16 May 2013

Keeping on top of your investment funds

I always advise people to keep investment funds under review - at least annually for a long term investor. Things change in the investment world, as well as in individual funds, and here's an example...
 
Sometimes a popular unit trust (or "OEIC") fund can have too much money being invested with it - believe it or not. The way that unit trusts are structured means that the fund manager has to use investors' money to buy the underlying investments which the fund is there for. But that isn't always easy.
 
Fund managers First State have just announced that their popular Global Emerging Market Leaders fund has reached that point. Too much extra investment in the fund will hamper their ability to use it effectively, they say. So they are imposing an initial charge of 4% from September 2013. That will certainly slow, if not stop, the inflow of new investors' money since there is generally no initial charge.
 
The same thing happened with another emerging markets fund not long ago - Aberdeen Emerging Markets imposed a 2% initial charge.
 
Actually, that does highlight the advantage of another type of investment: Investment Trusts. They are structured differently from Unit Trust funds - but that's another blog.

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