What are unit trusts?
Unit trusts are a form of collective investment scheme,
which pools money from many investors who share the same financial objectives.
They are long-term investment vehicles, most suited to investors who want
potential long-term capital growth and are able to tolerate volatile short-term
fluctuations in prices.
Unit trusts are managed by professional Fund Managers in:
· Securities of
companies listed in Bursa Malaysia
· Bonds and other
fixed interest securities
· Cash and money
market instruments
A unit trust scheme is created out of a deed which
constitutes a contractual agreement governing the tripartite relationship
between the:
· Manager - Often
referred to as the management company, which is the promoter of the fund and
responsible for the day-to-day operations and its overall investment
performance.
· Unit Holders -
Investors of the funds. The ownership of a unit trust is expressed in the form
of units. Depending on the amount invested, a proportionate share of the fund
will be allocated to the investor. The returns, commonly known as income
distribution, are distributed annually or biannually depending on the
performance of the funds.
· Trustee - Appointed
to act as the custodian for all assets of the fund, and to ensure that the
Manager adheres strictly to the provisions of the Deed.
Benefits
· True diversification: In unit trusts, diversification helps in the 'spreading
of risk' which essentially reduces volatility of returns. Our funds are an
alternative investment option with lesser risks than investing directly in the
stock market
· Professional management: Funds are managed by full-time professional Fund
Managers, equipped with ample resources and pertinent expertise
· Liquidity: You may convert your investment into cash quickly or
whenever the need arises
· Affordability: Compared to a direct investment in securities, an
initial investment in unit trusts can start from as little as RM1,000.
Risk or Reward?
As a rule, unit trust funds work best as long-term
investments. By understanding the nature of each fund and evaluating your own
risk tolerance, you can select funds that provide either a regular income
stream or capital growth, or a combination of the both.
Funds investing in stocks are relatively associated with a
higher risk or volatility, with the anticipation of a higher growth potential.
Fixed-income funds normally yield lower returns, due to the lower volatility
and risk elements of the funds.
Valuation of Units
The valuation of units is based on the Net Asset Value
(NAV) of the fund and is calculated at the close of each business day. When you
invest in the fund you will be issued with units. These units represent your
ownership of the fund. The number of units that you will receive is determined
by the selling price of the units, which is the net asset value of the unit
plus the service charge.
Customising your unit trust portfolio
By spreading your investment amongst different trust
funds, you can create a unique unit trust portfolio that controls risks and
generates potential returns. The first step towards this is to determine your
financial goals. Here are some questions to get you started:
· What is your
investment horizon?
· What is your level
of risk temperament?
· Given your level of
risk tolerance, what sort of returns are you looking for?
· Do you want your
returns to be in the form of capital growth or income?
Also, should your needs change over time, you can adjust
the portfolio simply by switching funds.
For further information, please call/text :
Ikhwan Nizam bin Abdul Rahim
Tel : 0162629696 / 0197140817
Email : ikhwannizam.ar@gmail.com
