Unit Trust

[sohguanh]

Sorry, I don't have the ISIN. Yes, it is same UT as link posted above.

It seem to be a special offering from OCBC and hence we do not see this same fund distributed in other platforms like fsm,dollarDex,poems. Since it is special that would mean when you want to sell the process you need to find out from OCBC. Is it can sell via OCBC mobile app or the traditional way fill up some form submit let them process. 2 years is far ahead I understand but doesn't hurt to know the process flow.

In all investment that you first enter, always understand how to fund and how to withdraw. A lot of times ppl focus on funding but neglect the withdraw becuz for some instruments the withdraw is not immediate need wait some days.

 

[BBCWatcher]

OK, so the good news is that it's not the world's worst unit trust. Evidently you didn't pay a sales charge, and the management fee is unit trust high (1.0% per year) but not as awful as some. There's a 2% penalty if you withdraw within the first two years.

The reason this unit trust has fallen in value is basically because you picked a pretty awful time to buy a lot of bonds. And that's what this fund is: mostly bonds. Bond prices were at or near all-time highs (meaning interest rates were at or near all-time lows), and that's when you bought this unit trust. When interest rates rise bond prices fall, and so too does the value of this unit trust. It's at least fairly likely that interest rates will continue to rise further, and that'll continue to put downward pressure on this unit trust.

This unit trust is highly concentrated in real estate both in terms of its REIT holdings (30%) and in terms of its bond holdings (the bonds of real estate-related companies). And more specifically in Singapore and regionally, so it lacks geographic diversification. It's a pretty aggressive bet on real estate in and around Singapore in a bond-heavy way. It seems like REITs won't do particularly well if/when interest rates rise since they borrow, too. (Although I'd have to look at REIT-to-interest rate correlation to draw a firmer conclusion.)

So now you have a decision to make, and you can approach it with a couple basic questions:

1. Do you even want a portfolio like this? (Do you remember what were you thinking when you picked this?) Do you want to bet heavily on Singapore dollar bonds in a heavily real estate- and regional-oriented way? That's a very narrow bet within a much, much bigger world.

2. Even if you do want to place this sort of narrow bet, do you want to keep riding this particular vehicle, bearing in mind you'll have a 2% penalty to get out now (within the first 2 years)?

I'm not a fan of Allianz's 1.0% p.a. fee. That's still very steep. However, if you're relatively close to the 2 year mark then maybe you hang on a little longer to avoid the penalty. How close are you?

 

[DakaABC]

OK, so the good news is that it's not the world's worst unit trust. Evidently you didn't pay a sales charge, and the management fee is unit trust high (1.0% per year) but not as awful as some. There's a 2% penalty if you withdraw within the first two years.

The reason this unit trust has fallen in value is basically because you picked a pretty awful time to buy a lot of bonds. And that's what this fund is: mostly bonds. Bond prices were at or near all-time highs (meaning interest rates were at or near all-time lows), and that's when you bought this unit trust. When interest rates rise bond prices fall, and so too does the value of this unit trust. It's at least fairly likely that interest rates will continue to rise further, and that'll continue to put downward pressure on this unit trust.

This unit trust is highly concentrated in real estate both in terms of its REIT holdings (30%) and in terms of its bond holdings (the bonds of real estate-related companies). And more specifically in Singapore and regionally, so it lacks geographic diversification. It's a pretty aggressive bet on real estate in and around Singapore in a bond-heavy way. It seems like REITs won't do particularly well if/when interest rates rise since they borrow, too. (Although I'd have to look at REIT-to-interest rate correlation to draw a firmer conclusion.)

So now you have a decision to make, and you can approach it with a couple basic questions:

1. Do you even want a portfolio like this? (Do you remember what were you thinking when you picked this?) Do you want to bet heavily on Singapore dollar bonds in a heavily real estate- and regional-oriented way? That's a very narrow bet within a much, much bigger world.

2. Even if you do want to place this sort of narrow bet, do you want to keep riding this particular vehicle, bearing in mind you'll have a 2% penalty to get out now (within the first 2 years)?

I'm not a fan of Allianz's 1.0% p.a. fee. That's still very steep. However, if you're relatively close to the 2 year mark then maybe you hang on a little longer to avoid the penalty. How close are you?

Thanks for the questions which I will keep in mind if I am in a similar scenario in the future.

I not incline to pay the penalty to exit unless it is to cut much more loss. I am currently only 7 months in, so around 1.5 years more to go.

 

[BBCWatcher]

I sense a bit of "sunk cost fallacy" in your reply, although I could be mistaken.

All that matters now is the future. Forgetting all that's happened in the past, would you take $X today and entrust it with a fund manager (charging 1.0% per year) to go bet on mostly Singapore dollar denominated bonds (of mediocre investment quality it looks like) plus a large dollop of regional real estate? If the answer is, "Yes, I would," then carry on. If the answer is, "No, that doesn't seem like a bet I want to make going forward," then it's time to change course. The 2% penalty is equivalent to only 2 years of management fees, so you could also avoid a lot of the next 17 months of management fees if you wish. That's part of the decision math, too.

When you bet on Singapore dollar denominated corporate bonds you're fundamentally betting that Singapore dollar inflation will be low, defaults will be low (a decent or better business climate for these companies), and interest rates will fall (meaning bond prices will rise) over your particular holding period. And that's most of your bet (70%) with this unit trust. Really all 3 parts need to happen at least to some degree (on net) for this unit trust to do well going forward. If you feel reasonably confident that this is what'll happen over the next ~17 months at least, OK, carry on!

 

[Andrew833]

Hello, I am new and want to seek advice of kind bro and sis here.

After my friends keep telling me I should invest, I made my first consult with local bank in January 2022 and bought a UT which is 70% bonds and 30% REITs, supposed to be moderate capital growth and cautious investment.

I read that REITs is good dividends, half of bonds are SGD (diversified), and historical performance of UT is good, so I put my savings which is six figure sum. By right can redeem after two years with 0% charge, if not is 2%.

At first I only wanted to put in low five figure, but consultant said his clients put seven figure sums into this UT cos is a good buy, and don't leave the money in the bank.

To date, the UT is down almost 10% and I'm quite shocked. I can only blame myself cos the consultant already tell me that not capital guaranteed but I still put in so much of my life saving. He cannot be contacted.

Any sharing thoughts please if UT should redeem to cut losses, or hold for a few years and hope one day recover?

Firstly never buy UT from banks or insurance company, the seller don't know what they are selling. Just sell for the commission.
This UT Fund assets are primarily invested in Debt Securities of global bond markets.
Pass 3 years performance is just 0.77%. It's a low risk low management UT.

Secondly, never place all your eggs in 1 basket. Btw current market is weak so no matter where you buy mostly are negative.

Every month there is a about 4% dividend, check with the bank where is the dividend money pay to, your bank or reinvest.

I don't think this is a good UT.
What can you do now?
I will say study what you want from investment. Your risk appetite.
For UT, there are many types, each has different risk level. Management fee will eat into your capital if the UT is not performing. UT manage by a group of experts but not all UT perform well, so bear in mind of this.

For UT, you can switch to different UT without paying a single cent. Switching is base on bid - to bid price. Buying and selling UT incur high cost.

BTW I brought my UT from insurance agent, was very stupid then. My UT loss badly, after I switch a few times, earning average 2-3% a year for over 10 years, not too bad.

 

[ZinY]

Hi everyone!
I would like to request advices from people here on my upcoming move on Unit Trusts.
Currently, I am holding First Sentier Bridge Fd A (Semi-Ann Dist) and FSSA Dividend Advantage Fd A (Quarterly Dist) about 30K for each fund.
Both of them are performing badly.
I am a retiree now and not holding any stocks/equities anymore.
May I know which one of these two funds could still have future and to hold?
I wanted to sell about 15K of my Unit Trusts and buy Singapore Savings Bond instead.
Please advise me on which fund to be reduced.

 

[dappermen]

Hi
At this period most funds/stocks are all not at their peak Pls hold longer

did u purchase them much much earlier??

 

[CaptainWu]

Hi everyone!
I would like to request advices from people here on my upcoming move on Unit Trusts.
Currently, I am holding First Sentier Bridge Fd A (Semi-Ann Dist) and FSSA Dividend Advantage Fd A (Quarterly Dist) about 30K for each fund.
Both of them are performing badly.

If you purhcased them long back you should have resonable divideds collected as both are reputation funds and not for short term. Market is bad for both Equities and Bonds so they are not exempted ..... From risk profile Dividend Advantage is Equity only so surely higher risk.

 

[ZinY]

Hi
At this period most funds/stocks are all not at their peak Pls hold longer

did u purchase them much much earlier??

If you purhcased them long back you should have resonable divideds collected as both are reputation funds and not for short term. Market is bad for both Equities and Bonds so they are not exempted ..... From risk profile Dividend Advantage is Equity only so surely higher risk.

Thanks for your advices!
I purchased them long time back and they pay dividends regularly. I chose dividends to be re-invested automatically.
Current market prices are still above my cost last time. These two funds are reputable and I intend to hold longer too.
It might be a bad idea to exit at this point of down time.
But, I am 70 now and I wander how long I should wait for market to recover.

Wanted to know which one is better to keep if I wanted to cash out partially (about 15K) from one of these two funds.
When the market is up, I think Dividend Advantage has more potentail to go higher, right?

 

[dappermen]

now humans have longer life expectancy
i do not forsee u hve to wait longer than 3-5yrs from now

I am 70 now and I wander how long I should wait for market to recover

 

[ranchfarm]

My friend had gone to the bank to do FD and got persuaded to buy the pimco gis income fund e sgd-h dist. I persuaded her to cancel it and she did, did I make the right decision? The ocbc bank said there's a 3% upfront fee and no management fee which I'm super suspicious of. I'm just wary of the returns after all the fees.

 

[sohguanh]

My friend had gone to the bank to do FD and got persuaded to buy the pimco gis income fund e sgd-h dist. I persuaded her to cancel it and she did, did I make the right decision? The ocbc bank said there's a 3% upfront fee and no management fee which I'm super suspicious of. I'm just wary of the returns after all the fees.

pimco gis income fund e sgd-h dist <- this fund can buy from poems no sales charge/fee. Most if not all UT has mgmt fee else the fund manger eat air do job for free? The UT price published is already nett of those fees. Or maybe the ocbc is referring to they themselves don't take mgmt fee for helping to sell that UT but they take a sales charge upfront instead?

 

[DevilPlate]

My friend had gone to the bank to do FD and got persuaded to buy the pimco gis income fund e sgd-h dist. I persuaded her to cancel it and she did, did I make the right decision? The ocbc bank said there's a 3% upfront fee and no management fee which I'm super suspicious of. I'm just wary of the returns after all the fees.

3% fee is super exorbitant….

No mgmt fee is BS….every UT has annual mgmt fee.

Looks like this pimco fund is being aggressively promoted by banks. My RM from another bank also intro me.

 

[DevilPlate]

pimco gis income fund e sgd-h dist <- this fund can buy from poems no sales charge/fee. Most if not all UT has mgmt fee else the fund manger eat air do job for free? The UT price published is already nett of those fees. Or maybe the ocbc is referring to they themselves don't take mgmt fee for helping to sell that UT but they take a sales charge upfront instead?

Maybe banks mean that they do not charge any custodian or platform fees.

If someone looking to hold for >10 years….can try asking for discount on bank sales charge….(1.5% is doable)
usually bank do not charge for sale of UT as well….

 

[sohguanh]

Maybe banks mean that they do not charge any custodian or platform fees.

If someone looking to hold for >10 years….can try asking for discount on bank sales charge….(1.5% is doable)
usually bank do not charge for sale of UT as well….

If one can find a UT platform got no sales charge lagi better correct? I know poems and dollarDex no sales charge and no platform fee (fsm,endowus got). So fsm,endowus use cpf. cash use poems,dollarDex assume they carry those funds.

 

[DevilPlate]

If one can find a UT platform got no sales charge lagi better correct? I know poems and dollarDex no sales charge and no platform fee (fsm,endowus got). So fsm,endowus use cpf. cash use poems,dollarDex assume they carry those funds.

Then how Poems earn? Under table kickback? Hmmm

 

[sohguanh]

Then how Poems earn? Under table kickback? Hmmm

Endowus already reveal trailer fee. They help to sell funds and they get those trailer fee. This is between them and the fund house. To us customers transparent.

 

[Mephist0pheLes]

Maybe banks mean that they do not charge any custodian or platform fees.

If someone looking to hold for >10 years….can try asking for discount on bank sales charge….(1.5% is doable)
usually bank do not charge for sale of UT as well….

why even bother to negotiate, its a blood sucking vampire.

There is a 1.45% management fee charged by pimco, of which i believe 0.9% will go back to OCBC. technically, they are not wrong to say OCBC dont charge additional fees, but they are getting paid another way apart from the ridiculous 3% sales charge.

Endowus has the same fund, no stupid sales charge, and the TER is only 0.85% (including endowus platform fee).

the ocbc one is a ***** reap off

 

[sohguanh]

why even bother to negotiate, its a blood sucking vampire.

There is a 1.45% management fee charged by pimco, of which i believe 0.9% will go back to OCBC. technically, they are not wrong to say OCBC dont charge additional fees, but they are getting paid another way apart from the ridiculous 3% sales charge.

Endowus has the same fund, no stupid sales charge, and the TER is only 0.85% (including endowus platform fee).

the ocbc one is a ***** reap off

3% sales charge considered cheap for banks. When I buy my very first Unit Trust back in the early 2000 they charge 5% sales charge! They deduct from your investment upfront first! Later I found fsm and shift over to them although they do charge a platform fee. Then many years later Endowus is born. UT scene has evolved over the years but banks still stick to sales charge concept!

 

[DevilPlate]

3% sales charge considered cheap for banks. When I buy my very first Unit Trust back in the early 2000 they charge 5% sales charge! They deduct from your investment upfront first! Later I found fsm and shift over to them although they do charge a platform fee. Then many years later Endowus is born. UT scene has evolved over the years but banks still stick to sales charge concept!

Banks have RM and many overheads to feed whahaha