The ongoing war towards low (or zero) commissions for unit trusts looks set to spiral on as both leading platforms of unit trusts in Singapore, Fundsupermart and Dollardex, announced their 0% sales charge program for bond funds program last week.
For Dollardex, they now have a list of 30+ bond funds that does not have any upfront sales charge. Currently, their private+ clients (those with more than $200k in assets invested) already enjoy 0% sales charge for all their CPF investments.
Similarly, Fundsupermart (FSM) now have a list of around 50 fixed income funds that will not have any upfront sales charge. FSM announced this move through a new portal Where Income and Savings are Enhanced (WISE), which also provided some educational materials on bond funds.
You might ask the question, so what exactly do the platforms earn if they do not impose any upfront sales charge?
In case you were not aware, a part of the annual management fees for the funds are actually paid to the distributor as trailer fee. This can add up if the assets are huge.
FSM also has an annual platform fee of 0.2% for bond funds held on their platform.
With increasing client sophistication, the days of paying a high sales charge through a third party distributor might very soon be a thing of the past.