Creation of Units for EPF Members

Update 2nd April 2008: The changes on Creation of Units Purchased was deferred until further notice.

Here’s the latest development from EPF-FMUTM.

Effective 1st April 2008, under the Investment Management Standard, the following changes are made pertaining to the Creation of Units Purchased.

1) Creation of Units
Units will only be created at the point UTMCs receive the EPF payments or other official confirmation from EPF and NOT on the day the applications for EPF withdrawals.

2) Cooling-off Period
Cooling-off period shall only commence on the date UTMCs receive payments or other offical confirmation from EPF.

What this means to you as an unit trust investor is that it’s no longer possible to time exactly at what fund price or date you are investing into the fund. This is because nobody has any idea when EPF will disburse the money from your Account 1 into your selected investment fund, since it could take from 3 weeks to probably 2 months.

Hence, it would be a good idea to first invest into a conservative or balanced fund, before switching to a higher risk fund if the market sentiment permits.

With service charges capped at 3% for all funds invested through EPF, I guess it won’t affect too much, but it’s still good to know that you can’t be timing your EPF investment in the future.

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