How management fees works?

[RM2SSG]

Hi,

Newbie investor.

I have recently taken some interest into diversifying my investment. Specifically I have invested so far a mix of insurance savings plans and stocks with my SRS monies, I think I am ready to take some higher risks product.

My attention was drawn to this Allianz Income & Growth Fund, which is said to pay consistently high monthly yield since inception. At the moment, one is looking at about 8%+ and it seems attractive.

On reading the fact sheets, I noticed that there is a 1.25% pa charges on management fees. I am wondering how this works. I supposed the fund manager has to be paid for keeping this fund profitable. How is this yearly fees paid? Will they ask me to pay 1.25% of my total sum invested by cash each year? Or they some how deduct from the dividend portion so it is transparent to me?

Sorry really new so asking probably a noob question.

 

[RubiksCuber]

Hi,

Newbie investor.

I have recently taken some interest into diversifying my investment. Specifically I have invested so far a mix of insurance savings plans and stocks with my SRS monies, I think I am ready to take some higher risks product.

My attention was drawn to this Allianz Income & Growth Fund, which is said to pay consistently high monthly yield since inception. At the moment, one is looking at about 8%+ and it seems attractive.

On reading the fact sheets, I noticed that there is a 1.25% pa charges on management fees. I am wondering how this works. I supposed the fund manager has to be paid for keeping this fund profitable. How is this yearly fees paid? Will they ask me to pay 1.25% of my total sum invested by cash each year? Or they some how deduct from the dividend portion so it is transparent to me?

Sorry really new so asking probably a noob question.

They take it out automatically (should be on a monthly basis though it may be accrued daily). You don't have to worry about it. And they take it out whether they are profitable or not.

 

[limster]

You should look at the total expense ratio and not just the management fees.

 

[Keverus]

be wary of funds that pay overly-attractive income streams. they may be paying out from capital

 

[wahkao3]

They take it out automatically (should be on a monthly basis though it may be accrued daily). You don't have to worry about it. And they take it out whether they are profitable or not.

i disagree.
you have to worry about it 1.25% on the whole fund, not on profits is crazy.

lets say they make 10%, and eat you 1%

1/10 is 10% of your profits. how u like it if ppl eat you 10% of your profits?

 

[wahkao3]

be wary of funds that pay overly-attractive income streams. they may be paying out from capital

this is very true
just like be wary of companies that pay out attractive dividends. They are paying out from their capital also. so do not be so hard up over dividends.

 

[Dividends Warrior]

......insurance savings plans.....

No..........

 

[RubiksCuber]

i disagree.
you have to worry about it 1.25% on the whole fund, not on profits is crazy.

lets say they make 10%, and eat you 1%

1/10 is 10% of your profits. how u like it if ppl eat you 10% of your profits?

Master, exactly which part did you disagree with?

 

[o0KelviN0o]

the 1.25% is accrued daily and deducted from the NAV every day... chargeable regardless whether the Fund is making $$$ or not.

8% because they tell u they can invest in a variety of investments? here cannot get 8%, I go there to get... there cannot, still got other options... 8% sure can get somehow (right.... )

all financial advisors are selling this Fund because of the payout number... please ask for the yield of the Fund... it has to be minimum 9.25% (8% payout + 1.25% management fee)

 

[RM2SSG]

Thanks so much for everyone's response. I now understand better.

be wary of funds that pay overly-attractive income streams. they may be paying out from capital

Care to explain? Do you mean it is paying out of the "unit value"? What I meant is that when one first buy a fund, there is the implied number of units bought based on the amount invested, this is a calculated based unit price associated with the fund. Over time, this unit price may go up or down and that's one other consideration for me before I jump in as well.

For the Allianz Income and Growth Fund I was referring to, it has a current unit value of about S$10.50. My understanding is that this fund started at S$10/unit.

 

[wahkao3]

No..........

u buy ILP last time before right?