AyG
Crazy Mango Extraordinaire
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Post by AyG on Mar 13, 2018 14:02:19 GMT 7
It's common practice to have controls in place to prevent the double charging you refer to on feeder funds. If you look at the Factsheet for the Emerging Markets fund in the section "Fees Charged to the Fund" it lists: - Management Fee 0.9970% - Trustee Fee 0.0321% - Registrar Fee 0.0750% - Other: None That totals 1.1041%. No reference to any charges within the ETF. Publicly traded ETFs don't discount their charges since this would affect the ETF price, and they certainly don't rebate them, so there's no way that the ETF charges could be included in "fees charged to the fund". I don't want to believe it, but I do believe the ETF charges are in addition to the above. (One might argue that is a problem with English and that "management fee" includes both TMBAM and the ETF fees, even if the latter is not "charged to the fund", but if so, why not break them out separately? And since this "management fee" is capped at 1.0%, what would happen if the ETF increases its charges?) |
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AyG
Crazy Mango Extraordinaire
Posts: 5,871
Likes: 4,555
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Post by AyG on Mar 13, 2018 14:21:55 GMT 7
Some recent headlines
"Grantham’s GMO Dissolves International Stock Team as Assets Fall"
"Iconic Value Investor Jeremy Grantham's GMO Loses $40 Billion In AUM Over Two Years"
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Post by Fletchsmile on Mar 13, 2018 15:13:03 GMT 7
Publicly traded ETFs don't discount their charges since this would affect the ETF price, and they certainly don't rebate them, so there's no way that the ETF charges could be included in "fees charged to the fund". ..... While ETFs don't discount charges, they certainly do rebate them. Remember this is not a UK product under the covered by the retail distribution review. ETFs create or redeem shares thru Authorized Participants, that are usually large financial institutions. The ETF manager will make charges for its funds. They can and do rebate these charges. These can be given to large investors who lift volumes and provide liquidity. If you google around you'll find articles to this effect. eg quick google: www.bloomberg.com/news/articles/2016-08-30/bats-offers-up-to-400-000-rebate-to-traders-who-lift-etf-volumemoney.stackexchange.com/questions/49225/why-would-an-etf-rebate-part-of-its-management-fee-rather-than-reduce-it-beforemarkets.businessinsider.com/news/stocks/horizons-etfs-maintains-hxt-management-fee-at-0-03-1002397065So, As TMB would be a large investor adding to the fund investors in Thailand that would not normally access the ETF, it's possible for them to negotiate such rebates. Whether they actually do that or not I'm not sure, and whether or not they have built them into the management charge in some way to avoid double charging would be a further step. It's a valid point you raise though that the ETF charge is possibly/probably on top of the management charge and not absorbed in it. TMB's documentation is often weak and not as clear as it could be. The English is often poor and the Thai ambiguous or not precise enough given the nature of the language. (Thai is very precise for mia nois, food etc to reflect the culture but not so precise for finance  ) It's something I'd thought about asking of TMBAM. But trying to get a decent answer or someone who understands the question might not be easy So worth bearing in mind as you point out that for 2 out of the 4 funds mentioned: TMB Emerging equity there could be an approx 0.7% p.a. cost and World Equity Index 0.45% "hidden cost", from the underlying ETFs. [Edit: BTW One thing that would support these being on top as AYG suggest and not absorbed into the management charge is that TMB's management charges at 1.10% and 1.11% are similar. If absorbing a gap might be expected to reflect the 25 bp diff - although again they may decide to absorb themselves. The ideal would be better disclosure] |
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