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Accredited Investor

An Accredited Investor is an individual:

1. Whose net personal assets exceed in value SGD 2 million (or it's equivalent in a foreign currency) with value of his/her primary residence capped at SGD 1 million, or

2. Whose financial assets (net of any related liabilities) exceed in value SGD 1 million (or it's equivalent in a foreign currency), or

3. Whose income in the preceding 12 months is not less than SGD 300,000 (or it's equivalent in a foreign currency)

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Kristal Freedom Account Fees and Charges

If account value is less than USD 50,000 -

NIL (if 25 or less client-initiated trade per calendar year; every SIP initiation is considered as 1 buy), else Custody and Asset Operating Fees at actuals charged to the Account by the Partner broker (i.e. Saxo Capital Markets).

If account value is more than USD 50,000 -

0.3% of account value charge is applicable, computed monthly on calendar month-end account value, charged quarterly and Custody and Asset Operating Fees at actuals charged to the Account by the Partner broker (i.e. Saxo Capital Markets).

Kristal Freedom Account Fund Movement Fee

Fee Item Kristal Freedom Account
Funds Deposit
USD Upto USD 25
SGD NIL
HKD NIL
AUD Upto USD 250
EUR Upto USD 250
GBP Upto USD 250
Deposit Threshold NIL (USD 1000 recommended)
Funds Withdrawal
USD Upto USD 50
SGD NIL
HKD NIL

FX Conversion

Where required shall be executed at 0.05% from the Market Rate. The Market Rate available to Kristal.AI is the Rate made available by the relevant brokers.

Note -

If Sender indicates Sender charges = 0, sending cost will be deducted (in addition to the above) by the receiving bank and paid back to the Sending bank and/or its Correspondent bank as applicable.

Additional charges levied by Clients’ bank may apply on transfers and FX conversions done in Clients’ bank account.

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Kristal Private Wealth Account Fees and Charges

Non Fund Kristal account value if less than USD 50,000 -

Custody and Brokerage at actuals, charged to the Account by the Broker (i.e. Saxo Capital, Interactive Brokers).

Non Fund Kristal Account value if greater than USD 50,000 -

- 0.30%p.a. of A/C value > US $50,000, computed MONTHLY on calendar month-end account value, charged QUARTERLY.

- Custody and Brokerage at actuals, charged to the Account by the Broker (i.e. Saxo Capital, Interactive Brokers).

Fund Kristal fee in accordance with Factsheet.

Fee Item Kristal Private Wealth Account
Funds Deposit
USD Upto USD 50
SGD NIL
HKD N/A
AUD Upto USD 250
EUR Upto USD 250
GBP Upto USD 250
Deposit Threshold NIL (USD 25000 recommended)
Funds Withdrawal
USD Upto USD 50
SGD NIL
HKD NIL

FX Conversion

Where required shall be executed at 0.05% from the Market Rate. The Market Rate available to Kristal.AI is the Rate made available by the relevant brokers.

Note -

If Sender indicates Sender charges = 0, sending cost will be deducted (in addition to the above) by the receiving bank and paid back to the Sending bank and/or its Correspondent bank as applicable.

Additional charges levied by Clients’ bank may apply on transfers and FX conversions done in Clients’ bank account.

Kristal Managed Investment Account Fees and Charges

Fixed Income account value is equal to or greater than 80% of Total account value -

0.20%p.a. of Total account value, computed MONTHLY on calendar month-end Total account value, charged QUARTERLY.

Fixed Income account value is less than 80% of Total account value -

0.50%p.a. of Total account value, charged QUARTERLY, computed MONTHLY on calendar month-end Total account value.

Brokerage Account operating and maintenance charges ADDITIONAL in accordance with your Agreement with Broker.

Money transfer and FX conversion charges in accordance with your agreement with Broker.

DISCLAIMER

This is offered only to Accredited and Institutional Investors as defined under the Securities and Futures Act, Chapter 289 of Singapore (“Act”), which broadly comprises of regulated financial institutions, large corporates, high net worth individuals and sophisticated investors.

By clicking “Proceed”, you confirm that you are an Accredited/Institutional Investor as defined under the Act and you agree to the Terms of Use for this website.

EXIT PROCEED

What is Expense Ratio?

Updated on 24 Feb 2020

Look up any ETF or investment strategy, and you are sure to see the term ‘Expense Ratio’ mentioned alongside. This is an important factor in calculating the total fees paid to your wealth manager. Learn more!

1. What is Expense Ratio?
2. Components of expense ratio
3. Types of Expense Ratio
4. Implications of Expense Ratio
5. Changes in Expense Ratio
6. Expense Ratio Limit by SEBI

What is Expense Ratio?

The most basic definition of expense ratio is that it is the annual fee that all funds or exchange-traded funds (ETFs) charge their shareholders. In other words, you can think of it as a ratio per unit cost of managing a fund. To get help you get good returns from your investment, the asset manager takes various steps to get the best possible result.

This requires expenses. The asset manager and a team of analysts come up with various formulas to detect an annual fee that the shareholders have to pay as the maintenance cost.

The process involves reallocation of your investments in the right funds, management under the AUM (assets under management) and then advertisements of the same to garner maximum attention in the market and thus improve the worth of the shares. The other aspects that are involved in this process are securities to incur the objectives of the scheme, registering and transfer, custodian, audit fees and various other legal fees.

The expense ratio depends on the size of the funds. If they are small then the expense ratio or fee is high and when the funds are higher and bigger, the expense ratio should ideally drop considerably.

Components of expense ratio

When it comes to expense ratio to be levied by mutual fund investors, the funds do it on a daily basis. However, this is not the case with other mega investors as they only get to know about the expense once every 6 months. Since expense ratio can cover up a major chunk of your returns, it is important that you know about it in depth. Generally, the expense ratio can be divided into three broad categories.

  • Management Fees – Management fees is basically the fees required to formulate a plan on how to use your investments. Such decisions require personnel with high levels of skill and experience and naturally a fee has to be paid to avail such services. In most cases, it is not more than 1% of the fund assets.
  • Administrative Fees – This is the second step of managing your funds, which includes customer support, services, information emails and all the other communication you need to have a better understanding of the running of your investments.
  • 12-1b Distribution Fees – This is the fees that is used to promote or publicize your assets to attract more traction.

All three fee structures are calculated with one year as the time period and then this amount if cut from the assets of the investment in the name of expense ratio.

Types of Expense Ratio

  • Annual Gross Expense Ratio
  • Annual Net Expense Ratio
  • Prospectus Gross Ratio
  • Prospectus Net Expense Ratio

Implications of Expense Ratio

The implications of Expense Ratio are major when it comes to higher expense ratios. The expense ratio is more when the funds or assets are not that high, leading to less profitability and the profit increase when you have larger funds. As a result, the amount associated with the expense ratio becomes more important in cases where there are moderate to lesser yields.

Another major implication of expense ratio comes when you need to differentiate between actively managed and passively managed funds. In case of an actively managed equity funds, the fund manager can create a big alpha but that is justifiable in a way because of the higher returns. However, if you find a wide divergence between the returns of your fund and index funds, then it is time for you to move on and make a switch.

Changes in Expense Ratio

To understand the changes in expense ratio, you first need to understand the difference between fixed and variable expenses. A variable expense like management fees is variable because it depends on the amount of assets. Therefore, it usually has a fixed percentage of 0.75% irrespective of the size of the assets.

However, a fixed variable like rent or an audit fee is something that has a fixed amount to be paid and therefore has varied percentages of the total asset. These two factors are the major determinants in understanding how a change occurs in expense ratio.

Expense Ratio Limit by SEBI

As per limits specified in SEBI Mutual Funds Regulations, every expense of an AMC must be managed under Regulation 52. The Total Expense Ratio (TER) should not be more than 2.5% for the first Rs. 100 Crores of average weekly total net assets, 2.25% for the next Rs. 300 crores and 2% for the next Rs 300 crore and 1.75% for the remaining AUM. The limit for debt funds is 2.25% on top of which SEBI allows all mutual funds to charge 30 basis points as an incentive to break into tier 2 areas.

An expense ratio is something that is unavoidable and therefore there is no need to think badly of it. In fact, you should just think that if you do not pay this expense ratio then it would be almost impossible for your assets to grow, hence making it a necessity rather than a liability.

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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