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From 1 July 2012, the CPF Board will subject the wrap fee charged for CPF Investment Scheme (CPFIS) investments to a maximum limit of 1% per annum.
The cap on wrap fees is intended to help members lower the costs of investing their CPF savings over the longer term. The move is another measure taken by the CPF Board as part of its efforts to progressively lower the costs of investment and improve the quality of products offered under the CPFIS since 2006. Past measures include the tightening of admission criteria for new funds and the setting of fee caps on sales charges and fund expense ratios (see Background).
A wrap fee is a regular charge paid to financial advisers for providing bundled investment services, such as advisory, brokerage and administrative services. Also known as an ongoing fee, the wrap fee is typically levied monthly or quarterly by liquidating a small portion of the investment. Currently, CPF members who maintain wrap accounts for their CPFIS unit trust investments are charged a wrap fee of up to 1.5% per annum by their financial advisers.
The CPF Board urges members who wish to invest their CPF savings for potentially higher returns to do so prudently and to scrutinise the total cost of investment as high costs may potentially erode investment returns significantly over the long term.
A copy of the FAQ is attached. |