By MoneyBees
See what a unit trust's sales charge, total expense ratio and platform or wrap fee take from your money over the years, with the fee ranges MoneySense publishes and the CPFIS fee caps.
MoneySense lists a sales charge of 1.5% to 5% when you buy, a redemption fee of 1% to 5% when you sell, a switching fee of about 1%, and a total expense ratio usually between 1.0% and 2.5% a year. Platforms charge 0 to 0.3% a year and wrap accounts about 1%.
Also called a front-end load or initial sales charge, it is a percentage taken off each sum you invest before it buys units. On S$10,000 with a 3% charge, S$9,700 is invested.
The TER is the fund's yearly running cost, including the management fee, as a percentage of its net asset value. It is taken from the fund's assets, so you never see a bill, and it should be disclosed in the fund's factsheet.
The sales charge is paid once on each sum you put in. The TER and platform fee come off the whole fund value every year, so they grow as your money grows, and you also lose the returns those fees would have earned.
MoneySense says 20% to 60% of the management fee is paid by the fund manager to the distributor. It is part of the expense ratio, not an extra charge.
Yes. Under the CPF Investment Scheme, sales charges on new purchases have been 0% since 1 October 2020, wrap fees are capped at 0.4% a year, and expense ratios are capped at 0.35% to 1.75% a year by risk category.
In its prospectus and Product Highlights Sheet, which must be given to you when a fund is offered, and in its factsheet for the expense ratio. Ask the distributor for the sales charge and any platform or wrap fee.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).