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The amount of trust property retained is not a fee
Now let’s take a look at the cancellation fees. “Amount of trust property retained“is.
Basically, investment trusts charge a purchase fee when purchasing, but there are almost no “cancellation fees”. As a few exceptions, there are some public and corporate bond investment trusts called long-term bond investment trusts that charge cancellation fees.
By the way, the fund has become a completely unpopular product now because the return has become so low that it can hardly be expected due to the prolonged period of ultra-low interest rates.
At the moment, this type of investment trust is the only one that charges a cancellation fee, but if you say that, there are quite a few funds that charge a fee called “retained trust property” when you cancel, but I think you will get an objection. is.
Certainly, there is a fee called “Trust Property Retained Amount” as a fee for cancellation, but strictly speaking, the trust property retained amount is not a fee. All fees such as purchase fees and cancellation fees are received by the selling financial institution. In other words, the structure is such that the investment trust holder loses money and the selling financial institution gains.
On the contraryThe amount of trust property retained is not received by the selling financial institution。
If you cancel the mutual fund, the trust property retention amount you paid at that time will remain with the investor who continues to hold the mutual fund after you cancel.
The cost required to convert the trust property into cash is
borne by fund holders
Let’s be a little more specific.
I am trying to cancel an investment trust you hold. In fact, I placed a cancellation order and it was executed.
The selling financial institution sends an order to the investment trust management company, saying, “Please break down 100 units of this investment trust.” Then, the investment trust management company will sell some of the stocks and bonds included in the investment trust on the market and make the cash necessary to cancel 100 units.
When selling stocks and bonds incorporated in an investment trust, the investment trust management company issues the order to the trust bank. Naturally, the trust bank then connects the sale order received from the investment trust management company to the securities company, but a certain amount of transaction fee is incurred here.
The question is who will pay for that fee.
In a mutual fund, the costs incurred in buying and selling the invested assets are to be paid out of the trust assets. In other words, when an investment trust is canceled, the costs necessary to cash out part of the trust assets will be borne by the current fund holders, not by the investor who requested the cancellation. It’s going to be.
Therefore, the system of the amount of trust assets retained was established so that those who leave the investment trust should bear the cost of canceling the investment trust.
The amount of trust property retained is
Useful system
The amount held in trust is not received by the selling financial institution. The amount collected from the former investor who canceled the investment trust is left in the trust property of the investment trust.
So, of course, you will pay when you cancel the investment trust, but while you own the investment trust, you will also receive benefits from other people canceling the investment trust, so it doesn’t matter if it is advantageous or disadvantageous. No, you could call it a neutral factor.
Nonetheless, from a superficial perspective, it seems to be true that investors feel that investment trusts are like “costs,” and this is acting as a force to curb the easy redemption of investment trusts.
The rate of the amount retained in trust is usually extremely low, around 0.1% to 0.3%, but this is probably because no one wants to bear the burden once they become aware of its existence. Some investment trusts have 0% of the trust property retained.
Therefore, it can be said that this represents the philosophy or stance of the investment trust management company that manages investment trusts toward investors and investment trusts.
The amount of trust property retained is shared by both parties, and is rather a useful mechanism for promoting long-term holding.That’s what I think.
Chairman and CEO of Saison Asset Management
Vice Chairman, The Investment Trusts Association, Japan; Director, The Saison Foundation
Graduated from Meiji University School of Commerce in 1987 and joined Credit Saison. In 2006, he founded Saison Asset Management. Current position since June 2020. Propose long-term investment to steadily increase assets. He has managed two internationally distributed investment trusts for over 15 years and supports the long-term asset formation of individuals. He has won the “R&I Fund Award” Grand Prize for objective quantitative evaluation for 9 consecutive years. The number of accounts opened by 160,000 people exceeded 500 billion yen in assets under custody.
in major publications“Select the latest investment trust from these 9”“Buy an investment trust like this”(above, Diamond Co.) and many others.