Aberdeen Small Cap Fund - 2.03% charges

[Johnniey]

http://www.aberdeen-asset.co.th/doc.nsf/Lit/FactsheetThailandOpenABSM

The above has a 2.03% total expenses and a front end fee of 1%.

Is this too high or pretty normal?

Should I go for this one or stay well away from it?

I thought a large company like this would be pretty straightforward.

One good thing, Maybank don't charge anything for it(so they said) but i don't understand how they can make any money from it.

[DogNo1]

There are all kinds of concealed fees in managed funds. Check out some ETFs that have similar holdings. You'll get lower fees and no 1% upfront fee. Many US firms have now matched the low fees that Vanguard charges. Google for sector and regions specific funds, for example, international and small cap. I don't know what your brokerage is but I recommend getting the expenses down around 1% or lower. Here are a couple of references:

https://www.ishares.com/us/products/260975/ishares-enhanced-international-smallcap-etf

http://etfdb.com/etfdb-category/foreign-small-mid-cap-equities/

https://personal.vanguard.com/us/funds/snapshot?FundId=3184&FundIntExt=INT

You will notice that Vanguard's VSS has an expense ratio of 0.17%. Depending on whether you like its holdings and returns, it is an option that would give you an additional 1.86% of the fund's earnings each year. Let's hypothesize that you invest $100,000 in each fund

and they each earned 3.5% or $3,500 each year. With Aberdeen, you would get to keep 100% - 2.03% = 97.97% of $3,500 or $3,428.95. With VSS you would get to keep 100%- 0.17% = 99.93% or $3,497.55. You would be $68.60 richer every year and this is not counting

that 1% upfront fee. Over the years it adds up and that's why John Bogle of Vanguard recommends investing in no-load, low fee funds. Please look around and see if you still like the Aberdeen Fund after you examined the alternatives. Good luck!

[Oxx]

(1) Fees on Thailand funds are steep compared with more developed markets. The particular fund is a niche markets so can charge particularly richly. As a relatively small fund, the fixed charges are shared over a smaller number of units, also putting up the cost. (See also 4 below.)

(2)

Check out some ETFs that have similar holdings

There is no ETF with similar holdings that I'm aware of, namely Thailand Small Cap Equities.

(3) The fund's relative outperformance (benchmarked against the SET PR) might make this level of fees acceptable, but personally I wouldn't buy into it. For fund information (in Thai) with performance history, see http://tools.morningstarthailand.com/th/snapshot/snapshot.aspx?tab=1&Id=F000000QWM&ClientFund=0&BaseCurrencyId=THB&CurrencyId=THB&LanguageId=th-TH

(4) Maybank will receive commission back from Aberdeen to cover their costs. This also accounts in part for the relatively high charges here in Thailand.

(5) By the questions you ask, you sound as if you're inexperienced in investing in Thai funds. This fund is really only suitable for people who have already built a portfolio of more core investments. It's high risk, and really should do no more than add a bit of "spice" to one's existing investments. I'd suggest that you step back from investing straight away and read more around the subject so that you have a better understanding of what you're doing, and so possibly avoid expensive mistakes. One common mistake (perhaps what you've done here?) is look at past performance figures and picked a fund based upon their looking good. As one is often warned "past performance is no guarantee of future results".

[KittenKong]

There are all kinds of concealed fees in managed funds. Check out some ETFs that have similar holdings. You'll get lower fees and no 1% upfront fee. Many US firms have now matched the low fees that Vanguard charges. Google for sector and regions specific funds, for example, international and small cap. I don't know what your brokerage is but I recommend getting the expenses down around 1% or lower.

I also much prefer ETFs to funds, and prefer trackers to managed ones.

But there is one slightly hidden charge with ETFs that has to taken into consideration: ETFs will usually have a dealing charge when you buy/sell and will also have a spread. Funds usually have neither. Even so ETFs will usually still work out cheaper, especially if you go for the ones with very low fees that you mention. Also most brokers (in the UK) will charge a holding fee for funds but fewer charge such a fee for ETFs/shares (though some do, and they should be avoided).

[Pinot]

This is a small mutual fund that hasn't performed well with high expenses. I see it listed as redemptions only.

It's not worth investing a single baht in. Why would anyone want to invest in it? Lack of choices?

You might look into becoming an International customer of Schwab. Far better choices from Schwab's own ETFs with expense charges of under .1%. Pull money out of your account with an ATM card that refunds all fees.

I suggest low volatility index funds such as SPLV, not the dog you're considering.

[Oxx]

This is a small mutual fund that hasn't performed well with high expenses. I see it listed as redemptions only.

Are you looking at the right fund? Check the Morningstar link I gave above and you'll see:

It has outperformed its benchmark in each of the last 5 calendar years by: 7.92%, 18.34%, 9.84%, 4.47% and 12.72% (2011-2015 respectively).

It has a 5 year annualised total return after charges of 13.2%, and a similar 10 year annualised return of 13.8%.

In my book that doesn't fall into the category "hasn't performed well".

Not sure where you're seeing it's "redemptions only". It certainly not on the Aberdeen Thailand fund factsheet http://www.aberdeen-asset.com/doc.nsf/Lit/FactsheetThailandOpenABSM

[nauseus]

I have found Aberdeen funds to be well managed and that's what you pay for really. This fund is fairly high risk but risk level has to be your personal choice. Long-term, all of the Aberdeen Thai equity funds have done very well.

[Pinot]

This is a small mutual fund that hasn't performed well with high expenses. I see it listed as redemptions only.

Are you looking at the right fund? Check the Morningstar link I gave above and you'll see:

It has outperformed its benchmark in each of the last 5 calendar years by: 7.92%, 18.34%, 9.84%, 4.47% and 12.72% (2011-2015 respectively).

It has a 5 year annualised total return after charges of 13.2%, and a similar 10 year annualised return of 13.8%.

In my book that doesn't fall into the category "hasn't performed well".

Not sure where you're seeing it's "redemptions only". It certainly not on the Aberdeen Thailand fund factsheet http://www.aberdeen-asset.com/doc.nsf/Lit/FactsheetThailandOpenABSM

I saw it as CPVCX when I looked it up. Different fund, although that is the Aberdeen Small Cap fund on the Dow or wherever it is.

My advice still stands.

[drm200]

There is no need to pay 1% up front with 2% annual charges today ... unless you want to lose your money.

You will find lots of hype around active management funds ... but the truth is that they do not outperform over the long run when their 2% annual charges are taken into account.

I personally, would avoid country specific emerging market etfs. These will get slaughtered when interest rates rise. I would argue that the good performance of the Thai etf for the last few years is due to ever lower world interest rates.

It is easy today to find funds with annual fees of less than 0.3% .... Take a look at Vanguard etf's. You can buy a Vanguard emerging market etf if you really want emerging market exposure.

I think a better investment for a nonprofessional investor is just to buy VT (vanguard world etf). This has annual expenses of 0.2% .. and tracks the world market (all regions and all company sizes). You will sleep better at night ... and over the long run you will outperform 95% of the active funds.

[Johnniey]

There is no need to pay 1% up front with 2% annual charges today ... unless you want to lose your money. You will find lots of hype around active management funds ... but the truth is that they do not outperform over the long run when their 2% annual charges are taken into account. I personally, would avoid country specific emerging market etfs. These will get slaughtered when interest rates rise. I would argue that the good performance of the Thai etf for the last few years is due to ever lower world interest rates. It is easy today to find funds with annual fees of less than 0.3% .... Take a look at Vanguard etf's. You can buy a Vanguard emerging market etf if you really want emerging market exposure. I think a better investment for a nonprofessional investor is just to buy VT (vanguard world etf). This has annual expenses of 0.2% .. and tracks the world market (all regions and all company sizes). You will sleep better at night ... and over the long run you will outperform 95% of the active funds.

I'd prefer vanguard but I can't get in with them, living in Thailand with no address anywhere else.

[DogNo1]

Vanguard has ETFs which mirror their various funds. You can buy the ETFs through many brokerages. Maybe you can use the address of a family member or close friend living in another country. I use my daughter's address in Seattle, WA for some purposes but I was able to open an account with Fidelity using my foreign address. All of my investments are profesionally managed now. There are just too many surprises that I don't anticipate so I now leave it to the pros.

[Pinot]

You can live in Thailand and be a Schwab International customer. Call them (Skype) and set up an account. All the benefits of having the regular American account except you can't buy mutual funds. (International restrictions)

ATM fees rebated with your debit card make Schwab the best choice for being your online broker.

All my money is there. They're very easy to work with.

[Oxx]

You can live in Thailand and be a Schwab International customer. Call them (Skype) and set up an account. All the benefits of having the regular American account except you can't buy mutual funds. (International restrictions)

Apart from the fact that all US income will be taxed at 15 or 30% (depends upon one's country of residence and the broker concerned - don't know which rate applies for Schwab).

For a non-American it is usually best not to invest in American stocks and ETFs for that reason. There are usually more tax efficient ETFs available with other domiciles (e.g. Ireland for most ETFs listed on the London Stock Exchange).

[Pinot]

You can live in Thailand and be a Schwab International customer. Call them (Skype) and set up an account. All the benefits of having the regular American account except you can't buy mutual funds. (International restrictions)

Apart from the fact that all US income will be taxed at 15 or 30% (depends upon one's country of residence and the broker concerned - don't know which rate applies for Schwab).

For a non-American it is usually best not to invest in American stocks and ETFs for that reason. There are usually more tax efficient ETFs available with other domiciles (e.g. Ireland for most ETFs listed on the London Stock Exchange).

Income for Americans is taxed no matter where you are in the world you invest. I don't know the implications for foreigners investing there. Having to pay some American tax would mean you're making a significant amount of money there. I don't know how Schwab handles tax implications for foreigners. For American investors outside of the US, Schwab is an excellent choice.

By the way, I don't make quite enough from investments to be taxed in the US and haven't even filed taxes in a few years because I didn't have to. I calculate the taxes every year just to make sure. Schwab makes it easy by being able to bring all the info into TurboTax.

[Oxx]

Apart from the fact that all US income will be taxed at 15 or 30% (depends upon one's country of residence and the broker concerned - don't know which rate applies for Schwab).

I don't know the implications for foreigners investing there. Having to pay some American tax would mean you're making a significant amount of money there.

I do, which is why I wrote that all US dividend income will be taxed*. And it's taxed from the very first cent.

The standard rate of taxation is 30%, but if one's country of residence has a tax agreement with the US, the rate can be reduced (usually to 15%). However, this is dependent upon the broker applying the reduced tax agreement rate. Brokers in Singapore and Hong Kong typically don't in my experience and you end up paying the 30% which is why a Luxembourg broker is typically better for US securities.

* Just to be 100% precise, this is for non-US resident, non-US citizens.

Edited July 29, 2016 by Oxx

[Johnniey]

You can live in Thailand and be a Schwab International customer. Call them (Skype) and set up an account. All the benefits of having the regular American account except you can't buy mutual funds. (International restrictions)

ATM fees rebated with your debit card make Schwab the best choice for being your online broker.

All my money is there. They're very easy to work with.

I just called them. They want a minimum of $25k to open an account, which I don't have.

I wonder if I could invest with them through Maybank.

Edited July 29, 2016 by Johnniey

[Oxx]

I wonder if I could invest with them through Maybank.

Maybank allows trading of US securities.

However, if you want proper advice, would you care to confirm (i) what you mean by "them", and (ii) whether or not you are a US citizen?

[Johnniey]

I wonder if I could invest with them through Maybank.

Maybank allows trading of US securities.

However, if you want proper advice, would you care to confirm (i) what you mean by "them", and (ii) whether or not you are a US citizen?

Thanks Oxx, your input/help is much appreciated.

i) I mean investing with Schwab's Offshore Mutual Funds or ETFs

ii) I'm British

[DogNo1]

Residents of foreign countries may not have to pay taxes on all of the income that they derive from investments in America. See this article:

http://www.investopedia.com/ask/answers/06/nonusresidenttax.asp

Also check on the tax treaty between your country of residence and the USA, whether Thailand or the UK. Depending on your income level, you may need to pay taxes in your country of residence.

It wouldn't hurt to check with Fidelity. They might open an account for under $25,000.

[Oxx]

Residents of foreign countries may not have to pay taxes on all of the income that they derive from investments in America. See this article:

Yet the article says:

"In terms of dividends, non-resident aliens face a dividend tax rate of 30% on dividends paid out by U.S. companies."

It is almost never a good idea for non-Americans to hold American securities.

For that matter, why should a non-American be taxed for investing in American companies? It's simply ludicrous to punish those who want to prop up the failing American economy.

[ExpatJ]

I would generally  never invest in a fund with more than @ 0.5% fee- plenty of ETFs available through etrade, schwab, fidelity that charge 0.1-0.3% fees.  I just opened a scwab international account - no problems.     I think its particularly important if your investment horizons are 5 years, 10 years (mine are @15 yrs ) 

[Johnniey]

I chose another one -  went to the TMB and opened an account with  their TMB SET 50 -  Total charges - 0.56% 

[Oxx]

6 hours ago, Johnniey said:

I chose another one -  went to the TMB and opened an account with  their TMB SET 50 -  Total charges - 0.56% 

 

Total charges of 0.56% would be surprisingly good for Thailand.  TMBAM's fund fact sheet, however, shows the total fees and expenses as 0.8818%.

[Johnniey]

4 hours ago, Oxx said:

 

Total charges of 0.56% would be surprisingly good for Thailand.  TMBAM's fund fact sheet, however, shows the total fees and expenses as 0.8818%.

It is the TMB SET 50 Dividend Fund.

 

I heard news from a very reliable source that an important announcement is going to happen in 2 days and the SET will be affected dramatically. Now I'm rushing out to buy gold and selling the many of my Thai stocks.

[Oxx]

1 hour ago, Johnniey said:

It is the TMB SET 50 Dividend Fund.

 

I heard news from a very reliable source that an important announcement is going to happen in 2 days and the SET will be affected dramatically. Now I'm rushing out to buy gold and selling the many of my Thai stocks.

 

I should have included a link to the TMBAM factsheet for the fund.  It's quite explicit the fees and expenses are quite a bit more than 0.56%.  Anyway, here's the link:

 

http://www.tmbam.com/pdfs/Factsheet - TB3_en.pdf

 

As for "news from a very reliable source", are you really that gullible? And if you really do have "news from a reliable source" that would be insider trading, and so illegal (not that it appears to be punished in Thailand).

[Johnniey]

I thought that's how people are successful in stock trading by knowing information others don't.

 

Gullible? 

 

http://tmbam.co.th/v6/en/mutual-fund-detail.php?f=137&accept=1

[Oxx]

20 hours ago, Johnniey said:

I thought that's how people are successful in stock trading by knowing information others don't.

 

No, that's how people end up in jail for insider trading (except in Thailand, of course).

 

Successful equity investors get their success from analysing publicly available information such as financial accounts, company announcements and news reports and making appropriate decisions to buy or sell or not.

[craigt3365]

On 7/28/2016 at 8:26 PM, Johnniey said:

I'd prefer vanguard but I can't get in with them, living in Thailand with no address anywhere else.

I just signed up with them.  Using a friends address.  And a VPN.