Sunday, December 25, 2016

Phillip now has 0% sales charge on UT

Seriously, I am a strong Phillip supporter.


Platform fees, hehe. Is this a potshot at the already struggling FSM One, "Market Player F"?

Seriously though, when I first started my investment journey, I was looking around at just how to start investing. Unit Trusts are easy to understand, plentiful in asset classes and strategy and practically every bank sells them. But... the banks sell them at cut-throat rates of 3-5% (back in 2013).

Now, I know that I have to justify why unit trusts before I can move on. Our financial media (no help from many financial bloggers too, thank you very much) have totally slammed unit trusts in the recent years. Guys, I get that ETFs are great, I really really do, but ETFs are not the holy grail and ETFs do come with their own set of drawbacks. Do I own and have ETFs? Yes, I do. How about unit trusts? Yes, I do too. In fact, I own a lot more unit trusts and that is because of (1) super shit variety and liquidity of ETFs and (2) super wide variety of asset classes and strategies of unit trusts.

Phillips has always been either 0.75% or 0% on special funds or during special promotions. Without doing anything, you already save by not fattening up your bankers. I really still shake my head at the sorry and screwed up state of our financial industry. I don't know about you, but this bothers me so much that all the "official" ways are the stupidest and most expensive way to do it. Bloody third world country financial industry.

Phillip has it's very interesting MMF option (which was a godsend before the likes of OCBC 365, UOB One, etc), they allow CPF-IS and also SRS investing. There are other stuff that they also have, like CFDs and FX, but I keep my Phillip account nice and clean for me. It's just for my SRS, Unit Trusts and another broker with access to my CDP.

So that's right. It seems that from now on, there is going to be absolutely no sales charge when you buy from Phillip. And that also includes (if you see the small print), no platform fees and no switching fees. That is bloody awesome.

All the banks can go screw themselves. All the people that buy unit trusts are the banks, you guys better be getting some insane promotion or deal to be having to do so, or else you're really much better off just asking your bank R/M to screw off because you're going to open an account at Phillip and pay 0% instead of her this month's commission bonus.

In case you still aren't convinced about Phillip / Unit Trusts being useful if you know what are their advantages and drawbacks, here is a small case study of me going into Russia through a unit trust bought on Phillips and exiting 3 months later with 20% profits. Funny thing is that I have since bought into that same unit trust again for exposure to Russia and my current unrealized gains is about 41% now.

Phillip also has quite a few nice bond funds, and I will now reveal the best tip which I tell all my friends that want to dip their toes into investing without going crazy - check out UOB SGD Fund Cl A. This is the same fund that I use as my bond component in the small portfolio that I run for my family.

I like Phillip a lot. They are really no-frills and straight. Perhaps Phillip might lead the change towards lower stockbroking commissions, but one can only dream of such progress in our backwards financial industry.

If you pay "platform fees"  now, you might want to consider to switch to Phillip.
If you pay ridiculous sales charges through your bank (your R/M will call it "special/promotional" rate), you might want to consider to switch to Phillip.

You might want to consider to transfer out your unit trusts to Phillip. On top of saving money by not getting screwed in the future, Phillip also has transfer-in promotions, although I'm too lazy to find out the finer details. There's the link, you can probably carry on yourself from there.

If you are planning to buy unit trusts, it's really a no-brainer to sign up with Phillip.

If you think unit trusts are shit investment vehicles, I'd agree with you 80%, but I'd also say that beggars can't be choosers. If you want easy access to a specific strategy or asset class - say for example, investing in Russia (hur hur) - then you really don't have much options, do you? It's okay to generally avoid them especially when there are other alternatives (please buy the STI ETF instead if you were thinking of buying a local focused stock fund), but you have to also acknowledge that you are narrowing your options by stereotyping and avoiding this MASSIVE investment option.

And just BTW, Phillip doesn't pay me jack for writing any of this. Which I guess it's fair since I don't pay them jack for their services too. It would be nice if any of these clear-cut better financial services that I use come and approach me to continue using them and also write about why I use them. A nice few hundred as credit into my account would be sufficient payment... Do you hear me Phillip? EMBRACE ME. Oh wait, I forgot that they are no-frills and probably don't have any social media marketing campaigns, haha. Oh well.

Keep staying dirt cheap Phillip, that's what I like about you.

10 comments:

  1. Hi GMGH,

    Hey, I saw this promo too and am interested. However I've not done any unit trust in my life. Any guides or tips for a newbie like me? haha! Maybe you can do a post on this :)

    ReplyDelete
    Replies
    1. Hi LP,

      Hehe, maybe I can. Are you more interested in the set up and selection process, or the funding-buying-selling process?

      Delete
    2. Everything man! I'm a total noob, haha :) If you do well, maybe poems will hire you as their IR/PR man for their unit trust division hahah :)

      Many thanks in advance! My millions are all depending on your post, no stress :)

      Delete
    3. Haha! Okay LP, I'll look into crafting a series of post on unit trusts. I do find that it is a bit under-represented in the topics of usual discussion.

      May you millions one day become billions :)

      Delete
  2. I wonder how Philips make money if they don't have sales charge?

    ReplyDelete
    Replies
    1. Hi Yew Khim,

      In all honesty, I'm not too sure about their model, but I'm sure it would be very interesting.

      I would imagine their 0% sales charge is the result of a 2 pronged approached:

      Reducing expenses - My friend who was a RM at one of the local banks selling UT told me that she doesn't keep all the sales charge as commission because some is kept by the bank, which makes sense because she also draws a basic salary. Cutting out the cute xmm RM's and the basic + comm is an obvious saver. Everything is done on their platform online too, so I think they save a lot on admin, paperwork and execution.

      On the income front, I'd imagine that they work with the UTs and get some form of kickback by pulling in AUM for the funds. I'm sure Phillip rakes in tons of AUM with their rock bottom fees and I'm sure the UT are more than happy to have a partnership with Phillip and benefit from that. Phillip also have a lot of bargaining power with the UTs since they have the ability to direct or even deprive AUM on their side. I also imagine that their UT segment is run very lean and might even be their loss leader to get customers to try their other services.

      What do you think?

      Delete
  3. "The 0% Fees is applicable to both “Buy” and “Switch” orders submitted through POEMS for any funds."
    So, I assume "Sell" order will incur cost?

    ReplyDelete
    Replies
    1. Hi Anon,

      From what I understand, there are no fees involved in selling (or in their terms, "redeeming") units from a unit trust imposed by the broker. However, there are some funds that have been mandated to impose a penalty on unit holders that choose to sell out (ie. 5% haircut on their withdrawals) during "crisis situations" where liquidity is thin and they need to protect the remaining unit holders from over-redemption.

      However, this special feature is only present in certain funds (notably some JPM ones), so it's not a major cause of concern, more like a point to note.

      Delete
  4. nice post and respectable effort , you can
    also flood your blogs with theses
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    ReplyDelete
  5. Hi GMGH,

    I'm a convert too. Screw that platform fees. Having said that it would be great if Phillip can fix their interfaces for UT. It's really very primitive compared to Market Player F

    ReplyDelete

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