Since the liberalisation of Bank Negara Malaysia’s foreign exchange administration rules on 1 April 2005, Malaysia has seen the launch of a number of global funds by several unit trust management companies. Malaysian investors now have the opportunity to invest in securities traded on foreign markets through investment vehicles in the form of global funds. In this article, the Securities Industry Development Centre (SIDC) will give an overview of what this fund is all about, so that investors would have a better idea of a global fund when approached by an agent.
| Q: |
How do I start investing in a global fund? |
| A: |
Investors may go to any authorised unit trust management companies that offer funds which invest in foreign markets. |
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| Q: |
Where can I look for information on the fund? |
| A: |
Generally, information like fund objectives, risks and potential returns are available in the fund’s prospectus. Investors can also obtain guidance from licensed investment advisers. |
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| Q: |
How about the fees and charges? Is it similar to a local fund? |
| A: |
There are no extra fees involved for investing in a global fund. The charges involved are the same as those for local unit trust funds. (However, management fees for global funds tend to be higher ranging from 1.5% to 1.85%. But the sales charges are the same as local funds.) |
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| Q: |
How do I monitor these funds? |
| A: |
Investors can check the unit prices in all major local newspapers. However, in certain circumstances due to different time zones of the foreign markets (where the funds have invested in), the price information may not be current (2 days late). |
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| Q: |
Is the cooling-off period the same as local funds? |
| A: |
The cooling-off period is similar to that of local unit trust funds i.e six business days after the purchase date. |
The following are the differences between global and local funds in terms of their investment objectives, risks and benefits.
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Global |
Local |
Investment objective |
Aims to achieve long-term capital appreciation/growth through investments in securities traded in foreign markets. |
Aims to achieve long-term capital appreciation through investments in securities traded in the local markets. |
Risks |
Generally, this fund is affected by country risks, currency risks and foreign market risks. |
Risks are concentrated on a single country, e.g. Malaysia (economic, political and market). No currency risks for local fund. |
| Benefits |
Greater diversification of investment portfolio across countries, hence minimising the risk of investing in single country. |
Diversification of investment portfolio across financial instruments traded in the local markets. |
