Watch Out for Mutual Fund and UITF Fees and Expenses!

(This post discusses fees and charges made by mutual funds and UITFs based in the Philippines.)

So you have decided to invest your hard earned money into a mutual fund and/or a unit investment trust fund (UITF). Make sure you have read and understood each products’ prospectus or fact sheet before you sign the investment application and invest your money.

Make sure you understand the fees and expenses charged to you by the fund company for your mutual fund and the bank for your UITF.

Here are some of the charges for mutual funds:

  • Sales charge ranging from one to five percent of the invested amount. Typically, on the day you buy the fund your invested amount will purchase shares at net asset value (NAV) plus the sales charge. These charges apply every time you purchase additional shares. Fund families usually extend a discount if your total fund holdings across all other funds have reached a certain amount.
  • Redemption fees are charged by fund families when you sell your shares too soon or less than a specific holding period.  Some funds charge the redemption fee for up to two years of your investment.  Fees typically range between half a percent to three percent of the NAV at the day of redemption.
  • Investment advisory, distributor and administration fees are fees charged to the NAV of the fund on a daily basis. As the name suggests the fee covers the advisory, distribution or marketing and daily administration cost of the fund. The lower the fee the more efficient the fund is. If all things are equal always choose the fund with the lowest expense or fees ratio/percentage.  Some funds charge as high as two and a half percent (2.5%) higher than most American mutual funds.  However, some fund companies justify their high fees by saying that a more actively managed fund would incur more expenses as far as trading fees and commissions are concerned. 

Here are some of the charges for UITFs:

  • Sales charges are uncommon but there are a few companies charging a fee for UITFs. The highest I have seen so far is two percent of NAV per unit (NAVPU).
  • Redemption fees are charged by by UITFs but are typically about one to two percent if units are redeemed for less than 15 to 90 days.  However, it is not impossible for a UITF to have a longer minimum holding period.
  • Trust fees are the equivalent of the investment advisory and expense fees in UITFs.  I have noticed that UITFs have a lower fee than mutual funds.  Average trust fee is about one to one and a half percent (1 to 1.5%).

How are the two taxed?

As far as taxes are concerned, capital gains tax is not charged to mutual fund investors. Only when the fund distributes dividends wherein they are required by law to withhold twenty percent (20%) from the gross dividends.  This is probably the reason why Philippine mutual funds don’t give dividends.

UITFs follow the same rules on dividends, wherein there is a 20% mandatory withholding tax.  However, any gain arising from the difference in the buying and selling NAVPU is charged with a 20% withholding tax.

personalized credit card image

Source: WikipediaMetrobank Card, a personal finance company, which is 60 percent owned by Metropolitan Bank and Trust Company and 40 percent owned by the Australia New Zealand Banking Group (ANZ), has launched its credit card image personalization service.

The service is called DesignMyCard. Personalization is done online by visiting New card holders and existing card holders can use the service. The website has a few photos for use but users can upload their own design. Photo uploads must follow the image guidelines for it to be approved for printing.

It costs PHP450.00 (USD10.71) to personalize each credit card. Fees are billed to the principal card holder’s statement.

This service is similar to the service offered by ANZ’s New Zealand subsidiaries, ANZ New Zealand and The National Bank of New Zealand. The only difference is that in New Zealand only the ATM cards are personalized. You can visit the personalization services here and here.

Being a Metrobank credit card client, I would want to also personalize my two cards but as of now I don’t have the perfect photo or image for my cards.

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Money Smarts » Demystifying finance charge computations on your credit card

Source: WikipediaMoney Smarts » Demystifying finance charge computations on your credit card

I must mention this blog post I read a few weeks back at the Money Smarts blog at

It gives you an idea how the credit card interest rate clause of “3.5 per cent per month on the average daily balance” works.

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San Miguel wins National Foods takeover

Source: Wikipedia(first posted 11 April 2005 23:05:00, updated 12 April 2005)

After several weeks of bidding against New Zealand‘s Fonterra Co-op, San Miguel Corporation, the largest food company in South East Easia is expected to win in its bid to acquire National Foods of Australia as Fonterra pulled out. In this process, Fonterra has sold its 1/5 share in NatFoods to San Miguel and will profit NZD 268 million.

San Miguel Corporation has recently increased its offer for National Foods AUD 6.40 or about USD 1.46 billion against New Zealand Fonterra’s AUD 6.20.

National Foods Limited

National Foods is one of Australia’s leading dairy products company. It sells fresh, modified and UHT milk under various brands as well as various flavours and brands of yoghurt and cheese. This firm also holds the Australia and New Zealand license for Yoplait yoghurt. According to the firm’s website it has annual revenues in excess of AUD 1.00 billion or about PHP 42 billion.

San Miguel Corporation

San Miguel (Saint Michael in English) Corporation traces its routes in Hispanic Philippines and is known for its San Miguel beer which enjoys a monopoly in the Philippine beer market. It has diversified into related industries such as food processing and is the Philippine licensee of Coca-Cola. It has also invested in packaging and property. The Philippine government owns 41 percent of the food group.

San Miguel is on a buying spree. It has been buying companies all over the Asia Pacific region. It has recently acquired Berri Limited, Australia’s largest juice company. I has bought an Australian brewer, J. Boag & Sons and a Thai brewer, Thai Amarit Brewery.

Fonterra Co-operative Group

Fonterra is probably the world’s largest dairy exporter. It is also probably New Zealand’s first and largest multi-national corporation. Since it is a co-op it is co-owned by about 13,000 New Zealand dairy farmers. According to its website, 95 percent of its production is sold overseas and it has present in 140 countries and territories. In Asia it retails milk under the Anchor, Anlene and Anmum brands. The company claims that it is the same size as Groupe Danone (France), Kraft (USA) and Unilever (Anglo-Dutch) in terms of its annual revenues while Nestlé is the largest dairy company in terms of revenues.

San Miguel raises bid for Australia’s National Foods. 07/04/2005. (Fairfax NZ).
Brewer tops Fonterra bid. 07/04/2005. NZ Herald.
Fonterra quits National Foods battle – with $268m booty. 12/04/05. NZ Herald.
San Miguel anticipates National Foods takeover. 11/04/2005. ABC News Online.
San Miguel hikes bid for National Foods. 07/04/2005. INQ7 Money.
San Miguel wins battle. 12/04/2005. BusinessWorld.
“The Boss” Steers San Miguel Expansion. 12/04/05. XtraMSN-Reuters.
SMC wins bid for National Foods as New Zealand rival withdraws. 12/04/2005. Manila Bulletin.