PETALING JAYA: The Employees Provident Fund has launched an investment platform called i-Invest by which contributors can invest in a range of unit trusts, but a financial planner has questioned the fees being charged, and the risks that EPF members would take.
While i-Invest appears to be an attractive prospect for those who want more say over their savings, EPF members might expose themselves to the risk of poor returns from under-performing fund managers.
The EPF says a sales charge of up to 0.5% will be imposed, and points out that the fee is lower than the 3% charged by other agents.
However, veteran financial planner Robert Foo says EPF members should not have to pay the sales charge at all because the fund managers now stand to profit more than the EPF would, by having access to the millions of active EPF contributors.
Foo says EPF members would not only pay 0.5% in sales charge, but also up to 1.5% management fees charged by the fund managers, he said. “Some global funds charge only 1% in management fees.”
“This is ridiculous as it is the fund management institutions who need EPF and its contributors, not the other way around.”
He said EPF should either abolish the percentage sales charge in favour of a fixed fee such as RM15 sales charge or force the fund managers to take a lower percentage in annual management fees.
Another potential problem was that some of the fund managers were unable to beat EPF’s own returns over a three-year span.
“So why is EPF approving funds when they cannot outperform EPF?”
He said EPF should focus on growing the people’s funds rather than allowing contributors to put their money in funds which may not earn them as much.
However, EPF chief executive Tunku Alizakri Alias said the initial sales charge is capped at 0.5% and fund managers could choose to lower the charge.
He said that since i-Invest was launched in mid-August some fund managers had not imposed the sales charge.
The 0.5% cap was already a significant reduction from the 3% charged by other agents, and significantly lower than 5%-6% for cash investments.
To the question of under-performing fund management institutions, Tunku Alizakri said the EPF wished to allow members to make investment choices in over 390 funds. They could also only withdraw an amount above the savings threshold set by EPF.
“Members should do proper research and understand what their investment goals are before making such investments,” he said.