Unit trusts are considered good instruments for medium- to long-term financial plans. However, it is important that you choose the appropriate fund depending on your risk profile and investment objectives. Listed here are the types of unit trusts currently available in the market:

Income funds: Invest in fixed income securities and huge dividend-yielding shares with the view to pay out most of the returns. Suitable for investors seeking income and some level of growth at low risks.

Capital growth funds: Invest primarily in shares with the view to maximise capital growth over the long-term (i.e. through a higher unit price). Appeal to high-risk investors keen on capital accumulation.

Aggressive growth funds: Similar to capital growth funds but with investments in aggressive, fast track shares that promise high returns - with higher risk. Generally suitable for high-risk investors.

Balanced funds: Have three objectives: income, moderate capital appreciation and capital preservation. Invest across a broad spread of asset categories including shares, fixed income securities and cash. Well-diversified and suitable for investors looking for reasonably safe investments where the risks are lower and which produce average returns.

Index funds: Invest in a basket of shares that tracks a selected stock market index.
Bond funds: Invest only in fixed income securities such as bonds and short-term money-market instruments. All bond funds are subject to interest rate risk and most to credit or default risk of the issuers.

Money market funds: Invest only in short-term money market instruments such as treasury bills, negotiable certificates of deposit and bankers acceptances, with maturity of less than 90 days. Since the funds invest in money market instruments, the returns, while small, are generally more attractive compared to saving deposits. Good for investors looking for liquidity, and perhaps a temporary place to park their funds before they commit to other funds.

Islamic funds: Managed according to Syariah principles; invest in shares and fixed income securities which excludes non-halal shares and interest-bearing money market instruments.

State funds: Managed by the state development corporations for investors from the respective states.