TheStar
PETALING JAYA: Pressure is mounting for unit trust upfront sales charges to be reduced as new players emerge.
The matter was also brought up by the Employees Provident Fund (EPF). In recent talks with the Federation of Malaysian Unit Trust Managers (FMUTM) and its members, EPF asked them to consider lowering the charges to facilitate investment in unit trusts.
Industry observers said with Tune Money and InterPacific Asset Management Sdn Bhd coming onstream, there was greater pressure to lower the upfront fees and this should bode well for the investing public.
It is also learnt that EPF, in the past two to three months, had proposed to FMUTM that the maximum sales charges for unit trust investment be capped at 3% as opposed to the average 5% to 6%.
Sources said FMUTM had appealed to the Finance Ministry, saying the EPF's proposed charges were too low and that the federation would consider lowering the charges gradually.
The dispute is expected to continue and the pressure is growing in every meeting between the EPF and the federation, according to an observer.
The latest player to join the unit trust league is InterPacific, which currently does not impose any upfront sales charges. Tune Money, meanwhile, plans to launch funds online with zero or minimal sales charges.
With the entrance of these players, competition is getting intense and fund houses will need to review their charges to ensure they are able to sustain the public's interest in investing with them, according to an industry observer.
By not imposing any upfront fees, a unit trust management company can fully invest their clients' money in the funds, they added.
Sources said many fund houses were not very keen on the EPF proposal to reduce the charges as it would affect their distributors' income, leading to lower sales volumes. At present, many of them sell funds via agents and banks (as third-party distributors).
It is estimated that 60% to 70% of unit trust management companies sell funds through agents and banks. As of May 31, there were 39 unit trust management companies with a total 462 approved funds.
An observer, however, said while the industry trends might lead to a gradual lowering of upfront fund charges, distributors could still succeed by growing their assets under management over the long term.
They could do this by being more productive and further elevating their capability to ensure long-term retention of customers, he added.
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