Unit Trusts in Singapore

[revhappy]

Hi All,

I am interested in investing in Chinese equities via Singapore Unit Trusts.
Does anybody have any experience in investing in SG unit trusts?

I did some search and this site called FundSupermart came up. They seem to be a broker.

I narrowed down to this fund

First State Regional China
http://www.fundsupermart.com/main/fundi ... ber=370047

They have mentioned that the initial sales charge is 0.75%.
Also when I went to this AMC's site, and viewed the fund factsheet:

http://www.firststateasia.com/uploadedF ... RCFD_S.pdf

it has initial sales charge as 5%! Isnt that too high? So is Fundsupermart's charge over and above the AMC's sales charge?
Isn't there a cheaper way to play chinese equities?

[carteki]

5% initial charge is about average in SG for unit trusts DBS were running a 1% promotion sometime back - check to see if they still are. 5% is definitely very heavy.

[Girl_Next_Door]

Most fund managers do not distribute the unit trust directly, themselves. Most of the time, they go through financial institutions (i.e. banks/financial advisory firm) and alternatives distribution channels (i.e. fund supermart) to sell their product. That 5% initial charge (found in the fund factsheet) is indicative, depending on who is distributing the fund, and is mainly used to cover commission, marketing charges, trailer fees, etc.

Depending on how much each distribution channel wants to keep for themselves (after factoring the infrastructure, payment of commission, etc), one distribution channel (i.e. fund supermart) may offer a lower initial sales charge than another distribution channel (i.e. DBS Bank), for the same product.

Fundsupermart's business model is different because they are more technology based and is a self-service way of buying unit trust. No human to meet you, to analysis your financial needs, send you birthday cards on your birthday, etc. Hence, their operating cost is lower and this "benefits" is return to the buyer (i.e. you), when you buy a fund from them. Of course, some prefer it this way, while others prefer somebody to provide advice.

OK, back to your original question: So is Fundsupermart's charge over and above the AMC's sales charge?

Based on my understanding, fundsupermart's charge is the final sales charge, i.e. you are paying 0.75% instead of 5%.

Isn't there a cheaper way to play chinese equities?

Generally, online is the cheapest way to buy unit trust because its self-service. If you want to buy chinese equities (not unit trust), then you should open a trading account that gives you access to China stock market. Another alternatives is to buy ETF (exchange traded funds).

[revhappy]

Thanks a lot Carteki and Girl_Next_Door.You were very helpful.

I am very bad at holding individual stocks. I get the gambler instincts whenever I buy stocks and start watching them on a daily basis and keep trading intra day and stop only after undergoing a loss.So I have decided that equity funds it will be for me.

I actually prefer online as I can do it at my convinience. I just learnt that Fundsupermart also has platform fee of .125% per quarter, which translates to 0.5% per annum. I think its still better than the 5%. So I will go with Fundsupermart.

Do you know of any other competitive providers of Unit trusts at cheap rates?

[Girl_Next_Door]

Fundsupermart's competitor is Navigator. This is owned by Aviva.

[revhappy]

I did some more research on Unit trusts.

The competitors of FSM are DollarDex and Poems.

FSM charges 1.5% sales charge on equity funds+0.5% platform fee per year. (They are currently running a promotion of sales charge of 0.75%)

DollarDex charges 2% sales charge(for investments below S$50K) and no platform fee.

So if you are going to invest in unit trusts for a period of greater than 1 yr then dollardex makes more sense.

But then you never know whether DollarDex will start imposing platform fees in future.

I would open an account in FSM now and invest at the promotional sales charge and if I hold the money for less than 2.5 yrs I would still be paying fees equal to or less than DollarDex.

I need to find out if DollarDex charges any inter distributor switching fees, if not then the smartest thing to do would be to buy in FSM and tfr to DollarDex

Poems interface looks pathetic and couldnt really find their pricing structure. So I will give that a miss.

[Arsenal_fan]

Hey Rev or is it WD now. Just wanted to check with you, which platform did you go with finally?

I was checking dollardex (http://www.dollardex.com/sg/index.cfm?c ... entID=2637). It seems that custodial services may be charged extra. Also their charges are a lot higher than FSM.

Fundsupermart seems to have reduced their charges a bit too equity funds 0.5% (subject to a minimum of $10 per transaction). There's still the 0.125% per quarter platform fee though.

Also was wondering if these charges are the only ones or does the fund house charge in addition to the above. Dollardex seems to have one of those "notes" that get your spidey senses tingling.

Usual maximum sales charge at dollarDEX, as a general guideline only. Exceptions do apply, and the sales charge could be up to the maximum indicated in the fund prospectus. Exceptions include: payment by credit card; when fund prospectus or fund manager requires a higher minimum charge; during new fund launches; funds in currencies other than SGD; specialised products for accredited investors; other situations. Other additional transactional or performance-related fees may also apply, levied by fund manager, custodian or dollarDEX. Check prospectus and fund summary page at dollarDEX. The charge calculation requires you to sign in, and is usually dependent on your client category, payment method, prevailing GST rate and/or special promotional rates that may apply from time to time. Because charges for each investment are customised for each client the actual charge can only be shown in the confirmation page before a transaction is made. If in doubt, please contact us before you invest.

[Wd40]

I am with Fundsupermart.

[Arsenal_fan]

Was thinking of FSM too, looks to be the cheaper option among the lot. Any hidden charges or is it as stated on the website?

[Wd40]

There are no hidden charges. There is only initial sales charge and then quarterly platform fee.

I think in case of dollardex there is no platform fee but the initial sales charge is higher.

I think it doesnt matter whichever one you choose. The fees are negligible compared to market fluctuations. For eg, you invest 1 day early or 1 day late, you easily gain or lose more than the 0.5% sales charge.