Unit Trust or Mutual Fund investments in Malaysia
Investment in unit trusts or mutual funds in Malaysia is one of the more popular long term investment schemes undertaken by Malaysians today. This is where one would invest a certain sum of money through a long period of time through the major banks in the country. The money is then pooled together and then they are professionally managed by the fund manager.
In most cases, major banks like Maybank, Public Bank and others would use this money and invest in various schemes before the earnings are then injected back to the members. Unit trusts are also known as Mutual Fund where this investment type has become more popular than the more conventional schemes like Fixed Deposits as it usually requires the same amount of money and takes about the same duration of years but offers better returns comparatively.
Typically, unit trusts work where they accumulate the investors’ money and then use them to invest in other lucrative and profitably markets like in shares and commodities. While this could provide one of the most secure returns, it is highly dependent on the current market and economic scenario as on a bad year, the returns could be very low. Comparatively, unit trusts are less risky than shares because you need not have to monitor the prices while investing in shares would require you to be hands-on with what and where you are investing in. in unit trusts, you can leave the worrying to the fund managers.
One of the most established and most popular unit trust managers in Malaysia is the KL Mutual Fund which is under the management of Public Bank Berhad and this is where you will be able to enter into this investment every easily. Only a small amount of money will allow you to start and they are very hassle free and easy to invest. Most notably, you only need to put aside a certain amount of money which can be as low as RM80 per month and you can then start straightaway. This amount can gradually be increased when you can afford more and after the term ends, you will be able to enjoy the profits which will be accorded to you then as well as through dividend payouts throughout the years.
This investment scheme is typically a long term investment method where it is like an insurance scheme where your money is used by the mutual fund manager over the years. The longer you keep your money there, the better the returns and if you decide to surrender the contract in a short term, you will usually not enjoy much monetary benefits. However, you will be able to have your rights and interests protected as the manager must appoint a Trustee which is independent and this is required under the Securities Commission Guidelines on Unit Trust Funds and Securities Commission (Unit Trust Scheme) Regulations 1996. Apart from that, a Company Auditor must be appointed to ensure that the funds are not mismanaged.
One of the most significant advantages of investing in unit trusts is that your money is invested into diversified areas. This means that the risks are spread out into various sectors and hence, even if there is a loss experienced, it would not affect your money in totality. This is only possible if there is a large pool of money and is not possible if you are doing it on your own unless you have a large amount of money. After all, the managers of the funds are usually financial experts who are well versed with investments. By transferring the responsibility to the professionals, you need not have to worry about documentation, monitoring of share prices and such.