Over the last few months you will have received various letters and notifications regarding changes to unit trust funds or other investment products. Some of these dealt with changes to asset pricing class, others asked the investor to vote for a proposal to change the mandate of a fund.


Most of this has been quite confusing. So what is it all about?

The Financial Services Board, which governs personal investments, has proposed further measures to protect clients from unscrupulous marketers and to make the environment simpler and more understandable.


One of the proposals is to clarify and make transparent the various fees which an investor pays. This includes changing the fee structure so that “insurance brokers” are not tempted to sell or switch policies with the prime purpose of earning an upfront fee.
The unit trust industry is responding by moving to “clean class” pricing, which shows the unit trust fee, net of any rebates that were previously were passed on to platforms. Not all platforms passed the rebate on to clients. This is resulting in changes from an existing fee class to a new clean class fee pricing. Investors are expected to benefit from this move.


A few fund managers as well as platforms have also reduced their fees.


A number of offshore funds are moving from being domiciled in the Channel Islands, to Luxembourg and Ireland, where the requirements allow more flexibility and are less onerous. Also managers who currently run Rand based offshore funds as well as “proper” offshore funds are merging the funds. The mandates are the same, but by merging funds, they are able to reduce costs.


All of this should result in an improved environment for you as an investor.


From time to time we write to clients to explain the rationale for a particular change, but we aren’t always informed of communications from each company before the client receives the notice. If you are in any way unsure as to what to do, or what the implications of a change are, please get in touch with us.