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Email this1:36 am
September 9, 2016
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Anyone tried out their Investment funds?
I'm wondering how the pricing works.
it mentions that it has an annual 1.08% fund expense.
just wondering how they charge it?
1.like do they already charge it in the unit price? so what i see is what i get regardless of selling/buying?
2.or is it charged when selling? so if i sell for $1,000, $10.80 is subtracted, and i get $989.20?
3.or at the end of the year, my unit counts decrease (or unit price decreases so my units worth less)?
in the fund facts, it says "You don’t pay these expenses directly. They affect you because they reduce the Fund’s returns."
so i'm guessing it's either case 1 or case 3?
I'm new to funds, so I don't really understand.
7:29 am
April 6, 2013
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It is #1. The resulting 1.08% per annum MER is already reflected in the unit price.
Large part of it is the 0.8% management fee and the 0.15% administration fee. Usually those are accrued daily based on the daily net assets of the fund and paid monthly or quarterly.
Page 34 of the Simplified Prospectus has more details.
9:08 am
October 21, 2013
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Norman is correct. This is standard practice for mutual funds.
What you have to be wary of is if you are told by an advisor or sales rep that you won't pay any fees. There are always fees somewhere. It's a question of whether they are hidden or obvious. If they are hidden, as these effectively are, they will already have been paid out before you see any return. Annual returns will have already had the fee taken off the top. Either way, they come off of your potential profit.
And don't think that this misrepresentation doesn't happen any more due to improved regulation. I was told this as recently as last December at my credit union. In this case, he was recommending a fund that had a fee of 2.3% and acting as if I wasn't really paying it because it came off the top! When I objected, he did not press the matter, but you have to know enough to object. The industry has sort of trained people not to notice by focusing on the actual in-your-pocket return.
You can find some comments on these Tang funds on the CouchPotato website which I think is fairly reliable. There, they are recommended for portfolios under 50K if I remember correctly. This is because they give you significant diversification without paying high fees, and you don't have to know anything or make any further decisions as the rebalancing is automatic. CouchPotato also thinks the returns have been reasonable.
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