Tag Archive: DBS

Oct
07
2009

DBS Cuts Sales Charge for Unit Trusts

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by Martin Lee

October 7, 2009

DBS has recently started taking drastic steps to gain market share in the sale of unit trusts.

They have implemented a 1% sales charge policy on the sale of any unit trusts under their platform. This rate is even more competitive than the 2% or 1.5%  found in other online unit trusts platform providers.

In fact, you can easily transact via DBS internet banking (edited: Online still shows the usual charges of 3 and 5%). A check after login to DBS internet banking shows that funds from the following fund managers can be purchased online:

  • DBS Asset Management
  • Deutsche Asset Management
  • AllianceBernstein
  • Henderson Investors Singapore
  • Legg Mason Asset Management
  • Schroders Investment Management

In addition, DBS has added 7 more days to the cooling period for anyone who buys from them. This means a total number of 14 days for the cooling off period.

I suspect that their sales have been hit pretty badly since the ban by MAS on selling of investment products through bank tellers. So now they have resorted to competing on price.

Will other financial institutions follow suit?

We have indeed come a long way since the old days where banks used to charge 5% for the sale of unit trusts. All these are positive changes for the consumers.

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Sep
01
2009

DBS Invest Choice Account

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by Martin Lee

September 1, 2009

I chanced upon an advertisement for the DBS Invest Choice Account a couple of days ago. Taking a closer look at the product, I realised that it is almost the same as the POSB Invest SingGrowth Account that POSB launched back in June 2009. You can refer to the POSB Invest SingGrowth Account post for an explanation of how it works.

The reference entities and redemption conditions are all the same. The only difference is that the payout is 0.22% higher in the first year.

Year Fixed Payout Bonus Payout
Year 1 3.00% -
Year 2 1.08% 0.50%
Year 3 1.18% 1.00%
Year 4 1.28% 1.50%
Year 5 1.38% 2.00%

Here is a repeat of the earlier exercise of calculating the returns based on a $100k investment.

Case 1: No redemption event

You will collect:

End of year 1: $3000

End of year 2: $1080

End of year 3: $1180

End of year 4: $1280

End of year 5: $101380

Case 2: Redemption event occurs at end of year 2

You will collect:

End of year 1: $3000

End of year 2: $101580

Case 3: Redemption event occurs at end of year 3

You will collect:

End of year 1: $3000

End of year 2: $1080

End of year 3: $102180

Case 4: Redemption event occurs at end of year 4

You will collect:

End of year 1: $3000

End of year 2: $1080

End of year 3: $1180

End of year 4: $102780

Case 5: Redemption event occurs at end of year 5

You will collect:

End of year 1: $3000

End of year 2: $1080

End of year 3: $1180

End of year 4: $1280

End of year 5: $103380

Case 6: DBS/POSB goes bust

You will get back nothing as this product does not fall under the Singapore Deposit Insurance Act.

————

The actual annualised yield for the 5 different cases are computed as follows:

Case 1: 1.59% p.a. (product matures in 5 years)

Case 2: 2.30% p.a. (product matures in 2 years)

Case 3: 2.09% p.a. (product matures in 3 years)

Case 4: 2.01% p.a. (product matures in 4 years)

Case 5: 1.98% p.a. (product matures in 5 years)

You can use the yield and maturity length as a benchmark to compare against other similar products. Of course, no one would be able to predict which of the 5 cases would ultimately happen.

The yield is slightly higher than the POSB Invest SingGrowth Account but it requires a much higher minimum of $100k to invest in the product.

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Jul
10
2009

DBS High Notes Lawsuit

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by Martin Lee

July 10, 2009

A group of more than 200 DBS High Notes 5 investors have commenced legal action against DBS. The group of investors is understood to have lost about S$17 million and are suing for a total refund of their investment money.

Yesterday, a legal notice was served on DBS by legal firm Premier Law. The claim was based on the prospectus and pricing statement relating to the DBS High Notes 5.

A DBS spokesman said the bank remains confident that the case is without merit and will defend themselves.

This legal suit against DBS will no doubt attract a lot of interest as it is the first “class action suit” bought against a financial institutional as a result of the massive losses incurred from structured products linked to Lehman Brothers.

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Jul
02
2009

DBS and POSB to Cut Savings Interest Rate

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by Martin Lee

July 2, 2009

Starting from yesterday, interest rates on the savings accounts at both DBS and POSB will be reduced.

The interest rate for the first $50k held at PSOB will be cut from 0.25% to 0.125% while DBS Savings Plus account holders will get 0.1% for the first $50k.

Rates at other banks are similarly low. For example:

UOB – 0.125% on first $15k

OCBC – 0.125% on first $10k

SCB – 0.125% from amount between $1000 and $2500

With the cut by DBS and POSB, the 3-month treasury bills could be an alternative to those who has excess cash but do not wish to park it into a long tenure fixed deposit. Currently, the 3-month T-Bill is yielding about 0.25% p.a. You can apply for it on a weekly basis via ATMs of the local banks without the hassle of going down to the bank branches.

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Jun
24
2009

POSB Invest SingGrowth Account

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by Martin Lee

June 24, 2009

I saw an advertisement for a POSB structured product, the POSB Invest SingGrowth account, in the newspapers the other day. Thought it would be good to highlight and have a look at this product.

The POSB Invest SingGrowth account is a 5-year equity-linked structured product that promises a fixed yearly payout with the potential of a bonus payout if a redemption event takes place.

A redemption event takes place when the share prices of Singapore Telecommunications Limited, United Overseas Bank Limited, Singapore Press Holdings Limited and SembCorp Industries Limited have all risen 15% or more above their original prices on specific fixing dates.

When that happens, the original investment will also be returned and the product will terminate.

Year Fixed Payout Bonus Payout
Year 1 2.78% -
Year 2 1.08% 0.50%
Year 3 1.18% 1.00%
Year 4 1.28% 1.50%
Year 5 1.38% 2.00%

The minimum amount for this investment is $5000 and here are some examples of how the payout will look like (using $10,000 as an investment). Note that the analysis and examples might not be exhuastive. I am relying only on the information found on the POSB website (link no longer exists).

Case 1: No redemption event

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $118

End of year 4: $128

End of year 5: $10138

Case 2: Redemption event occurs at end of year 2

You will collect:

End of year 1: $278

End of year 2: $10158

Case 3: Redemption event occurs at end of year 3

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $10218

Case 4: Redemption event occurs at end of year 4

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $118

End of year 4: $10278

Case 5: Redemption event occurs at end of year 5

You will collect:

End of year 1: $278

End of year 2: $108

End of year 3: $118

End of year 4: $128

End of year 5: $10338

Case 6: DBS/POSB goes bust

You will get back nothing as this product does not fall under the Singapore Deposit Insurance Act.

While the 2.78% payout for year 1 might look attractive, the actual yield for the 5 different cases are computed as follows:

Case 1: 1.55% p.a.

Case 2: 2.19% p.a.

Case 3: 2.02% p.a.

Case 4: 1.96% p.a.

Case 5: 1.94% p.a.

Conclusion

For a 5-year product, there are currently other better options around.

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