expense ratio for unit trust

u dont pay.

What fees and charges do I have to pay?

There are two broad categories of fees: those to be paid by you and those to

be paid by the fund. Some of the more common fees and charges are:

(a) Fees and charges to be paid by you — These represent one-time fees

that you pay to invest in a unit trust.

(i) Initial sales charge (also known as the “front end load”) — This fee

is charged when you buy a unit trust, and is typically 1.5% — 5% of

your investment. Funds with an initial sales charge would usually not

charge a redemption fee.

(ii) Redemption or realisation charge (also known as the “back end

load”) — This fee is usually set at 1% — 5% of your investment, and is

charged whenever you sell or redeem the fund. Some unit trusts

progressively reduce the redemption fee if you hold your investment

over a longer period of time. Funds that charge a redemption fee

typically would not have an initial sales charge.

(iii) Switching fee — Some unit trusts allow investors to switch or change

to another fund managed by the same fund manager. A switching

fee of about 1% would usually be charged. There may also be free

switching facilities available — check with your fund manager or

financial adviser.

(b) Fees and charges to be paid by the unit trust — These are fees that

the fund manager, trustee and other parties charge to the unit trust.

While you do not pay these fees out of your own pocket, they are

nevertheless paid for by the unit trust, which will reduce the return you

get on your investment.

(i) Management fee — This is an annual fee charged by the fund manager

for the management of the fund. It is typically 0.5 — 2% per annum

of the Net Asset Value (NAV) of the fund. The NAV of a unit trust is

the value of the fund’s assets less its liabilities.

(ii) Trustee fee — This is the annual fee charged by the trustee for the

provision of custody services for the fund’s assets. It is usually set at

0.1 — 0.15% per annum of the NAV of the fund.

When reading the prospectus, pay attention to the maximum amount that

the unit trust can levy for each charge. Take note that although some unit

trusts do not currently levy certain charges, they may do so in future. Ask