RetireJapan

Hello,
Let me start off saying I really appreciate the very useful information I got from reading this forum and Retire Japan website. It's an invaluable source and I hope you guys keep up, you're helping so many people, it's amazing!

Now to the question, I was browsing through the prospectus of the eMaxis Slim S&P 500 and there was a chart showing eMaxis slim going through a "mother fund" which then buys the S&P 500 stocks (at least that's what I understood). I've seen this "mother fund" term in various prospectuses that I've scanned.

Could someone explain to me what these mother funds are and does that lead to double fees?
I understand eMaxis is already probably one if not the cheapest ones in terms of fees, but just curious what is the consequence of this "mother fund" structure.

Thanks a lot!

Hi,

The mother fund structure allows asset management companies like MUFJ to run their funds more efficiently by pooling everything together. MUFJ has a lot of different funds (e.g., eMaxis, eMaxis Slim, various ideco funds). Instead of each of these funds holding stocks separately, MUFJ just runs one big fund for each of the kinds of assets people commonly invest in. So, there'll be a mother fund for Japanese stocks, another for developed market stocks, another for emerging markets, and others for REITs and bonds. Any MUFJ fund that invests in these different assets will share the same mother fund.

As for fees, I don't think you are charged twice as such. However, for any fund there are fees relating to day to day running (trading fees, auditing costs, etc) which are not included in the management fee. They are pointed out at the end of the prospectus and you have to go into the financial reports to find out exactly how much. For example, for the eMaxis slim all country fund the total cost last year was actually about 0.2%, compared to the quoted management fee of 0.114%. I wouldn't worry about it too much though as they're still probably the most competitive option out there.

Hope this helps!

Thanks a ton, very helpful!