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Changes to the Pricing Structure April 1, 2010
Author : Fundsupermart.com


Untitled Document

Fundsupermart.com To Introduce New Pricing Structure With Lower Front-End Sales Charge

 

From 1 April 2010 onwards, we will be introducing a new pricing structure with substantially lower front end sales charge. From 1 May 2010, there will also be a new quarterly platform fee on all cash and SRS fund holdings.

Ten years ago, we started Fundsupermart.com. Our objective then was to enable self-directed investors to invest in a profitable manner, and we offered a very competitive pricing structure to provide investors with a low-cost alternative for unit trust investing. We offered a significantly lower sales charge of 2.5% in the initial days ( and lowered it over the years to 2%), and the introduction of the FSM Rewards Program and the Free Switching initiative resonated strongly with the local unit trust community.

Over the years, the industry is facing regulatory changes. The changes are accelerating following the recent global financial crisis. For instance, a consultation paper released by the Monetary Authority of Singapore (MAS) has been circulated to industry players. In the consultation paper, the Authority proposed a requirement in having investors to take a Customer Knowledge Assessment test. This test is to be administered by an independent third party. Only when investors pass this test, will they be allowed to purchase the investments of their choosing.

Such increasing regulatory procedures, along with the growing number and complexity of funds, growing popularity towards free switching and new investment products which distributors will have to embrace and accommodate, will mean that distributors like us face increasing ongoing operating costs.

In the past, we relied on the profit margins from the front-end sales charge to subsidise the ongoing operational costs which includes the updating fund prices and data, handling of fund dividends, custodian duties, keeping track of holdings and sending out statements etc. Now, we face shrinking front-end margins and increasing ongoing costs, so this kind of subsidy is simply no longer viable. Hence we have to introduce the new platform fee, which will apply to all cash and SRS unit trust holdings from 1st May 2010. This fee will be accrued daily and be deducted on a quarterly basis at 0.125% on equity fund holdings and 0.05% on fixed income funds. CPF holdings will be exempted from this platform fee. The quarterly platform fee of 0.05% for the cash fund will also be waived until February 2011.

The introduction of this platform fee will allow us to accommodate these ongoing transactional and operational expenses. We will then be able to introduce different tiers of low and attractive sales charges for different product classes. With immediate effect from 1st April, the sales charge for all equity funds will be lowered to 1.5%, from the current 2%. And the more rewards program will continue to apply, allowing silver and gold status investors to enjoy discounts to the existing sales charge.

In addition, we will be having a special promotional sales charge of 0.75% on 285 of the funds on Fundsupermart.com from 1st April to 22nd April 2010.

Fixed income funds in particular, will have their sales charge significantly reduced immediately from 1st April, and certain funds having a permanent sales charge of just 0.1% or 0.2% and entire category of funds like the short duration bond funds and money market funds will have no sales charge at all. Such low sales charge on fixed income funds will allow investors to benefit almost immediately from their steady returns, due to their extremely low sales charge instead of having to wait for a long period of time before they break even.

The new pricing structure is summarised in the table below:

Sales Charge

Type of Purchase

Sales Charges

Equity funds - General Investors (below S$75,000)

1.50%

Equity funds - Sliver Investors ($75,000 to $249,999)

1.25%

Equity funds - Gold Investors ($250,000 or more)

1%

Money Market, Short duration bond

0%

Selected Fixed Income Funds

0.1% or 0.2%

All other Fixed Income funds

0.75%

Switching

Switching (same tier)

0%

Switching (lower tier to higher tier)

0.75%

Switching (0% sales charge fund to any fund)

Prevailing sales charge

Platform Fee

Holdings

Platform Fee

Equity Funds Holdings (Cash/SRS only)*

0.125% per quarter

Fixed Income Funds Holdings (Cash/SRS only)**

0.05% per quarter

All CPF Holdings

Exempted

All fees and sales charges quoted are exclusive of GST.
* Platform fee for equity holdings above $500,000 will be charged only 0.1% per quarter and equity holdings above 1 million will be charged only 0.075% per quarter (incremental basis).
**The quarterly platform fee of 0.05% for the cash fund will be waived until February 2011

 

We believe the new pricing structure will allow Fundsupermart.com to remain a competitive, value-for-money unit trust distributor, while allowing us to continue to provide new services, products and features going forward.

We thank you for your support through the years and we look forward to your continued support.

 

 

For more information on the new pricing structure, please click here.




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