Some unit trust names have been overtaken by circumstances
By EMILYN YAP
 | Email this article |
 | Print article |
 | Feedback |
(SINGAPORE) Watching the romantic tragedy unfold in Shakespeare's Romeo and Juliet, few would disagree when Juliet laments: 'What's in a name? That which we call a rose by any other name would smell as sweet.'
But do investors feel the same when it comes to unit trusts? Taking a look at some of the trusts on sale, BT found a few that surprise, with investments in regions not suggested by their names.
Take for instance, the First State Singapore Growth Fund. It is not entirely invested locally - 37.5 per cent of its assets were in Malaysia at end-July.
Similarly, as at July 31, only 77 per cent of the assets of Legg Mason Southeast Asia Special Situations (SASS) Trust were invested in South-east Asian nations such as Singapore and Malaysia. But the fund also held assets further afield - 11 per cent in Hong Kong, 6 per cent in Australia and 3 per cent in India.
In another case, LionGlobal China Growth Fund held about 6 per cent of its assets in Singapore as at July 31.
The funds have actually not broken any rules. According to the Monetary Authority of Singapore, the onus is on funds to choose accurate, relevant names and avoid those that could be misleading.
  |
More importantly, funds are required to disclose details such as the principal countries and types of investment in their prospectuses. Under the Securities and Futures Act, fund offers to retail investors must be accompanied by registered prospectuses.
Indeed, the three funds cited above spelt out their investment objectives clearly in their prospectuses or factsheets.
Legg Mason SASS Trust highlights that it invests 'at least 70 per cent of the trust in securities issued by companies that are incorporated, domiciled or listed, or have a significant economic interest, in South and South-east Asia countries'.
The fund was set up more than 10 years ago to tap on opportunities in South-east Asia during the Asian Financial Crisis. 'Since then, however, markets in Asia have changed dramatically, and the fund's objective has also evolved to allow it to invest in other Asian-Pacific countries,' Legg Mason Investments Asia told BT.
Legg Mason considered changing the fund's name when the objective was expanded after an extraordinary general meeting last year, but dropped the idea to avoid confusing existing investors.
First State Singapore Growth Fund states that it invests in securities of companies in Singapore or Malaysia, or companies with significant exposure to these countries.
First State Investments (Singapore) told BT the fund got its name because it was one of the earliest to emerge in Singapore back in 1969. Although the fund adopted its current investment objective and policy in 2000, its name 'has been retained for its legacy as being one of Singapore's longest-standing funds'.
As for the LionGlobal China Growth Fund, its objective is to invest 'primarily in equities and equity-linked securities of companies with assets in or earnings derived from the People's Republic of China'.
'It is common nowadays for companies to list outside their home countries,' Lion Global Investors said. 'Some companies may be headquartered in China, Hong Kong and Taiwan but are listed elsewhere, such as in Singapore.'
Ultimately, fund names cannot tell the whole story - and this is where financial advisers come in. When recommending investments, they 'are required to disclose to every client and prospective client, all material information relating to any designated investment product such as unit trusts', said MAS.
Such information includes terms and conditions, performance and risks as well as expenses and fees.
'Consumers too should take steps to ensure they understand the product before they decide whether to buy it,' MAS added. This is when it pays to scrutinise details in fund prospectuses.
To help consumers with investment decisions, the Investment Management Association of Singapore has produced a Making Sense of Unit Trusts guide with the support of national financial education programme MoneySENSE.
When money is involved, investors should not be drawn simply by names - no matter how sweet they are.
No comments:
Post a Comment