Unit Trusts: Pricing and Fees Explained
Understand how unit trust prices are set based on net asset value (NAV), how subscription and management fees work, and what to review before investing in Singapore.
How Unit Trust Prices Are Determined
The price of each unit in a unit trust is based on the fund’s Net Asset Value (NAV). The unit price is calculated by dividing the fund’s NAV by the number of units outstanding.
Understanding Subscription Charges and the Bid-Offer Method
In the “bid and offer pricing” method, a subscription charge is added to the NAV per unit, and a redemption charge is deducted from the NAV per unit. This means the price you pay to buy units and the price you receive when selling them may differ from the underlying NAV.
Management Fees and What to Expect
Management fees vary depending on how a fund is managed. Actively managed funds charge management fees ranging from 1.0% to 2.0% per annum of the fund’s NAV. Passively managed funds generally charge management fees below 1%.
Key Points to Check Before Investing
Before investing in Singapore, you should understand NAV pricing, fund costs, and the risks involved.