Unit trusts, robo-advisors and managed money compared

Learn what a unit trust, robo-advisor or managed portfolio actually charges, and compare any of them on total cost over 20 years.

Most people buy their first fund because someone at a bank recommended it or because an app made it easy. Few could say what they pay each year, who holds their money, or whether the fund has beaten a cheap index fund after fees. That is partly because the costs are spread across a factsheet, a prospectus and a platform's fee page, and nobody adds them up for you. In this course you learn how unit trusts and robo-advisors work, what each charge is for and what the evidence says about active funds, and then you add up the costs of your real options over 20 years yourself.

What you'll be able to do

• Explain how a unit trust is structured and how its NAV per unit is calculated
• List every charge on a fund, from sales charge to trailer fee, using the fund's own documents
• Compare buying the same fund through a bank and through a fund platform
• Describe how a robo-advisor builds, rebalances and charges for a portfolio
• Separate the insurance and investment parts of an ILP illustration
• Summarise what the SPIVA reports say about active and passive funds
• Build a 20-year total cost comparison of the managed options you are considering

Syllabus

Module 1: Know what you own when you buy a unit trust

You will learn how a unit trust is set up, how its price is worked out each day, and where to find the facts in the factsheet, Product Highlights Sheet and prospectus. By the end you can describe any fund you hold in plain terms.

• 1.1 A unit trust is a pool you own a slice of
• 1.2 Why your fund's price arrives a day later
• 1.3 Find the facts in a fund's three key documents
• 1.4 Trace one fund from your money to its holdings

Module 2: Find every charge you pay

This module covers the one-off and yearly charges on a unit trust, how trailer fees work, and why one fund is sold in several share classes at different prices. By the end you can list every cost before you invest.

• 2.1 One-off charges: buying, switching and selling
• 2.2 Yearly charges: management fee, expense ratio and trailer fee
• 2.3 Same fund, different price: share classes
• 2.4 List every charge on one fund

Module 3: Buy through a fund platform or a bank

You'll see what a bank adviser and a fund platform each give you, how platform fees and trailer fees work together, and what happens to your units if a platform closes. Then you can pick a channel on cost and service.

• 3.1 What a bank adviser does for the money
• 3.2 Fund platforms: lower charges, more of the work on you
• 3.3 What happens to your units if the platform closes
• 3.4 Compare buying the same fund two ways

Module 4: See how a robo-advisor builds and runs your portfolio

Covers what a robo-advisor does with your questionnaire answers, which funds it buys, how it rebalances and what you pay in total. By the end you can compare a robo-advisor with unit trusts and with investing on your own.

• 4.1 From questionnaire to portfolio
• 4.2 The funds inside a robo portfolio and how it rebalances
• 4.3 What a robo-advisor really costs
• 4.4 Compare two robo-advisors on the same risk level

Module 5: Know where ILPs fit before anyone pitches one

You will learn what an investment-linked policy is, which charges set it apart from a unit trust, and what to ask before you sign. That is enough to follow a conversation about an ILP and to know where to learn more.

• 5.1 An ILP is insurance and funds in one policy
• 5.2 The charges that set ILPs apart from unit trusts
• 5.3 Questions to ask before you sign an ILP
• 5.4 Separate the insurance and the investment in an illustration

Module 6: Weigh active against passive with the evidence

Active funds as a group must trail the market after costs. You will see why, what the SPIVA reports measure, and how to judge one active fund fairly, so you can decide whether its fee is worth paying.

• 6.1 Why active funds as a group trail the market after costs
• 6.2 What the SPIVA reports measure and show
• 6.3 When an active fee might be worth paying
• 6.4 Test one active fund against its own benchmark

Module 7: Compare total cost over 20 years

Small yearly cost differences grow into large sums over time, and factsheets leave some costs out. You will build a 20-year comparison of the managed options you are considering, so you choose on the numbers.

• 7.1 Why a 1% yearly gap becomes a large sum
• 7.2 Costs the factsheet leaves out
• 7.3 Model one-off and yearly costs together
• 7.4 Build your 20-year cost comparison

Frequently asked questions

How long does the course take?

About seven and a half hours across seven modules, including the exercises. Most people finish in three weeks at two or three hours a week.

Will the course tell me which fund or robo-advisor to use?

No. It shows you how to read the documents and compare costs and evidence so you can decide for yourself. Providers are named only as examples of a type, never as recommendations.

Does this cover ILPs fully?

Only at a glance, enough for you to follow a conversation about them and ask useful questions. ILPs are covered in depth in Insurance Decoded.

Is this financial advice?

No. The course is education and does not replace financial advice. For advice on your own situation, speak to a representative of a licensed financial adviser and check them on the MAS Register of Representatives.

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