Page 63 - Profile's Unit Trusts & Collective Investments - March 2026

Costs and pricing Chapter 3

management portion and an administration portion, for
example. A manager may reduce the administration Income accrual
portion when investments are made through a LISP or Income accrual is defined in CISCA
investment platform because the LISP is relieving the as any dividends or interest (or
manager of a large part of the administrative burden any other income) received by the
(the LISP puts through bulk transactions, meaning the trustee, custodian or manager on behalf of investors
manager does not have to deal with many individual in a portfolio and for distribution to investors.
investors).
When investment platforms first started bulking
transactions, managers rebated part of the fee to the Quartile
LISP for investments in funds through the platform. Since
then a “clean class” for funds priced without rebates have Technically, a quartile is the mid-point
been introduced and the industry has encouraged the of either the top or bottom half of a
use of these classes. From an investor’s point of view, the data set (the median is the mid-point
disclosed fees of a clean class transparently reflect what data value).
is being paid to the asset manager, the administrator and A top quartile fund is therefore a fund which has beaten
the adviser without disguising payments between the at least 75% of other funds. A bottom quartile portfolio
three service providers. has been beaten by at least 75% of other funds.
A and R classes
Fees charged on unit trust funds were regulated until June 1998 and funds were obliged to offer
the same scale of fees to all investors.
New funds created after June 1998 were permitted to set their own fees which were not limited
by the Unit Trust Control Act. After 1998 funds were free to charge any fee provided they disclosed
these fees to unitholders.
Funds already in existence when the fees were deregulated, however, were only permitted to
change their fees if they obtained approval from unitholders.
Existing funds lobbied for the freedom to vary their charges for new investors and fees were further
deregulated from April 2000. Since then funds have been allowed to charge different investors in the
same fund different fees. A fund may now have a number of different fee tiers or classes.
A fund established before 1998, however, must continue to offer investors who were in that fund at
the time the old regulated fee class or Class R fees. A new fee class may be offered to new investors.
This is why many older funds offer both a Class R and Class A fees.
In summary:
R Class R charges apply to funds in existence before June 1998, and to unitholders invested
prior to 1 April 2000.
R The charges apply to both lump sums and debit orders. In other words, a CIS manager cannot
increase either initial charges or annual fees for an existing debit order client established
before 1 April 2000.
R On reinvestment of dividends from a lump sum investment made prior to 1 April 2000, the fund
is also obliged to stick to the old charges (ie, Class R charges).
R Class A charges are applicable to all new investments into funds with Class A charges.
Not all funds necessarily have both Class A and Class R fees (some have stuck with their
old fees).
R Class B and C units are based on fee structures which apply to institutions or other “wholesale”
clients. CIS managers are sometimes reluctant to publish these fee structures.
ETF unit classes
Unlike other collective investments, an Exchange Traded Fund (ETF) can only have one unit class
(separate unit classes would require separate listings on the stock exchange).
Where a manager offers reduced fees for lump sum investments above a certain threshold, these
management fee differences are dealt with as rebates (ie, a portion of the fixed annual management
fee deducted inside the fund is returned to investors who meet the criteria for lower fees).

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