What unit trust to invest in?

[yeokiwi]

I'm not so sure about this but assuming the total market value of the stocks held already far exceeds the 35% limit, wouldn't selling and buying back reduce the total market value of the stocks held?

Yes, this case is the reverse of what had described earlier. The purchased stocks were bought at low low price and had risen to a level that the total market valuation had exceeded the 35% limit of the total OA assets.

[ghchua]

==> BUT personally I avoid script div resulting in odd lots in CPF Inv A/c, even if I'm left only 1 share of XYZ, there is still a Qtrly servicing cost - charged on a per counter basis,

also note that CPF trans charges is lower if you buy 1 lot of a $10 share, compared to buying 20 lots of a $0.50 share.

The point on buy/sell transaction charges by CPF agent bank, I really had thought about it for quite sometime before I started my CPF Investment about more than 10 years ago. But the point is that to accumulate the amount to buy 1 lot of a $10 share, it really takes a lot of time due to the CPF stock investment limit and also due to the fact that there is a cap on CPF contribution every month. Therefore, the opportunity cost is huge when idle cash is sitting around just to wait for CPF Stock investment limit to reach $10k. Therefore, I still buy small cap stocks for my CPF Investment Account. But I try not to buy and sell often and therefore transaction cost is minimal.

For quarterly servicing charges, as long as the dividend from all my CPF Investment stocks can cover the cost, I really don't bother about limiting the number of counters. Because I have always used the diversification method of investment and therefore I don't want to change my style just for the quarterly charges. For unit trusts, I am using CPF-IA so it is ok as they consider one IA administrator as one "counter" no matter how many unit trusts you hold under the IA administrator.

[Vseeker]

==> BUT personally I avoid script div resulting in odd lots in CPF Inv A/c, even if I'm left only 1 share of XYZ, there is still a Qtrly servicing cost - charged on a per counter basis,

also note that CPF trans charges is lower if you buy 1 lot of a $10 share, compared to buying 20 lots of a $0.50 share.

The point on buy/sell transaction charges by CPF agent bank, I really had thought about it for quite sometime before I started my CPF Investment about more than 10 years ago. But the point is that to accumulate the amount to buy 1 lot of a $10 share, it really takes a lot of time due to the CPF stock investment limit and also due to the fact that there is a cap on CPF contribution every month. Therefore, the opportunity cost is huge when idle cash is sitting around just to wait for CPF Stock investment limit to reach $10k. Therefore, I still buy small cap stocks for my CPF Investment Account. But I try not to buy and sell often and therefore transaction cost is minimal.

For quarterly servicing charges, as long as the dividend from all my CPF Investment stocks can cover the cost, I really don't bother about limiting the number of counters. Because I have always used the diversification method of investment and therefore I don't want to change my style just for the quarterly charges. For unit trusts, I am using CPF-IA so it is ok as they consider one IA administrator as one "counter" no matter how many unit trusts you hold under the IA administrator.

guess its different stroke for different folks...
my priority is kept CPF for the big move, during extreme depressed period,
then do the necessary to max-up Direct Stk Limit and do a major load/reload-up with a small number of core stocks,
further activities (average down) will be more limited to investing beyond "Direct Stk Limit" and so limited more to ETFs which allow up to 100% of OA. (i do not find a need for UTs)

for less core ideas that may see more frequent buy/sells, better to use Cash A/c instead, this will lower your trans costs,
and for Cash portion, odd lots actually offer advantages esp when applying for excess RTs
with CPF Inv A/c... RTs application incur additional admin charges and except for rounding to std boardlot (everyone get it first),
for further allotment of Excess RTs : generally application via CPF-Inv-A/cs seem to yield a much poorer outcome... compared to CASH application
I also not sure why, but my experience over the years quite consistently give such a feedback

[ghchua]

guess its different stroke for different folks...
my priority is kept CPF for the big move, during extreme depressed period,
then do the necessary to max-up Direct Stk Limit and do a major load/reload-up with a small number of core stocks,
further activities (average down) will be more limited to investing beyond "Direct Stk Limit" and so limited more to ETFs which allow up to 100% of OA. (i do not find a need for UTs)

for less core ideas that may see more frequent buy/sells, better to use Cash A/c instead, this will lower your trans costs,
and for Cash portion, odd lots actually offer advantages esp when applying for excess RTs
with CPF Inv A/c... RTs application incur additional admin charges and except for rounding to std boardlot (everyone get it first),
for further allotment of Excess RTs : generally application via CPF-Inv-A/cs seem to yield a much poorer outcome... compared to CASH application
I also not sure why, but my experience over the years quite consistently give such a feedback

I do invest in Streetracks STI ETF using CPF OA funds but the choices available are quite limited. Besides the Gold ETF and the S'pore focused ETFs, not much choices out there. UTs have more choices in terms of geography and sector coverage. I select those UTs that have lower expense ratio to minimize costs. Also, with UTs, you can invest with small amounts of a few hundred dollars every time and there is no brokerage charges. Sales charge for UTs had came down through the years and if you use online platforms, the sales charge can be as low as 0%.

My experience in applying for excess rights shares using CPF Investment Account is quite ok. But since the agent bank charges you transaction costs even if the excess rights application is unsuccessful, therefore one should not apply for so much excess rights shares if he thinks that he will not be able to get a lot of excess shares. The funny thing is that CPF Investment Account don't allow you to use CPF-OA funds to apply for rights warrants (unless it comes free with the rights shares), so therefore you have to make your own arrangement to apply through CPF agent bank using cash and then ask them to transfer the rights warrants to your CDP account after the rights issue closes. I did that for Viz Branz and Old Chang Kee rights warrants issues using my CPF Investment Account and transfer those warrants back to my CDP Account after application through CPF agent bank.

Frankly speaking, I don't really like to apply for rights issues using CPF Investment Account because the reaction time is always quite short. Their closing date is about one week earlier than the official rights issue closing date. If you suddenly find that your CPF stock investment limit is not enough to apply, you might not have time to do "reloading".

And yes, you can sell off your rights entitlements in your CPF Investment Account if you do not wish to apply for those rights issues. Again, the rights will only trade for around one week and you have a short period to do something.

[Vseeker]

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.... The funny thing is that CPF Investment Account don't allow you to use CPF-OA funds to apply for rights warrants (unless it comes free with the rights shares), so therefore you have to make your own arrangement to apply through CPF agent bank using cash and then ask them to transfer the rights warrants to your CDP account after the rights issue closes. I did that for Viz Branz and Old Chang Kee rights warrants issues using my CPF Investment Account and transfer those warrants back to my CDP Account after application through CPF agent bank.

Frankly speaking, I don't really like to apply for rights issues using CPF Investment Account because the reaction time is always quite short. Their closing date is about one week earlier than the official rights issue closing date. If you suddenly find that your CPF stock investment limit is not enough to apply, you might not have time to do "reloading".

And yes, you can sell off your rights entitlements in your CPF Investment Account if you do not wish to apply for those rights issues. Again, the rights will only trade for around one week and you have a short period to do something.

Oh those RTs are quite some years ago: Viz's Rts Wrts dated back to Dec2007, while OldChangKee's are in 2010.
so if you sell those npRs outright, proceeds go back into CPF Inv A/c
BUT if you subscribe for it using cash, you get to keep wrts in CDP, meaning you effectively get to pocket the "values of the npRs" !!
=> so for deeply discounted RTs Wrts, some will find this an interesting wormhole !! if they have not yet plugged it.

Guess we can both agree that using CPF funds for RTs is much less productive, timeline is shorter, also less viable to top-up/sell-down your npRs to preferred sizings...inaddition to generally highly trans+admin costs... cheers !

[HitandRun]

Incidentally, I realised that a "back-door" way of increasing the CPF portion that can be invested in stocks is via opting for scrip dividend instead of cash .....

[ghchua]

Incidentally, I realised that a "back-door" way of increasing the CPF portion that can be invested in stocks is via opting for scrip dividend instead of cash .....

I almost always opted for scrip dividends for my stocks in my CPF Investment Account as there is no transaction charges. It can also lower down your unit cost of the stock since there is no additional investment and your number of shares held is larger after the scrip dividend, resulting in lower unit cost.