Lesson 4

Lesson 4 – How Unit Trust Is Priced ?

In order to accelerate growth and enhance investor protection in the unit trust industry, on 1 July 2007, the Securities Commission introduced a Single Pricing Regime (SPR) whereby there will only be one price – the Net Asset Value (NAV) per unit – quoted for selling and redeeming unit trusts.The Single Pricing Regime was introduced to ensure full transparency and disclosure of up-front costs. Unlike the previous dual pricing regime where prices were quoted inclusive of charges, single pricing regime will reflect only the Net Asset Value (NAV) of a unit trust fund while all charges will be separately disclosed. The enhanced transparency of prices and charges will allow investors to compare the costs of investing in unit trusts associated with different distribution channels and should lead to a more competitive cost environment.

Your question will be?

With the new ruling, how many units will you be entitled to and how much shall you pay for your investment?

This example serves only as a guideline on how the calculation is done assuming the fund’s NAV per unit is RM0.2500 and the investment amount is RM5,000.00

Units credited to your account:
= Amount invested /NAV per unit
= RM5,000/RM0.2500
= 20,000 units
Service charge per unit:
= NAV per unit x Service Charge (%)
= RM0.2500 x 5.45%*
= RM0.013625
* assuming service charge is @5.45%

Total service charge incurred:
= Service charge per unit x Units credited to investor
= RM0.013625 x 20,000 units
= RM272.50

Finally in progression of the above, the total amount you should pay will be:
= Amount invested + Service charge incurred
= RM5,000 + RM272.50
= RM5,272.50


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