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Sell cost of an investment trust
Posted: Mon Jul 12, 2021 4:10 am
by Shiy60
Hi everyone,
New here and the Forum is great.
I have a question involving investment trusts in Japan I hope somebody may answer.
If you own an investment trust (through Rakuten or SBI for instance), what is the fee/cost when you decide to sell it? I have tried to find this information on their websites but cannot find it. Is it charged a certain percentage or do they withhold (for example, 5%) of the total value of your trust? Also, is their a lockdown period - a year or up to 20+ years for example before you can sell? I am looking at the standard trust like emaxis or slims, nothing exotic.
Not really sure about this as I am looking at ETFs or trusts and the trust cost of selling if need be.
Thanks!
Re: Sell cost of an investment trust
Posted: Mon Jul 12, 2021 5:10 am
by Kanto
Will these funds be in a normal-taxable (Specific) account? Or in a Nisa or iDeco?
1. Tax, if you made a profit in a taxable account you will need to pay 20.15% tax. (15% of this can be avoided if you made a profit of less than 20万, and you file your own tax return.
2. Fees. -> Fees are usually calculated annually and are very different depending on the fund you selected.
3. Some funds may levy a small fee upon sale. However, I do not think this is common for low-cost funds.
https://money.rakuten.co.jp/woman/arti ... icle_0031/
Re: Sell cost of an investment trust
Posted: Mon Jul 12, 2021 2:27 pm
by mighty58
The fee upon sale in Japanese is called "信託財産留保額". This is one of the standard "specs" that is usually listed front and center on the main page of a fund listing, right alongside other fees like the management fee. For most of the emaxis series of index funds, this fee is zero, but some have up to 0.3% so you'll need to check what you own. The Emaxis SLIM series of funds are all zero.
As for a lockup period, there is none. You are free to buy and sell at will. Note, of course, that you will be taxed 20% of your gains as capital gains tax at the time of sale.
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 12:10 am
by Shiy60
Thank you very much for the feedback about where to find the cost and getting a better picture of how the total costs work.
I was looking at the buy-hold vs. rotation strategy where the rotation strategy would involve selling so this was really important to know – thanks again.
I am quite new to this, but it seems ETFs and trusts have their advantages/disadvantages for applying a rotation strategy:
ETFs – can buy/sell at market price but purchases need to be at minimum the price of 1 unit of an ETF, which can be large in some cases (depending on the ETF). The major brokers have lists of Japanese ETFs that offer free buy/sell so no extra cost there.
Trusts – can buy/sell with a set amount without a need to purchase a full unit if needed. A negative may be that the actual entry/price cannot be firmly fixed as it is not traded as a stock.
This of course does not look at taxes on gains made from selling (if profit occurs) if a rotation strategy is used.
If anyone has any thoughts about it, it would be great to hear.
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 12:41 am
by Kanto
Shiy60 wrote: ↑Tue Jul 13, 2021 12:10 am
Thank you very much for the feedback about where to find the cost and getting a better picture of how the total costs work.
I was looking at the buy-hold vs. rotation strategy where the rotation strategy would involve selling so this was really important to know – thanks again.
I am quite new to this, but it seems ETFs and trusts have their advantages/disadvantages for applying a rotation strategy:
ETFs – can buy/sell at market price but purchases need to be at minimum the price of 1 unit of an ETF, which can be large in some cases (depending on the ETF). The major brokers have lists of Japanese ETFs that offer free buy/sell so no extra cost there.
Trusts – can buy/sell with a set amount without a need to purchase a full unit if needed. A negative may be that the actual entry/price cannot be firmly fixed as it is not traded as a stock.
This of course does not look at taxes on gains made from selling (if profit occurs) if a rotation strategy is used.
If anyone has any thoughts about it, it would be great to hear.
Mutual funds, or trusts as they are known in Japan, are a betting long-term saving tool.
Mutual funds in Japan are a different, better animal than in the west. (where ETFs are usually a better option.)
They usually have (a) lower fees, (b) Reinivest their dividends, thus becoming more tax-efficient, and (c) can be bought in "yen" amounts.
They are not suited for active trading strategies, and sales and purchases take 1-3 business days to settle depending on the fund composition and other timing factors.
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 2:22 am
by RetireJapan
Shiy60 wrote: ↑Tue Jul 13, 2021 12:10 am
This of course does not look at taxes on gains made from selling (if profit occurs) if a rotation strategy is used.
If anyone has any thoughts about it, it would be great to hear.
What is a rotation strategy?
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 2:32 am
by Kanto
RetireJapan wrote: ↑Tue Jul 13, 2021 2:22 am
Shiy60 wrote: ↑Tue Jul 13, 2021 12:10 am
This of course does not look at taxes on gains made from selling (if profit occurs) if a rotation strategy is used.
If anyone has any thoughts about it, it would be great to hear.
What is a rotation strategy?
Chasing the winners basically. An example might be the reflation trading that is popular of late.
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 4:25 am
by RetireJapan
Kanto wrote: ↑Tue Jul 13, 2021 2:32 am
RetireJapan wrote: ↑Tue Jul 13, 2021 2:22 am
What is a rotation strategy?
Chasing the winners basically. An example might be the relation trading that is popular of late.
Like this?
https://www.investopedia.com/terms/s/sectorrotation.asp
So market timing, over and over again?
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 4:40 am
by Kanto
Yes, lots of reading tea leaves, pouring over analyst reports, and musing over the significance of Jerome Powell`s tie choice for the most recent Fed meeting.
Re: Sell cost of an investment trust
Posted: Tue Jul 13, 2021 5:08 am
by mighty58
Rotation is a great strategy as long as you have the foresight to make the right picks at the right time, then sell when it goes up. Rinse and repeat, make mad money, easy peasy. This guy has it down:
https://twitter.com/i/status/1350854473598558213 