Since 2003, unit trusts in SA all trade on a single daily Net Asset Value (NAV) price. The fund management companies add a further initial fee when units are bought. For an equity fund this will generally be around 5% to retail investors, and 0.25% to Linked Investment Service Providers (LISPs) such as Equinox. Most LISPs will add a further fee of around 5% (for equity funds, less for other funds).

Fund Management companies and LISPs also charge ongoing management fees. These were fixed prior to 1998, but may now be changed by the management company as long as due notice is given to investors. The complexity of managing changing fees has led to the introduction of different classes for many funds, each with it's own annual fee.(see below.)

Please refer to Unit Trust Pricing in our Fees section for more details on how the annual fees are structured - and how Equinox can save you big money here!

The industry codes of conduct for Unit Trust Companies and LISPs prohibit the charging of fees for withdrawals - so, when selling a unit trust, there should be no further charges and you will receive the intrinsic value of the portfolio.

In April 2000 unit trusts management companies were permitted to introduce multiple classes of unit trusts. This allowed them to vary annual fees levied to different clients for the same fund.

There are two main reasons behind this rather confusing state of affairs:
1. Historically, all unit trust prices were regulated – maximum initial fee allowed was 6.5% and the maximum annual fee 1%. In 1998, fee restrictions were lifted, to "bring the South African unit trust industry in line with international practice". Management companies could now increase their charges and introduce new types of fee structures.
2. The Financial Services Board, however, refused to allow existing unit trust clients to be prejudiced by a unilateral fee increase, so the management companies instigated the multiple class system, enabling them to increase fees to new clients. Practically this meant having to 'close' the fund to new investors, and open a mirror image fund, where new investors could buy the same units at a new higher price.

Broadly, the classes can be defined as follows: