“EPF i-Invest Online Platform: Benefits and Impact to Unit Trust Investors”, as featured in StarBiz, The Star, on 7th December 2019
“With great powers, comes great responsibility” so says one of the most thematic and often quoted lines by a well-loved character from Marvel’s Spiderman. Indeed, the latest initiative by the Employees Provident Fund (EPF) to allow its members to invest directly from their EPF funds into unit trust via the newly launched i-Invest online platform is an exciting prospect to say the least. Not only would this move offer greater convenience for members to grow their wealth, but also unparalleled access to tap into a set of diverse funds.
In fact, I would go as far as to say that this could be the game changer that the unit trust industry needs in order to reinvent itself and offer more value to investors. Let’s break down what’s in store for the readers.
Benefits to EPF Members
Firstly, with the new launch, eligible EPF members will be able to enjoy the convenience of purchasing the unit trust fund online anytime, anywhere. With only a simple click of a button, and the Internet of course, EPF members can access, analyse, monitor and transact their unit trust transactions online. This is a huge step for investors, considering that they may in the past, only buy unit trust funds from agents whom unfortunately can only sell unit trust funds from the 1 company that they represent. i-Invest, in contrast, allows its members autonomy to pick and choose the unit trust funds that is most suited and aligned with their risk profiles and best interest. As a professional who have been operating in the financial services industry for the past 20 years, EPF’s latest move frees would-be investors from any undue influences coming from unit trust agents whose intentions may not be entirely aligned with their clients’ interest.
In order to benefit EPF members, EPF has also enforced a maximum cap on online sales charge. The sales charge from the current 3% for offline traditional transactions through agents, has gone down to as low as zero to 0.5% for i-Invest. The reduction in front end sales charges means EPF members can easily breakeven, perhaps even make a profit in a short span of time. This incentive alone can be the motivation needed to switch from traditional unit trust investing via agents to using EPF’s newly launched online platform.
The Emergence of Whole Market Fund Investing
Given all the positive changes in the unit trust scene, I foresee that i-Invest will trigger the transition from a single company fund investing era to whole market fund investing era. With this, I mean that investors who have in the past been limited by what they can or cannot purchase via agents representing a single unit trust company, can now have access to shop best of breed funds across multiple unit trust companies within the whole market.
With that, one of Malaysia’s greatest unit trust myth, that a single, large and established fund house can cater to all your unit trust investing needs, and act on your best interest, is false. My apologies if I had burst your “unit trust” bubble, but the sooner you realize this the better!
The truth of the matter is, there’s no one single fund house, even if they are large fund houses and with awards to show, offer the best of breed funds in every unit trust fund category. You don’t need to take my word for it; go ahead and deploy the comparison tools provided by i-Invest to discover it for yourself.
Had you looked closer or do your research more diligently, you would discover some small, perhaps less well-known fund houses, who offer funds with better returns and lower volatility.
You’ll be surprised by what gems you can uncover especially when you are given broad access to the whole unit trust market. In fact, I believe the practice of whole market fund investing will not be limited to just using our EPF money to invest into unit trust funds. Far from it, investors who has the foresight to see the opportunities and benefits of whole market fund investing will even start applying the same practice to their unit trust investing with their cash money. When that happens, whole market fund investing will become the new norm for unit trust investors.
Beware of the Downside
As with all investments, risk-return trade-off is something that needs to be actively managed.
As you are now fully responsible for your own investment decisions, you should have at least some semblance of experience or knowledge to handle the day-to-day management and monitoring of the funds that you have picked.
They say, investing is just like gardening. You would have to actively sow different types of plants to ensure you have a variety of flowers or plants in your garden. In other words, when it comes to investing, the first rule is to ensure you have a diversified portfolio. Next, while still on the subject of gardening, replace struggling plants with new blooms. This would equate to having to sell off non-performing funds in your portfolio and committing to doing portfolio restructuring at least once a year to bring in new best of breed funds into your portfolio.
It is not to say you cannot seize the day and undertake i-Invest online platform and DIY on your own. However, the task may prove daunting. Under the new investment scheme, you would have access to a sea of potential investments from various categories, across multiple fund houses, each with its own set of offering. According to EPF official numbers, investors can tap into more than 300 funds listed on the online platform. For investors who have always relied on unit trust agents to give them ‘advice’, the thought of having access to hundreds of unit trust funds from not ONE but multiple fund houses can be quite overwhelming. It is common for investors to ask, where do I start? Which funds do I buy? When is the right time to buy?
As you would realize by now, the downside to having to DIY your own investment is that you will need to be quite hands on to monitor the funds which you have invested, and replace non-performers to keep a healthy portfolio. As far as i-Invest is concerned, you will need a certain degree of knowledge, experience and discipline to make the investment performs. There is no dedicated advisor who can help to encourage you to stay invested when market crash or suggest corrective actions according to the market’s performance. If you are one of those investors who doesn’t have the time to research, monitor and manage your investments, then perhaps it would only make sense for you to seek a Corporate Unit Trust Advisor (CUTA).
The rise of Corporate Unit Trust Advisor (CUTA)
Make no mistake, there’s a huge difference between what unit trust agents can or cannot do, compared with what a Corporate Unit Trust Advisor (CUTA) can or cannot do.
For starters, unit trust agents only represent a single unit trust fund house, where as a CUTA advisor can help investor access funds available via multiple fund houses. In other words, if you are in the game to gain better returns for your unit trust investment, you may consider working with a CUTA advisor to help you select the best of breed funds scattered over different fund houses.
Furthermore, a CUTA advisor’s widespread experience in dealing with multiple fund houses, would endow him or her with the expertise to help you monitor your diverse funds, and make suggestions to replace any under-performing funds when required. Depending on the market cycle, the CUTA advisor may even make suggestions to take profit or encourage you to stay invested to capitalise on emerging opportunities. In short, a good CUTA advisor can be of great value to you, when you are ready to practise whole market fund investing.
In closing, EPF’s timely launch to introduce i-Invest is a much-awaited milestone for the unit trust industry in Malaysia. The move is expected to bring forth many exciting benefits to the unit trust investors. So, whether you choose to go at it on your own, or with a trusted professional, best be prepared to gear up for the digital evolution that is the new dawn for unit trust investors.
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This article is featured in The Star Online too – https://www.thestar.com.my/business/business-news/2019/12/07/epf-i-invest-online-platform-benefits-and-impact-on-unit-trust-investorsBack To Article Page Get Started Today