You will map the full chain of one fund, from your account to the trustee and the assets it holds.
Ask most fund holders who has their money and they will name the bank they bought through. That is one link in a chain of four or five companies, and the bank usually holds none of the fund's assets. If you have never traced the chain for a fund you own, this exercise will take about twenty minutes and you will know more about that fund than most of the people who sold it.
You need the same fund you used in lesson 1.1, A unit trust is a pool you own a slice of, and its three documents from lesson 1.3, Find the facts in a fund's three key documents. Wei Ling's Asia equity fund is the worked example throughout. Its details are made up for the example, so the names are described rather than given.
Start at your end with the distributor, whoever sold you the fund, which could be a bank, a fund platform, a robo-advisor or a financial adviser firm. Your account statement names it, and for Wei Ling it is the bank whose app she uses.
Next, the manager, the company that decides what the fund buys and sells. It is on the first page of the factsheet and the cover of the prospectus. Then the trustee, the company that holds the fund's assets on behalf of investors and checks the manager keeps to the rules. If the factsheet does not name it, look in the directory section near the front of the prospectus. Some funds set up outside Singapore use a depositary in place of a trustee, which does the same job under a different name.
Last comes the custodian, the firm that keeps the actual securities in safekeeping, often a large bank appointed by the trustee and usually named in the prospectus. For Wei Ling's fund the trustee and custodian were two companies in the same banking group, and the manager was a separate firm altogether. Her own bank appeared nowhere in the fund's documents, because its role ended once it had sold her the units.
Go to the MAS website and search the list of collective investment schemes offered in Singapore. Search by the fund's name and note what it says. An authorised scheme is a fund constituted in Singapore that MAS has authorised for sale to the public. A recognised scheme is a fund constituted outside Singapore, for example in Luxembourg or Ireland, that MAS has recognised for sale here.
Neither status tells you the fund is a good investment. Both tell you it meets the rules for being offered to the public, with a prospectus and a Product Highlights Sheet. If you cannot find your fund at all, find out why before adding money. It may be sold only to accredited investors, or it may be a sub-fund inside an insurance policy, which is a different product and the subject of module 5.
Wei Ling's fund turned out to be a recognised scheme, constituted in Luxembourg, which she had not known.
The domicile is the country where the fund is legally set up. It matters for tax on the fund's income, for the dealing calendar you met in lesson 1.2, Why your fund's price arrives a day later, and for which regulator oversees the fund at home. It is on the factsheet or the prospectus cover.
The base currency is the currency the fund keeps its accounts in. Wei Ling's fund reports in US dollars. She holds a Singapore dollar share class, which means her NAV per unit is quoted in Singapore dollars even though the fund's accounts are in US dollars. Check whether your class is hedged or unhedged against the base currency. Lesson 2.3, Same fund, different price: share classes, explains what the difference costs and does.
From the latest factsheet, write down the five largest holdings and the percentage of the fund each makes up, then add the five percentages. In Wei Ling's factsheet, with figures made up for the example, the top five were three Asian technology companies and two banks, together 31% of the fund.
That total tells you how concentrated the fund is. A fund where five holdings make up nearly a third of the money will move a lot with those five companies. A fund where the top five make up 10% is spread more widely. Neither is wrong, but you should know which you own. Compare the names with the objective from lesson 1.3. A fund describing itself as diversified across Asia that is heavy in one sector is worth a second look.
Wei Ling's finished map fits on half a page. The distributor is her bank and the manager an asset management firm, while the trustee and custodian sit in one banking group. The fund is a recognised scheme domiciled in Luxembourg, with accounts in US dollars, and she holds the unhedged Singapore dollar class. Its top five holdings make up 31% of the fund, mostly technology and banks. Beside each entry she wrote the document it came from and the date she read it, so she can check it again when the documents change.
Her one surprise was the domicile. She had assumed a fund bought at a Singapore bank was a Singapore fund, and it was not. In the activity below you will build your own map and write down the one thing that surprised you.
Fill in the fund map template for one fund and write one sentence on something you learned that you did not know when you bought or were offered it.
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