Understanding Mutual Fund Fees, Share Classes And Certain .

3y ago
84 Views
2 Downloads
351.72 KB
7 Pages
Last View : 23d ago
Last Download : 6m ago
Upload by : Ronan Garica
Transcription

Understanding mutual fund fees, shareclasses and certain risk considerationsHighlights– In retail brokerage accounts, UBS moved to a singleshare class with a commission-based fee structuresimilar to equities and ETFs.– The other most commonly used share classes inretail brokerage accounts—Class A, B and Cshares—may only be used for offshore, legacy andmoney market fund transactions.– It is important to understand how UBS and yourFinancial Advisor are compensated when youpurchase mutual fund shares.– Risk considerations for mutual funds are disclosed ineach fund’s prospectus. This document highlights anumber of risks associated with certain mutualfund investments.This overview broadly describes mutual fund fees and theshare classes most commonly offered in retail brokerageaccounts, including their effect on the fees you pay andthe return your investments earn. Beginning in January2020, the primary share class offered in retail brokerageaccounts is a share class without upfront, ongoing orbackend sales charges, referred to as the “singleshare class”.Because every mutual fund is different, we recommendthat you refer to a fund’s prospectus for details on thatfund’s share classes and fees.Please contact your Financial Advisor with questions.Additional information is available from the FinancialIndustry Regulatory Authority (FINRA), an independentregulator, at www.finra.org.Offshore funds. Most of the information in thisoverview also applies to unregistered (offshore) mutualfunds, with these differences:– Offshore funds have an offering document.This document may be called a prospectus oroffering statement.– Sales charges for offshore funds may be negotiable.– Offshore funds may offer discounts which differ fromdiscounts commonly available in onshore funds.Offshore funds may be free from US withholding tax onincome earned on investments and excluded from USestate tax calculations.Types of feesTo understand the differences among share classes,you should first review the types of mutual fund fees:Commission. A fee you pay based on the notional valueof the mutual funds shares being purchased or sold.Management and administrative fees. Management feesare paid by the fund itself to the investment adviser whomanages the fund’s portfolio. Administrative fees coverother operating expenses.Upfront sales charge or front-end sales charge. A fee youpay at the time you purchase mutual fund shares. This feeis deducted from your initial investment amount.Surrender charge or back-end sales charge. A fee you paywhen you redeem your shares, it is also known as a“contingent deferred sales charge,” or CDSC.12b-1 distribution fees. Named after a Securities andExchange Commission (SEC) rule, this annual fee ispaid from the fund’s assets to cover marketing anddistribution costs.Some mutual fund families also charge a redemption fee(typically 1.00% to 2.00%) if you redeem shares shortlyafter purchasing them, to discourage short-term trading.See the mutual fund’s prospectus for details.Why share classes matterA mutual fund may offer different types, or classes, ofshares. Each share class invests in the same group ofsecurities, has the same investment objectives andfollows the same investment policies.What’s different for each class is how much you pay in feesand when you pay those fees, which can significantly affectlong-term return on your investment.1 of 7

To determine what share classes a mutual fund offers, askyour Financial Advisor and review the fund’s prospectus.The prospectus contains fee tables, details on waivers anddiscounts, examples and other useful information.Beginning in January 2020, the single share class is theonly share class available for purchase in retail brokerageaccounts, except for offshore funds, interval funds andmoney market funds, or to fulfill an existing letter ofintent, referred to below as “Legacy Transactions”.Common share classesFollowing are brief, general descriptions of commonmutual fund share classes. Because the specifics of shareclasses can vary significantly, it is important to review afund’s prospectus before investing.Single share class– Beginning in January 2020, UBS simplified its mutualfund platform by offering a single share class inbrokerage accounts.– The single share class has no front-end loads, back-endloads or 12b-1 fees.– For mutual fund transactions in the single shareclass, commissions are charged on buys and sells,except in 529 plans, where commissions are chargedon buys only.– The commissions charged are described atubs.com/mutualfundcommissions.Class A shares (for Legacy Transactions only)– Generally have an upfront sales charge, deductedfrom your initial investment amount.– May offer discounts if you invest a large amount, holdmutual funds in the same fund family, commit tobuying more shares or aggregate your holdings withthose of qualifying household or family members.– Generally have lower 12b-1 and administrative feesthan Class B and Class C shares.– Class A shares purchased in advisory programs aretypically offered at Net Asset Value (NAV), free of anysales charges.Class B shares (for Legacy Transactions only)– Generally have a surrender charge or back-end salescharge, called a “Contingent Deferred Sales Charge”(CDSC), which you pay when you redeem your shares.– Typically offer decreasing CDSC each year you holdthe shares, until it reaches zero (usually after six years).– Generally have 12b-1 and administrative fees thatare higher than Class A shares and the same asClass C shares.– Normally convert automatically to Class A shares,with lower annual fees, if you hold them long enough(generally eight years).– Many fund families have discontinued offeringClass B shares.Class C shares (for Legacy Transactions only)– Generally do not have an upfront sales charge.– May have a small surrender charge or back-end salescharge (CDSC) when you sell your shares. The CDSC forthese shares typically decreases to zero within 12 to 24months, except for reinvested dividends or capital gains.– May impose sales and 12b-1 fees that are usually higherthan for Class A and the same as for Class B.– Generally do not convert to Class A shares, whichmeans higher operating expenses continue for aslong as you hold the shares.Discounts and Breakpoints (for Interval Funds only)You have several ways to reduce the upfront sales chargeon Class A shares. Discounts are generally available if you:– Make a large investment. The more you invest, thelower your sales charge. There are usually severalthresholds, called “breakpoints,” typically starting at 50,000, with no charge for investments of 1 millionor more.– Hold mutual funds in the same fund family. You cangenerally get a sales charge discount by purchasingvarious mutual funds from the same fund family, even ifthey’re different share classes, for different accounttypes (IRA, trust, etc.), or held at a firm other than UBS.– Sign a letter of intent. If you commit to buy a specifieddollar amount of additional shares within a specificperiod, usually 13 months through a letter of intent,some mutual funds let you apply the discountretroactively. If you do not make your purchase withinthe specified time, the fund family will sell shares in youraccount to make up for the discount you received andrestrict you from selling fund shares in that amount.– Aggregate your shares with other shares in the fundheld by qualifying household or family members. Tomake sure you receive all applicable breakpointdiscounts, ask your Financial Advisor to link, or“household,” all your accounts (i.e., individual, IRA, trustand investment clubs) and related accounts such asthose of immediate family members. With theseaccounts linked, UBS can aggregate your holdings anddetermine your eligibility for breakpoint discounts– Reinvest dividends and capital gains, or earlierredemptions. Mutual funds may waive sales chargeswhen you reinvest dividends and capital gainsSome fund families offer a “reinstatement privilege,” waivingsales charges when you reinvest proceeds from an earlierredemption of a specific share class in the same fund or fundfamily. They may also offer a ”NAV transfer” privilege, inwhich you can use the redemption proceeds to buy funds in adifferent mutual fund family. Time limits and other conditionsmay apply; refer to the prospectus for details2 of 7

Working with your Financial AdvisorIf you maintain a brokerage account at UBS, yourFinancial Advisor can help you determine which mutualfunds are most appropriate for your specific situation.He or she will consider your investment objectives, riskcomfort level, liquidity needs, current holdings, taxsituation and other factors.In particular, your Financial Advisor will discuss thefollowing with you:– Investment Time Horizon– Amount you have to invest– Investment Objectives and Risk ProfileHow UBS Financial Services Inc. and yourFinancial Advisor are compensated when youbuy mutual fundsThe mutual fund type and share class you buy, as well asthe type of account you have, affect how UBS FinancialServices Inc. and your Financial Advisor are compensated.Please contact your Financial Advisor if you are interestedin obtaining more information. Information is alsoavailable in “Understanding our fees, charges and othercompensation“ at www.ubs.com/guidetofeesFees you payCommissions. For all mutual fund transactions outside ofLegacy Transactions, you will pay UBS a commission onboth buys and sells, except for transactions in 529 planaccounts, where you will pay a commission on buys only.Financial Advisors receive a portion of the commissionpaid. Financial advisors have the ability to discountcommissions. More information is available atubs.com/mutualfundcommissions.For example, if you buy 20,000 worth of a mutual fundand the maximum commission is 435.00, plus a 5.25processing and handling fee (per transaction), themaximum cost for the trade is 20,440.25.Sales charges (for Legacy Transactions). When you pay anupfront sales charge, or sell shares and pay a contingentdeferred sales charge, the mutual fund company typicallykeeps a small portion of that charge and pays the rest toUBS, which in turn pays your Financial Advisor.For example, if you buy 10,000 of Class A mutual fundshares with a 5.75% upfront sales charge, you wouldpay a sales charge of 575. Typically, the mutual fundcompany would keep a portion. UBS would receive theremainder and pay part of that amount to your FinancialAdvisor, based on a standard compensation formula.The formula is the same for every mutual fund familywe offer.If you have a fee-based account, you do not pay asales charge on your mutual fund purchase. Instead, thepurchase is added to the total value of your account, onwhich we charge an account fee. UBS keeps part of thisfee and pays the rest to your Financial Advisor.12b-1 fees. Mutual funds may pay a 12b-1 or annualservice and/or distribution fee to UBS, directly from thefund’s assets. In turn, we generally pay part of this fee toyour Financial Advisor. The amount varies among fundsand share classes, but it typically is 0.20% to 1.00% peryear of the fund’s total assets. The exact amount isdisclosed in the fund’s prospectus.Processing and networking fees. For transactions witha principal amount over 500, UBS charges a 5.25processing and handling fee on the purchase and sale ofmost mutual fund shares in retail brokerage accounts, todefray transaction processing costs. No part of this fee ispaid to Financial Advisors.Fees paid by the mutual fund, fund distributorand/or adviserNetworking or omnibus fees. UBS Financial Services Inc.receives networking fees or omnibus service fees inconsideration for certain services, which are ancillary tothe effecting of mutual fund transactions that we provideon behalf of mutual funds. These fees generally are paidfrom investor assets in mutual funds, but in some casesmay be subsidized in part by affiliates or the distributor ofthe mutual funds, and are generally calculated by applyingour standard networking rate of 4 – 16 for each mutualfund position that is held at UBS. Some fund companiesmay choose to calculate this rate expressed in basis pointson assets. Exclusions may apply to positions below 500and retirement accounts in discretionary advisoryprograms. Omnibus payments, which usually range from 10 to 26 per position, can vary by share class. Somefund companies may choose to calculate this rateexpressed in basis points on assets, which may result inpayments in excess of 26 per position. The assetmanagers making these payments may consider the excessof what the mutual fund would otherwise have paid forthese services on a per position fee schedule as a form ofrevenue sharing. Exclusions may apply to positions belowan asset level mutually agreed upon by UBS and the fundcompany, retirement accounts in discretionary advisoryprograms, and certain funds and/or share classes. Aportion of the payments we receive for Omnibusprocessing is paid to a sub-account vendor contractedby UBS.3 of 7

Revenue sharing. In addition to sales loads,12b-1 fees,networking, omnibus and processing fees, UBS FinancialServices Inc. receives other compensation from certaindistributors or advisors of mutual funds that we makeavailable for purchase. These separate compensationamounts (commonly referred to as revenue sharing) arebased on two components:– The amount of sales by UBS Financial Services Inc. of aparticular mutual fund family to our clients (excludingsales through wrap-fee programs), and– The asset value of a particular mutual fund family’sshares held by our clients at UBS Financial Services Inc.Further, we may institute caps at certain asset and saleslevels, as well as comprehensive caps, and may excludecertain mutual fund shares from the above calculations.And although we seek to apply a level, standard paymentschedule for all of the mutual fund companies whosefunds we sell, we recognize that mutual fund companiesapproach revenue sharing in a variety of ways, and thatsome mutual fund companies may decline to pay revenuesharing exactly at the levels listed above or at all, whichmay present a financial disincentive for us to promotethe sale of those funds that do not pay us at the levelslisted above.We require that these payments be made directly fromthe distributor or advisor, and not from the mutual fundsor indirectly through mutual fund portfolio tradingcommissions, because revenue-sharing payments areintended to compensate us for ancillary services related tooffering mutual fund shares through our distributionplatform. Except as noted below, none of theseamounts are rebated to you or paid to the FinancialAdvisor or his or her branch office.Revenue-sharing payments may present a conflict betweenour interests and those of our customers because thepayments give us a financial incentive to recommend thatour customers buy and hold shares of those funds that wemaintain on our distribution platform and for which wereceive revenue-sharing payments. Although mutual fundsfrom more than 300 different mutual fund families areavailable through our distribution platform, this is onlypart of the universe of mutual funds that are available toour customers in the marketplace.Many mutual funds companies pay revenue sharing to us,including our affiliate, UBS Asset Management. UBSFinancial Services Inc. determines the level of access toour branches based on our own review and evaluationof mutual funds and fund families. There are multiplefactors involved in determining a particular mutual fund’slevel of access to our branches. Although revenue sharingmay be one factor, others include understanding ofbusiness goals, quality of sales personnel and marketingmaterial, range of products, level of service to FinancialAdvisors and Branch Managers, participation of funds inresearched investment models, and branch discretion.In general, we charge each mutual fund family thefollowing amounts (other than money market andoffshore funds):– 0.15% per year (paid quarterly) on all sales ofmutual fund shares (excluding sales through wrapfee programs).– Up to 0.20% per year (paid quarterly) of the assetvalue of all fund shares held at UBS FinancialServices Inc.Some mutual fund families may be subject to aminimum annual payment which, in some instances,may result in a fee that exceeds the percentagesdescribed above. Except as noted below, this calculationincludes shares of affiliated and non-affiliated funds inour wrap-fee programs, but does not include UBS PACEMoney Market investments, mutual fund assets held atother financial institutions and ERISA and IRA assets incertain advisory programs.The revenue sharing information above is current asof the date of this brochure and can be changed atour discretion. For updates, e payments. Generally, shareholders pay no front-endsales charges on UBS Asset Management (US) Inc. Class Yshares, nor does that share class pay ongoing 12b-1distribution or service fees. We have entered into anagreement with our affiliate, UBS Asset Management (US)Inc., pursuant to which UBS Asset Management (US) Inc.,as principal underwriter of its funds, may make paymentsout of its own resources for the sales of Class Y shares toeligible purchasers. The payments consist of a one-timefinder’s fee consistent with the Fund’s Class A shareReallowance to Selected Dealers’ schedule as indicated inthe relevant funds’ prospectus and, beginning in month 13after purchase, an annual fee in an amount up to 20 basispoints for an equity fund, an asset allocation fund orbalanced fund; 15 basis points for a fixed-income fund; and5 basis points for an index fund. UBS Asset Management(US) Inc. does not make these payments on accountsholding Class Y shares for employee or employee-relatedclients. The one-time finder’s fee is calculated on the date ofpurchase and may be paid in four equal installments overthe first 12 months of ownership. UBS Asset Management(US) Inc. reserves the right to suspend these payments atany time in its sole discretion. We pay a portion of thesepayments to the Financial Advisor originating the sale.These payments may create a financial incentive for ourbrokers to recommend Class Y shares of UBS proprietaryfunds over non-proprietary products.4 of 7

Finder’s fees (for Legacy Transactions only). In addition,our Financial Advisors may also receive “DealerConcessions” or “Finder’s Fees” from certain mutualfund companies as described in the fund’s Prospectus orStatement of Additional Information from certain mutualfund companies. The Finder's Fee subjects a client to aholding period and, if sold prior to the end of that period,a CDSC will be assessed to the client on the amount of thesale. Such fees may be up to 1% of sales of a particularmutual fund. Generally, these finder’s fees offset otherfees payable to UBS Financial Services Inc. by the clientpurchasing the particular mutual fund.Non-cash compensation. In addition to the paymentsdescribed above, from time to time, mutual funddistributors and/or advisors will reimburse UBS FinancialServices Inc. for expenses we incur in connection withcertain training and educational meetings, conferencesor seminars. Also, in the ordinary course of business,our Financial Advisors may receive promotional items,meals or entertainment, or other similar “non-cash”compensation from representatives of the mutual fundcompanies with whom we do business.Risk considerationsAs with any other investment, an investment in amutual fund carries risks which are disclosed in eachfund’s prospectus. This section is intended to providean overview of risks commonly found in mutual fundinvestments. Please note that this overview is not meantto be exhaustive and some of these risks may not applyto all mutual funds. Investors should carefully read thefund’s prospectus before making any investment anddiscuss any questions with their Financial Advisor.Portfolio Risk. The perfo

Some mutual fund families also charge a redemption fee (typically 1.00% to 2.00%) if you redeem shares shortly after purchasing them, to discourage short-term trading. See the mutual fund’s prospectus for details. Why share classes matter A mutual fund may offer different types, or classes,

Related Documents:

18 Reliance Mutual Fund ELSS Schemes Reliance Tax Saver Fund 19 SBI Mutual Fund ELSS Schemes SBI Magnum Tax Gain Scheme 1993 20 Sundaram Mutual Fund ELSS Schemes Sundaram Diversified Equity 21 Tata Mutual Fund ELSS Schemes Tata India Tax Savings Fund 22 UTI Mutual Fund ELSS Schemes UT

Evaluating Pakistan's Mutual Fund Performance Alam & Qadar Journal of Managerial Sciences 174 Volume X Number 1 investors to invest in mutual Fund as it is considered low risk and safer investment. Pakistan holds around 1.4 % assets of Mutual Fund of the world total Mutual fund assets (Bhatti et al, 2015). Pakistan Mutual fund

Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores

a mutual fund through a financial professional, ask that person to explain all the charges that may apply to your investment in the fund. Mutual Fund Fee Table. A mutual fund is required to disclose its shareholder fees and operating expenses in the form of a standardized fee . table in its prospectus. In the fee table, under the heading of “File Size: 446KB

mutual fund shares. A comprehensive example, with filled-in forms, appears at the end of the publication. In this publication, the term “mutual fund” means a mutual fund or other regulated invest-Get forms and other information ment company. faster and easier by: Mutual fund.A mutual fund

performance of diversified large cap fund and sectoral fund in Reliance mutual fund. To compare the diversified large cap fund with sectoral fund in Reliance mutual fund Methodology: The methodology adopted was Non- Probabilistic method, Judgmental Sampling as only Large Cap fund and sectoral Mutual Fund schemes are selected for

CIBC Balanced Fund . CIBC Dividend Income Fund. 3. CIBC Dividend Growth Fund. 3. CIBC Canadian Equity Fund. 3. CIBC Canadian Equity Value Fund. 3. CIBC Canadian Small-Cap Fund . CIBC U.S. Equity Fund. 3 CIBC U.S. Small Companies Fund. 3. CIBC Global Equity Fund . CIBC International Equity Fund. 3. CIBC European Equity Fund. 3. CIBC Emerging .

Architectural Graphic Standards , American Institute of Architects, Mar 30, 2007, Architecture, 1080 pages. Since 1932, the ten editions of Architectural Graphic Standards have been referred to as the "architect's bible." From site excavation to structures to roofs, this book is the. Basic construction blueprint reading , Mark W. Huth, 1980, Architecture, 131 pages. Discusses the use of .