net returns".

So if I understand it now, UTs are more like shares... the performance charts just represent the net asset value (from which the management fees are deducted monthly), and so all regular fees will be taken into account automatically. In other words, even if nothing happens to the underlying shares/bonds, the UT's NAV will still nibble down each month due to the fees.

Sorry, sorry, it seems so obvious now. Thanks for the clarifications!

Hi folks, another Q about unit trusts:

My understanding is that "annual expense ratio" or "management expense ratio" is the total fees (including management fee, trading costs, etc) over the NAV. If that's the case, the expense ratio should be at least equal or higher to the annual management charge, correct?

Yet, if I look at fundsupermart's fund info table, there are quite a lot of funds where the expense ratio is lower than the management charge (e.g. AmBRIC Equity Fund, annual management charge: 1.8%, annual expense ratio: 0.21%). And yup, I did check the actual fund report to confirm the value.