Tuesday, August 19, 2014


Hey yall!

I know unit trust might not be for everyone, especially people who think that the management fees and expense ratios are too high.

Well, good news, Phillip is having a promotion, 0% sales charge on all their unit trusts!

While many of their bond funds have been having a long running 0% sales charge promotion, this new promotion will apply to all unit trusts that they have... RIDICULOUSLY AWESOME!

Why go through any of the banks when their normal sales charges are anywhere between 2-5%? Even without any promotion, the one-time sales charge with Phillip is just 0.75%.

Unit trusts can be a good way to get simple exposure to asset classes. To do away with the hassle of direct ownership, currency management and of course diversification and individual investment selection, you will have to pay a small expense ratio. Yes, it is expensive. I do not think that it is cheap at all. If unit trusts could drop their management fees by 50bps or more, I would honestly not bother too much about ETFs and minimizing trading costs.

But honestly, in the grand scheme of things, the decision of the asset class is MUCH more important than the vehicle used to play that asset class. 

Ie. It is more important to know that you should have entered the US stock market 5 years ago, rather than if you should do it through an ETF, an index fund or a fund manager. The SPY has gained 95% over the past 5 years. Even if you picked a horrible manager, you will still get most of the gains.

Currently, I am thinking of adding funds to purchase unit trusts in EM bonds and Russian equities. Long-term, I don't see either of these 2 asset classes running into any major issues that will hinder it from performing well while offering low correlation to the common asset classes.

Anyway, time take to decide what sort of asset class exposure you might be interested in. After that, compare the different funds available, since usually there are a few funds that will be offering that same exposure. Finally, don't wait around too long, this promotion will end at the end of September!

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