Stanlib has changed the rules of its money market unit trust fund to discourage investors from making frequent deposits into the fund or from withdrawing small amounts.
As of October 1, investors in the Standard Bank Money Market Fund will be charged an initial fee of 0.25 percent on any deposits of less than R10 000. All debit orders will attract an initial fee of 0.4 percent.
You will also not be able to deposit or withdraw less than R2 000 from the fund. If you request a withdrawal when your balance in the fund is less than R2 000, all the money in your fund will be paid to you and your account will be closed.
The minimum lump-sum investment in the fund remains R25 000 and the minimum monthly debit order is still R2 000. The annual fee remains at 0.57 percent (including VAT).
Anthony Katakuzinos, Stanlib's service director, says Stanlib did not want to introduce across-the-board fee increases on its money market fund in order to cover the costs incurred as a result of frequent low-value transactions. Nor did it want to stop people from using the fund to invest small amounts.
But, Katakuzinos says, investors in the fund who deposit or withdraw small amounts, will now have to pay a small fee to do so. The interest earnings on such an account are still good relative to a savings account, he says.
Trurman Zuma, Stanlib's head of unit trusts, says investors in the money market fund responsible for just one percent of the fund's value now account for more than 15 percent of the transaction volumes as a result of their low-value, high-frequency transactions.
"Daily inflows and outflows impact on the fund manager's ability to out-perform the three-month deposit rate objective," Zuma says.
The Standard Bank Money Market Fund can be accessed in all Standard Bank branches and ATMs, so it is understandable that some people have used the product as a transactional banking facility, Zuma says. The new rules are designed to ensure that the fund retains its appropriate place as an investment vehicle for cash assets, he adds.
Investors were notified of the rule changes three months ago.
Most money market funds do not have initial fees, but more funds are introducing flat fees for all investors.
Bank money market accounts do not charge initial fees, but have different charges for transactions and may even limit the number and type of transactions you can do from the account.