How will CPF investors benefit from the reduced Total Expense Ratio (TER) caps?
Expenses on investment have a significant impact on returns. Hence, reducing Total Expense Ratio caps will lower the expenses that CPF investors have to bear and increase a fund's per-unit net asset value. This will enable CPF members who have invested in the fund to accumulate their retirement savings faster.
The following example illustrates the impact of expense ratio:
Amount invested: $10,000 over 30 years, with annual return of 5%
1.
Total expense ratio of the Fund decreases from 1.95% to 1.75%
Savings =
$1,475 (or 6% more in his retirement savings)
| |
Expense Ratio of 1.95%
|
Expense Ratio of 1.75%
|
|
Net investment value after 30 years
|
$24,629
|
$26,104
|
|
Savings
|
$1,475
|
1 Assumes no front end load
