EPF caps unit trust investment charges (Sunday December 16, 2007)

By M. KRISHNAMOORTHY

KUALA LUMPUR: The investing public and unit trust agents will benefit from reduced service charges for unit trust investments funded by Employees Provident Fund (EPF) contributions.

The EPF recently announced that service charge (including commissions) by unit trust companies for investments by EPF members would be capped at 3% from 6% starting Jan 1.

Deputy Domestic Trade and Consumer Affairs Minister Datuk S. Veerasingam said that if the charges were reduced, people would invest more and this would mean an increase in sales for unit trust agents.

”By taking 6%, the investment will set back the EPF contributor by a large amount.

“For example, if the investment was RM100,000, RM6,000 would be taken by the unit trust companies, reducing the investments to RM94,000.

“But at 3%, the invested amount will be RM97,000,” he said.

Federation of Malaysian Unit Trust Managers (FMUTM) president, Tunku Datuk Yaacob Tunku Abdullah said the ruling would hurt profits.

He felt that the 3% rate would cut their income by half.

Overall, unit trust companies have performed well this year, with RM155bil in funds as at the end of September, an increase of 28% from last year’s RM121bil.

Fomca secretary-general Muhammad Shaani Abdullah said that it was a good move by EPF, adding that in line with this, Bank Negara should also reduce the service charges for individuals using their own funds to buy unit trusts.

http://thestar.com.my/news/story.asp?file=/2007/12/16/nation/1978186

What is Unit Trust?

A unit trust fund is a collective investment scheme, which pools the savings of investors with similar investment objectives in a special "trust" fund managed by professional fund managers. The pooled monies in the unit trust fund will then be invested in a diversified portfolio of securities and other assets in accordance with the unit trust fund's investment objectives and as permitted under the Securities Commission's (SC) Guidelines on Unit Trust Funds.

The investment scheme of a unit trust fund can be illustrated as a tripartite relationship between the manager, the trustee and the unitholders. The manager is responsible for the management and operations of the unit trust fund whilst the trustee holds all the assets of the unit trust fund. The obligations and rights of each of the three parties are specified in the Deed, (a legal document entered into between the manager and the trustee, and registered with the SC). The Deed regulates the duties and responsibilities of the manager and the trustee with regard to the operations of the trust fund and protects the unitholders' interests.