Why Singapore retail funds' costs remain stubbornly high

In distributor-skewed market, lower-cost funds face uphill climb to raise assets

A 2017 file picture of the Central Provident Fund Service Centre in Maxwell. The distributor-skewed dynamic raises questions about how the CPF's plans for the Lifetime Retirement Investment Scheme (LRIS) would take off because there may be little to
A 2017 file picture of the Central Provident Fund Service Centre in Maxwell. The distributor-skewed dynamic raises questions about how the CPF's plans for the Lifetime Retirement Investment Scheme (LRIS) would take off because there may be little to pay distributors, if at all. LRIS, proposed in 2016, is envisioned as a low-cost option invested mainly in passive diversified instruments.PHOTO: LIANHE ZAOBAO

Investment costs among Singapore's retail funds remain stubbornly high, exacting a substantial toll in terms of net returns for investors.

But in a funds landscape dominated by distributors such as banks and insurance companies, the overall picture is unlikely to change much - unless regulation intervenes, as it has across markets in Britain, Australia and Europe, which have taken a hard line on "inducements" to fund sales.

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A version of this article appeared in the print edition of The Sunday Times on August 11, 2019, with the headline 'Why Singapore retail funds' costs remain stubbornly high'. Subscribe