Fundsupermart cuts fees to grow pie

Investors buying unit trusts will be paying less on online platform Fundsupermart, after the distributor slashed its sales charges.

The transaction charge for buying certain fixed income funds will drop to 0.2 per cent from 0.5 per cent.

The sales charge for equity funds and balanced funds will drop to 0.5 per cent from 1 per cent.

A balanced fund aims to invest 50 per cent in bonds and 50 per cent in equities.

Fundsupermart is the online unit trust distribution arm of iFast Financial.

Fundsupermart's general manager Wong Sui Jau said the online platform wants to be more competitive and, hopefully, grow the unit trust pie.

He said: "Consumers will benefit from the reduction in upfront sales charge. They will see their transaction costs go down. So, for the same investment amount, they will be able to buy more units due to the savings from the reduction."

Already, more than 30 new accounts have been opened since last Thursday, when the move was announced.

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore (Case), welcomed the cut in costs.

He said: "We believe consumers will welcome Fundsupermart's initiatives and will certainly look forward to more reviews of other applicable service charges such as holding fees.

"This will make Fundsupermart services more affordable to a larger group of consumers as compared to their competitors."

Still, factors other than a lower transaction cost should also be considered, said Mr David Gerald, president of the Securities Investors Association (Singapore), such as the investor's personal risk profile.

He noted online platforms do not usually provide advisory services, while a bank or financial adviser assesses an investor's risk profile before making a recommendation.

Fundsupermart still has a quarterly platform or holding fee for recurring administrative costs, which ranges from 0.05 per cent to 0.125 per cent per quarter. It has no plans to revise them yet.

Mr Wong said: "Right now, we are focused on gradually reducing the upfront sales charges of unit trusts on our platform, and continuing to beef up the products and services. So for now, there is no change to the platform fee."

Banks typically have a 3 to 5 per cent sales charge, and may or may not absorb the holding fee.

DBS Bank, for example, absorbs the holding fee, while others like Standard Chartered Bank and Maybank do not charge at all.

HSBC offers investors two pricing models.

One is a wrap fee for active unit trust investors, which is a monthly fee of as low as 1 per cent per year, in place of sales charges or switching fees.

The other option is a sales charge of up to 5 per cent, depending on whether the purchase is made online or at a branch. Fundsupermart customer Wong Wei Yi, 31, welcomed the news.

The investment analyst said: "All along, Fundsupermart has been pushing down sales charges, making it even more affordable to young investors like us."

He thinks the platform fee is reasonable, for the range of funds offered as well as the "convenience" of investing from home.

rachaelb@sph.com.sg

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