Understanding Fund Managed Rate and Its Impact on Investments

A fund managed rate is a type of investment strategy where a professional manager oversees a pool of money to achieve specific financial goals. This approach can be beneficial for investors who lack the time or expertise to manage their investments directly.

The fund managed rate is typically expressed as a percentage return, which reflects the manager's performance over a given period. For example, if the fund managed rate is 8%, it means the manager has generated an 8% return on investment over a specified time frame.

Investors can benefit from a fund managed rate by diversifying their portfolios and reducing risk. By pooling their money with others, investors can access a broader range of investment opportunities and potentially achieve higher returns.

The performance fee is a key aspect of fund management, and it's designed to align the manager's interests with yours.

The hurdle rate of return is the minimum rate your investment must achieve before a performance fee begins to apply, which is the Official Cash Rate (OCR) + 5% for most funds.

This means that if the OCR is 3.00%, the hurdle rate would be 8.00% (3.00% + 5%). If your investment returns exceed this hurdle rate, you'll receive 90% of the excess returns, while Fisher Funds will receive 10%.

Here's a breakdown of how the returns would be shared in different scenarios:

Note that the performance fee cap is 2% per annum, and the High Water Mark ensures that no performance fee is payable if the manager has previously been rewarded for that performance.

The Fullerton Short Term Interest Rate Fund has a proven track record of navigating market cycles with ease. The core team has successfully navigated several major market events, including the Global Financial Crisis, 2013's taper tantrum, and Covid.

This team has a remarkable ability to maintain a focus on capital preservation and measured growth, even during the most challenging times. With 18 out of 20 positive calendar year returns since its inception in September 2004, the Fund has consistently delivered results.

The Fund's 20-year track record is a testament to its stability and reliability. The returns are calculated on a single pricing basis in SGD with net dividends and distributions reinvested.

Past performance is not necessarily indicative of future performance, but the Fund's history is certainly impressive. The Fund has a proven ability to adapt to changing market conditions and deliver results.

The performance fee is a way for Fisher Funds to align their interests with yours to achieve great investment returns and grow your retirement savings. It's a fee that's charged when the fund's performance exceeds a certain hurdle rate of return.

The hurdle rate of return is the minimum return that the fund must achieve before the performance fee begins to apply. For most funds, this is the Official Cash Rate (OCR) plus 5%, but for the Property and Infrastructure Fund, it's the OCR plus 3%.

The performance fee is 10% of the excess returns above the hurdle rate. This means that if the fund's return is 8% and the hurdle rate is 8%, you'll get the full 8% and Fisher Funds won't get any performance fee. But if the fund's return is 15%, you'll get 14.3% and Fisher Funds will get 0.7% as their performance fee.

Here's a breakdown of how the returns are shared:

The performance fee is capped at 2% of the average net asset value of the Growth Fund, which means that Fisher Funds won't get more than 2% of the excess returns, no matter how well the fund performs.

Equity funds have seen a significant decrease in asset-weighted average fees over the decade from 2008 to 2018, dropping from 0.83% to 0.55%.

The bond category has also experienced a decline in fees, with a drop from 0.61% in 2008 to 0.48% in 2018.

Hybrid funds, including target-date funds, have seen a more modest decrease in fees, from 0.77% in 2008 to 0.66% in 2018.

Money market funds have had the greatest decrease in fees, with a drop from 0.35% in 2008 to 0.26% in 2018.

Here's a quick summary of the fee decreases in each category:

Fisher Funds charges a fee to actively manage your investment in the Fisher Funds Managed Funds Scheme.

The annual fund charges are based on the fees and expenses from the 31 March 2024 audited financial statements. They are a reasonable estimate of the annual fund charges that are likely to be charged in the future.

The fixed management fees range from 0.76% to 1.27% of the net asset value, depending on the investment option.

For example, the Conservative Fund has a fixed management fee of 1.12%, while the Income Fund has a fixed management fee of 0.76%.

Estimated costs and expenses also vary across the different investment options, ranging from 0.16% to 0.25% of the net asset value.

The total estimated annual fund charges range from 1.01% to 1.67% of the net asset value, depending on the investment option and whether a performance-based fee is applicable.

Here's a breakdown of the estimated annual fund charges for each investment option:

Performance-based fees are also applicable for some investment options, ranging from 0% to 2.00% of the net asset value.