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Is unit trust a scam?

My parent bought $30,000 worth of blackrock BGF Global Multi-Asset Income Fund three years ago. First of all, they have to pay 5% Initial Charge. They lost $1500 from the start just by buying. Next is management fees of 1.5%. They never took out any dividends and re-invested back into the unit trust. At it's peak, they earn around $1500, 5% for 3 years. Due to market uncertainty, the unit trust NAV and they earn $900 over 3 years. That is merely 3% for 3 years! 

@muhdhazmanmoh pointed out there is a sale charge of 5%. Buy and sell at 5%, that is freaking 10%! What a joke! Isn't unit trust suppose to be safe and targeting the retailers? 

Managed to convince my parents to sell their holding over the weekends, let's hope there is no 5% sales charge! Time to buy some Singapore Saving Bonds instead. Though there is no upside, but at least no downside.

Update 1: seems like there is no sales charge, we shall see 1 week later.

Update 2: this charge cant run from it as it is from blackrock itself. dont think using those free platform will help.

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cannot say all are scams. i buy unit trusts to gain exposure to stocks which normally i cannot get from the stock market, exotic countries, or usually open to institutions only.
then must see their underlying, distribution frequency, reinvestment charges etc. many things to consider. but having said that, i avoid buying from insurance company because insurance company also has charges on top of the fund managers charges.

remember this one multi-millionaire guru claimed she lost 40% in unit trusts to psych people to sign up for her stock course. dig deeper. she lost during lehman crisis. mostly everyone will lose money during that time. S&P also dropped about c40-50%. LOL


Reply to @jasonhhlim : the company is the one that teaches value investing and she take photo with mary buffett?

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unit trust are long term with the dollar cost averaging in mind... just that there are too many charges these days...


Choosing the wrong unit trust is not an investor's fault, but anyone who is still paying a 5% sales charge today has nobody to blame but himself.

Unit trust is just an investment structure, It is the same as an ETF or REITs. Whether you make or lose money depends on the underlying investment market, not the vehicle.

This article has a more detailed explanation.


There seems to be a certain misunderstanding of how a unit trust works. The sales charges are a bit like the commissions you pay when you buy a stock. That said, you will not catch me buying a unit trust with sales charges (from banks or insurance agents for eg) since i can buy from POEMS without paying sales charges.

The other charges could be platform fees (POEMS has none though) & the expenses associated with the fund itself (which ETFs also have though ETFs usually have lower expenses, particularly if they are Vanguard ETFs for eg). These latter expenses peculiar to the unit trust will always be there as you do not exect a unti trust manager to buy, sell, and perform admin functions for the basket of stocks for free, do you?

Having said all the above, if one wishes to buy unit trust, besides picking the unit trust based on certain parameters such as its investment mandate, one would wish to make sure it is a very low cost unit trust so as to increase one’s chances of earning a good return. This is just my layman understanding of unit trust.

Since IN is devoted to discussions pertaining to the buying & selling of stocks, I suspect most people know how & are comfortable to buy & sell stocks & would prefer to do so instead of buying unit trusts. People who are not as confortable with stocks or prefer diversification or only have a small sum of money may find unit trust more suitable than stocks though.


Reply to @luckyman : Yes, I bought unitrusts through poem. Most of the funds don’t have front load 5% charge and Some have very small charge around 0.75%. No platform fees too. We have tons of unitrusts to choose from not like banks where choice of unitrusts is limited.


This post should be forwarded to MAS so they could put those Unit Trust sellers on alert list since majority of investors think UT is a scam.. keke


My bankers charge me "sales charges" that range from 0.18% (DBS Treasures) to 2% (CitiGold & OCBC Premier) Can even borrow to buy more


Reply to @chuckchung : Hi, did I read correctly? 0.18 sales charge for unit trust from dba treasures?


I can dare say fund managers are a load of crap, if not why all avoiding the best performing Asian market, Nikkei??


Reply to @liowkevin : yea cos they have japan standalone fund.

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Probably 95% of people lost money on unit trust, the yearly fees jus keep deducting without investors knowing. And most funds managers jus sit at office and enjoy the high life, who focus maximising commission for themselves


Like any other scam, there will be people who make money but majority lose. Those who earn probably becoz the fund earn a lot more.


Reply to @CoryLogics : yea i agree. if unit trust is a complete scam, i think sg gov will do something about it.


I had made money as recent as last Friday.

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