Saturday, May 26, 2007

Enhanced Income Fund

Dear Mr Tan,

Other than NTUC Income's Flexi-cash, do you invest in any other money market funds, like DBS Enhanced Income fund? How would you compare the two?

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REPLY:

Here is an analysis done by an expert.

The DBS Enhanced Income Fund has half of its investments are outside of Singapore. This makes it partly a currency speculation fund -- and you are betting on a weakening Singapore dollar. It is riskier than a straight money market fund.

It is also actively managed, and has a rather high expense ratio of 0.46 per cent. On top of that it charges an initial sales charge of 0.2 per cent.

Because of the foreign investments, you must also pay currency conversion costs -- (which are a hidden expense that is deducted directly from the fund's yield and not included in the expense ratio).
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3 comments:

Anonymous said...

Dear Mr Tan,

I invested with DBS Enhanced with Dillardex and my returns from 18 April to 24 May is 0.5%. I do not have to pay sales charge and the returns seem pretty good! Moreover I can sell anytime and my money will be deposited in the bank in 8 days.

The NTUC money market charges a one time administration fee on $50 and the returns is somewhat lower than DBS.

I enjoy reading your blog and have told some of my friends about it.

Kind Regards

May 26, 2007 8:43 PM
Anonymous said...

Mr Tan,

You seem reluctant to show your readers the full picture. Of course NTUC Income's funds will looks good if you only compare them to the charges from normal banks or other insurance companies. There are better deals available online through fundsupermart or dollardex that cost much less than what NTUC Income has to offer.

May 27, 2007 7:47 PM
Anonymous said...

Yes, you certainly pay lower sale charges through online fund distributors. But the comparison is only fair if NTUC Income operates in the same way.

(NTUC Income might need higher operating costs to serve customers who don't transact online.)

And yes, DBS Enchanced Income fund is a pretty good fund which gives high return while providing fairly good liquidity. But doing well doesn't mean that there's no risk.

(If one had drunk and driven, and eventually reached the destination safely, it didn't mean there's no risk.)

--anonymous coward

May 28, 2007 12:14 AM

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