Stock Market Explorer

Posted on 16 Oct 2008

Investor may incur fees and charges upon the purchase, sale and holding of their investments in unit trust funds as below:

1. Service Charge: Is a front-end fee incurred(?) by an investor when he purchases units of a fund. The service charge is computed as a certain percentage of the NAV per unit.

2. Repurchase Charge: A back-end redemption fee incurred (if charged) whenever a unitholder sells his units back to the Manager. The repurchase charge is computed as a certain percentage of the NAV per unit.

3. Switching Fees: This may be incurred by a unitholder when he switches his units between funds in response to his changing financial goals or market conditions.

4. Transfer Fees: Will be incurred by a unitholder when he fully or partially transfers his units in a fund to another person.

5. Management Expenses: This include expenses for portfolio management, the manager's fees, trustee's fees and custody costs, audit fees, administrative charges such as printing of annual reports, distribution cheques, postage and other services incurred in the administration of the fund. These costs are paid out of the fund's assets.The manager is entitled to an annual management fee for managing the fund, which is calculated and accrued daily and payable to the manager on a monthly basis.

The trustee is entitled to an annual trustee fee for performing its functions as a trustee to the fund, which is calculated and accrued daily and payable to the trustee on a monthly basis.

6. Management Expense Ratio (MER): Is the ratio of the inherent costs incurred in operating a unit trust fund to the fund's average net asset. MER allows unitholders and investors to make direct comparisons of the costs carried by competitor funds of the same fund categories/peer e.g. between one balanced fund and another. Through comparing the MERs of peer funds, the unitholders will be able to arrive at an informed judgment as to whether the expenses of a fund that he's invested with can be considered to be excessive.Cost are important consideration in selecting a fund. The annual costs of operating the fund can erode a substantial portion of the gross income or capital appreciation that a fund achieves. Even seemingly small differences in fund expenses can, over time, have a dramatic impact on a fund's performance.

Visit http://www.publicmutual.asia to learn more about Mutual funds and unit trust funds investment.

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