22 March 2011

Things to take note when you purchase or redeem Unit Trusts Online

There are few things you must take note when your purchase / redeem Unit Trusts Online:

0. Do your homework of the funds you would like to purchase - Please make sure you do homework before you purchase the fund. Please treat your money seriously as now your money can work hard. Some good website you can go to: eUnitTrust Website and look at Toolbox >> Fund Comparison OR Fund Supermart.

1. Check out transaction cut off time. If you submit the trade after cut off time, the trade will be treated as next trading days. You must also take note of the fund holiday as the transaction date will be on next day after the fund holidays. Normally the cut off time for online trades is 3pm. However, there are some exceptional cases where cut off time is reduced to 12pm whenever the business day is eve of holidays.

2. Check out the transaction charges and any hidden charges. Most of the clients do not really know the hidden costs such as platform fees, annual management fees, trailer fees and so on. Basically equity funds have higher management fees as compared to bond funds / money market funds. Of course, passively managed funds has lower management fees compared to actively investment funds as actively managed fund's aim is to beat the market.

3. Check out the period when the payment can be reached. Some clients do sell the unit trusts when they need money urgently. However, please take note that it takes about 5 business days for bond fund redemption and 7 business day for equity fund redemption. So, please make sure you can time the redemption exactly so that you can meet your commitment of budgeting.

4. Check out the term and conditions of cancellation of the Unit Trust. Your Rights to cancel
must be exercised within 7 calendar days from purchase date. However, it is important to look through the clause whenever you submit a transaction. Some companies only allow clients to submit the cancellation request if this is the first time purchase of the fund. 

5. Double check the amount after you submitted the trade online. You will receive the confirmation note as and when the trade is confirmed. From there, you can check the exact unit trust price you purchased. Please take note that the unit trust price is always indicative price as Unit Trust is forward pricing.

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