Page 191 - Profile's Unit Trusts and Collective Investments 2021 issue 2

Fact Sheet Tips

against the portfolio and do not necessarily have to be recovered only from portfolio income. Certain
other costs incurred by a management company (such as dealing costs) can now be charged directly
against the portfolio, which means the new NAV will be marginally lower than the old repurchase price.
As annual fees sometimes differ for different classes of units within the same fund, the NAV price may
differ across classes.
The Association for Savings and Invesment SA (ASISA), formerly known as the Association of
Collective Investments (ACI), decided not to require management companies to calculate historical
data for funds (ie, to create a history of NAV prices). Buy prices remain a valid proxy for entry costs
into unit trusts prior to 2003 – however, performance figures calculated by ProfileData with a start date
before 2003 use the historic sell price as a proxy for NAV in order to match NAV-to-NAV performance
as closely as possible.

CONVENTIONS FOR THE UNIT TRUSTS HANDBOOK
For performance periods starting after 1 April 2000, we use A class prices and dividends to calculate
investment returns. For performance periods starting before 1 April 2000, we use R class prices. This is
because only R class prices were available prior to April 2000. Conversely, investors entering a fund
after April 2000 were only able to buy A class units.
Charges

Most management companies apply the same scale of initial charges to funds within the same sector
(eg, all equity funds). For this reason, we show the table of charges on the CIS manager page.
The Initial Charges found on each CIS manager page specifies those funds that it applies to (typically
by category).

VAT
All charges and service fees are shown as Vat inclusive in Profile’s Unit Trusts & Collective Investments.

INITIAL CHARGES
This shows the initial charges levied by the management company. In the past initial charges were
designed to cover marketing and administration costs, but this “ring-fencing” of costs is no longer
applied in the industry. Many fund managers no longer charge initial fees. Expenses such as dealing
costs and Marketable Securities Tax (MST) are charged directly to the portfolio. Broker commission,
which is usually subject to negotiation, is shown separately.
Most management companies, in fact, apply a sliding scale to the initial charge: the greater the
amount invested, the lower the initial charge. Initial charges on a large lump-sum investment might be
as low as 1% or maybe even lower.
FUND SWITCHING CHARGES
Many investors are attracted to the idea of being able to exploit the cyclical nature of the market by
switching from, say, an industrial fund to a mining fund when they feel bullish about gold and bearish
about industrials. Many management companies offer reduced Initial Charges if unitholders wish to
switch from one fund to another within the same management company.
Switching from an income fund to an equity fund usually attracts an Initial Charge, although this may
be reduced to a lower amount. Many management companies take the view that the initial charge should
only be recovered once on all funds invested. They therefore subtract the income fund initial charge
(usually 1%) from the equity fund initial charge in the event of a switch (eg, the investor would pay 4%).
This is obviously not a universal practice: see the Switching Charges table under each CIS manager for
more information.
Switches from equity funds to income funds are often free of charge, or a nominal fee may be levied.

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Profile’s Unit Trusts & Collective Investments — DOMESTIC