Hate for Unit Trusts

[antonpoh]

To me it depends on the fund manager. If you buy unit trusts because you do not want to do the investment yourself due to lack of knowledge, how do you know the fund you bought into is managed by competent people?

You will still have to study the fund, the people manages the fund, etc.

I recently bought a high yield fund, it's Allianze Income and Growth, pay about 8% and give you dividend monthly. Each month I see the money coming in very shiok. Prior to buying it I was questioning left right and center about how the dividend is generated, I didn't get a straight forward answer except to be told that the manager is very good and they took risks. Also I read the fund prospectus on the redemption risks, very scared.

After 6 months I got out. Not because it didn't pay any dividend anymore but I got truly cold feet. It's just me.

Many of us invest with money we saved from many years of living frugal life, so even though it is only 35K that I have invested into the fund, to me, eventually I just didn't want to take the many unknown risks.

If you want to invest please do a lot of reading, talk to many people and only after you are very sure it is sound, then perhaps you could go in. Even after you have gone in, I suggest you monitor closely as well and pay attention to any news related to your fund.

My humble opinion.

Is this the one you bought?

Allianze Income and Growth SGD



For me, I put 28k of my CPF in this last month.

EASTSPRING INV UT GLOBAL TECH

 

[InnovaIQ]

Hi..I am asking a silly question here. If I want to get american ETFs. Is it worth it compared to UTS? For example, we go for Vanguard ETF.

 

[RM2SSG]

if you need to spend time to study the fund, etc. Might as well spend that effort to directly study the stocks and cherry pick the best ones , u agree or not?

The point of my statement was that buying unit trusts is not that different from buying stocks. So, yes, as long as I am putting in my hard earned money, I will study everything.

 

[RM2SSG]

Is this the one you bought?

Allianze Income and Growth SGD

[/URL]

Yes. I have friends who are still in it. I am not saying it is a bad fund what I am saying is I got cold feet and got out.

 

[frenchbriefs]

Is this the one you bought?

Allianze Income and Growth SGD



For me, I put 28k of my CPF in this last month.

EASTSPRING INV UT GLOBAL TECH

**** 28k are u serious?these things are like throwing darts...u dunno whether they are good or complete duds....first off i do not trust CPF ratings or GIC or SGX or PAP.....anything they say u can be sure its downplayed or understated....secondly its risk rating 10 wtf!!!!!!!!!even CPF is telling u they think this is risky and u are ******* nuts!!!!!!!are u a jihad jihad allah akbah suicide bomber???

 

[antonpoh]

**** 28k are u serious?these things are like throwing darts...u dunno whether they are good or complete duds....

It's ok.. i know what i'm buying. Yes, i'm serious.

Top 10 Holdings

APPLE INC - 8.2%
MICROSOFT CORP - 5.5%
GOOGLE INC - 4.1%
GOOGLE INC - 4.0%
ORACLE CORP - 3.7%
FACEBOOK INC - 3.2%
CISCO SYSTEMS INC - 3.2%
SAMSUNG ELECTRONICS CO LTD - 2.8%
VISA INC - 2.6%
INTERNATIONAL BUSINESS MACHINES COR - 2.4%

Can read more here.

https://secure.fundsupermart.com/main/admin/buy/factsheet/factsheetPPGTFS.pdf

 

[frenchbriefs]

It's ok.. i know what i'm buying. Yes, i'm serious.

Top 10 Holdings

APPLE INC - 8.2%
MICROSOFT CORP - 5.5%
GOOGLE INC - 4.1%
GOOGLE INC - 4.0%
ORACLE CORP - 3.7%
FACEBOOK INC - 3.2%
CISCO SYSTEMS INC - 3.2%
SAMSUNG ELECTRONICS CO LTD - 2.8%
VISA INC - 2.6%
INTERNATIONAL BUSINESS MACHINES COR - 2.4%

Can read more here.

https://secure.fundsupermart.com/main/admin/buy/factsheet/factsheetPPGTFS.pdf

oh ok....but the fund is lagging behind the MSCI world information technology index fund though.....prolly from the high fees.....the fund is making a killing off ur cpf monies.....cant u switch to the MSCI fund with cpf?

 

[antonpoh]

oh ok....but the fund is lagging behind the MSCI world information technology index fund though.....prolly from the high fees.....the fund is making a killing off ur cpf monies.....cant u switch to the MSCI fund with cpf?

This fund is getting aro 10% return.. why is it kill off my cpf money? As for the fees i think it's low.

This promotion is only valid from 8 August 2014 to 30 September 2014. Successful Unit Trust subscriptions will NOT be charged with any upfront POEMS Sales charge during this promotion period.

 

[Shiny Things]

I recently bought a high yield fund, it's Allianze Income and Growth, pay about 8% and give you dividend monthly. Each month I see the money coming in very shiok. Prior to buying it I was questioning left right and center about how the dividend is generated, I didn't get a straight forward answer except to be told that the manager is very good and they took risks. Also I read the fund prospectus on the redemption risks, very scared.

I remember that one! I think it might even have been you - you asked how it generated its 8% yield. I decomposed it, and it turned out it was some horrible combo of a high-yield bond fund, a convertible bond fund, and a covered-call fund. It basically ended up looking exactly like a 50-50 mix of a corporate bond fund and a large-cap US stock fund, but charging like 1.5% per year for something you could replicate yourself for about 0.25%.

This sort of gets back to what I was banging on about - unit trusts tend to charge an awful lot of money for something that you could do yourself quite easily. The Allianz fund (and that Eastspring tech fund, which charges 1.75% for something that looks an awful lot like the Nasdaq-100 QQQ ETF) are just particularly egregious examples of them charging huge amounts of money just because they think you won't notice.

The Allianz fund is nine billion dollars, and it overcharges by 1.2%; that's a hundred and eight million dollars a year that investors are handing over to Allianz because they don't know any better.

That's your money. Wouldn't you rather keep it in your pocket?

 

[wahkao3]

The point of my statement was that buying unit trusts is not that different from buying stocks. So, yes, as long as I am putting in my hard earned money, I will study everything.

i help u short cut a bit. Dont bother with unit trust, mutual fund. They are a waste of time.

go directly into DIY stocks. Learn TA+FA to cherry pick low risk high return opportunities.
if u like diversification you can indeed do it yourself by simply buying different low risk, high return stocks.


I as an individual have much more competitive advantage than a stupid mutual fund/unit trust.

 

[sophie.wee.weng]

Learn TA+FA to cherry pick low risk high return opportunities. if u like diversification you can indeed do it yourself by simply buying different low risk, high return stocks.

Master, what stocks are low risk high return?

 

[alexchia01]

This fund is getting aro 10% return.. why is it kill off my cpf money? As for the fees i think it's low.

This promotion is only valid from 8 August 2014 to 30 September 2014. Successful Unit Trust subscriptions will NOT be charged with any upfront POEMS Sales charge during this promotion period.

What is sales charge?

I only know unit trust have loading fee and yearly management fee.

No other banks have sales charge.

So are they just making you happy by taking away something that doesn't exist in the first place?

 

[antonpoh]

What is sales charge?

I only know unit trust have loading fee and yearly management fee.

No other banks have sales charge.

So are they just making you happy by taking away something that doesn't exist in the first place?

Don't know. Bought it online with POEMS before this promo and paid a fee aro 1.17% for those UT.

 

[genie47]

There is only one mutual fund worth buying if you are in the US and investing in the US. An index fund or more specifically Vanguard run index fund. Low cost, tracks an index. Nothing else to input.

Let me set the record straight. An index fund is not an ETF. It is still a mutual fund except it is low cost and tracks components of an index like the S&P500. An ETF can track an index so it can be an index fund.

Index mutual funds in Singapore? Not in my lifetime.

 

[RM2SSG]

I remember that one! I think it might even have been you - you asked how it generated its 8% yield. I decomposed it, and it turned out it was some horrible combo of a high-yield bond fund, a convertible bond fund, and a covered-call fund. It basically ended up looking exactly like a 50-50 mix of a corporate bond fund and a large-cap US stock fund, but charging like 1.5% per year for something you could replicate yourself for about 0.25%.

This sort of gets back to what I was banging on about - unit trusts tend to charge an awful lot of money for something that you could do yourself quite easily. The Allianz fund (and that Eastspring tech fund, which charges 1.75% for something that looks an awful lot like the Nasdaq-100 QQQ ETF) are just particularly egregious examples of them charging huge amounts of money just because they think you won't notice.

The Allianz fund is nine billion dollars, and it overcharges by 1.2%; that's a hundred and eight million dollars a year that investors are handing over to Allianz because they don't know any better.

That's your money. Wouldn't you rather keep it in your pocket?

You are absolutely right, I asked you in this forum and your explanation made sense to me.

I also went to ask the person who tried to sell the fund to me. The answer was "don't worry, they have been paying dividend for many years already, very safe".

There are many things to be learnt from this forum, just have to make sure reading the right post from the right person. Yours for example.

 

[wahkao3]

I also went to ask the person who tried to sell the fund to me. The answer was "don't worry, they have been paying dividend for many years already, very safe".

that's why....... DONT BE SO HARD UP OVER DIVIDENDS!!!!!!

 

[Bedokian]

Hi..I am asking a silly question here. If I want to get american ETFs. Is it worth it compared to UTS? For example, we go for Vanguard ETF.

There are many issuers of ETFs, Vanguard is one of them. For a start on US ETFs, you could go to ETF Database: The Original & Comprehensive Guide to ETFs.

But have to consider the 30% withholding tax, else you could buy from the LSE listed ones as mentioned by some forumers here.

 

[Rmondo]

So, there's a couple of things here that I want to touch on.

The first one, and it's one I see a lot here: fixating on dividends at the expense of capital gains. When you just compare the yields of the two funds, it's like you're entirely forgetting about capital gains - but capital gains account for half or more of the gains from equities. The S&P 500 index, for example, averages about 7-8% in total returns over the long term, but only about a quarter of that - 2% - comes from the dividend yield. If you say "oh this fund yields 5% but the STI only yields 2%" you're letting yourself be duped.

Secondly, there's no "management fees aside" - management fees are the reason for the unit trust hate. Most of these funds give you exposure that's almost identical to what you'd get from an index fund, or from just doing it yourself - but they charge vastly more.

My favourite especially egregious example is from the USA: the $50 billion American Funds Washington Mutual fund charges 0.67% for a fund that exactly - EXACTLY, like, tick-for-tick - tracks the SPY ETF, which charges 0.09%. The only difference is that the mutual fund consistently underperforms by exactly 0.58%: the difference between the two management fees. Over 20 years, that's ten percentage points drag on your portfolio - potentially tens or hundreds of thousands of dollars, because you didn't know about the ETF.

And there are really very few exposures that you can't get through an ETF, even the batsh!t risks that you don't really want exposure to in the first place. High-dividend emerging market stocks? 1-3 year corporate bonds? Precious metals, but only white precious metals? Coffee? There's an ETF for all of those. (Even the white-metals one! This is a real thing - its ticker is WITE on the NYSE. Why you would want that I have no idea, but it's there.)

Spot on regarding the point on dividends. Can't emphasize enough on the point on dividend fixation. Especially for people who aren't literate enough to scour through financial reports to look at how it is being paid out, and if it really makes sense.

Also, one thing to consider [prob not for locals buying SG stocks since it won't apply] would be the tax rate for dividends and capital gains. Unless you're telling me outright that you are being taxed more for capital gains than dividends, then to me there shouldn't be a fixation on dividends alone.

 

[bslow27]

i only use cpf money to buy unit trusts.

 

[Futureskid]

i help u short cut a bit. Dont bother with unit trust, mutual fund. They are a waste of time.

go directly into DIY stocks. Learn TA+FA to cherry pick low risk high return opportunities.
if u like diversification you can indeed do it yourself by simply buying different low risk, high return stocks.


I as an individual have much more competitive advantage than a stupid mutual fund/unit trust.

I will buy unit trust if i think the fund manager can perform better than myself as a stupid individual