Public Mutual Switching Fee (New)!!

Posted by Kris | Monday, May 30, 2011 | | 2 comments »

The new switching fee structure will only be implemented from 1 July 2011 onwards for existing funds.


The new switching fee structure is summarized below: -
(1) Switching of units made within 90 days from date of purchase

  • Switching from equity/balanced funds will be subject to switching fee of 0.75% or minimum RM50 per transaction;
  • Switching from bond funds will be subject to switching fee of 0.25% or minimum RM50 per transaction*; and
  • Switching from money market funds will be subject to switching fee of RM50 per transaction*.

(2) Switching of units made after 90 days from date of purchase

  • Switching into equity/balanced funds and bond funds will be subject to switching fee of RM25 per transaction*; and
  • Switching into money market funds will not be subject to any switching fee.
* Other than switching of low-load units into the equity/balanced funds which will be subject to service charge. @KnowThyMoney - This means that switching your money from money market funds into equity/bond will incur the normal ~5.5% service charge. So, don't always switch in and out of equity to market and back often, that will is the surest way to lose your capital even before you begin to profit. It will 100% increases the difficulties for your investment to break even. Mutual fund is not like stocks, you should not time the market by doing heavy switching!!

So the new switching fee for Public Mutual only effect heavily on anyone who are an active switcher. Honestly, I am not so sure why Public Mutual implements this fee structure? My guess, earn more $$$ from this new method of income or to discourage people to do active switching. (again may reduce their own administrative cost since Public Mutual is still reliant on their agents to do the switching for their clients, hence you still need some resources to process the manual paper forms!!) 

But if they move aggressively towards doing transactions online, they could easily wiped off the role of their multitude of agents whom are aggressively promoting their mutual fund products. (again the various agent fees, paper form and training fees associated with maintaining their membership provides a stream of small income to Public Mutual. It can be quite a lot of miscellaneous fees (the various forms are not free to agents) if you as agent don't sell alot and barely fulfill the quota. That is the reason I discouraged my close friends from being an agent unless you are planning to go FULL FORCE and  no turning back in make selling mutual funds & related services, your sole career option) It is a chicken and egg story in moving towards a full internet solution platform.



For Mutual Gold and Mutual Gold Elite investors, their current 18 and 30 switching entitlements valued at RM25 each can also be used to offset the switching fee on switching transactions made within 90 days.



Illustration:

A unitholder executing a switching transaction of RM10,000 from an equity fund within 90 days from date of purchase will incur a switching fee of RM75 (computed based on 0.75% of RM10,000). 

If he is a Mutual Gold Member, his switching entitlement of RM25 can be used to offset the switching fee of RM75, thereby he only incurs RM50 on this switching transaction.


P.S WEIRD!! I cannot find the above info from the Public Mutual website. Maybe i don't searched deep enough. I found the data above from various blogs.


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2 comments

  1. ChampDog // 10:50 PM  

    You should credit to me. :) lol just kidding. :) But yours one should have more accurate info. Not really affect me much as I'm not an active user in switching. :D

  2. Kris // 11:32 PM  

    Yea..it only effect heavy switcher..which i really no idea on how much is the percentage of the total Public Mutual investors :P