Unit Trust Funds

A unit trust fund is an investment scheme that pools money from many investors who share the same investment objective.

There are many types of unit trust funds currently available in the market, i.e. income funds, capital growth funds, aggressive growth funds, balanced funds, index-linked funds, bond funds, money market funds, Islamic funds and property trust funds.

When deciding to invest in a unit trust fund you should look out for information on:

• shareholders, board of directors and key management staff of the management company to assess the financial strength, track record and expertise of the company and its staff. This is because in addition to marketing and administration of the fund, the management company also manages the investments, i.e. your money.
• fund’s investment objective and strategy, investment limits, its current portfolio and any commentary on its recent performance.
• past performance of the fund. Investors should be reminded that while a fund’s track record may be a guide to its future performance, it is no guarantee of its future performance. A fund that has performed well in the past may not do so in the future and vice versa.

Prospectus

Each unit trust fund will have a prospectus, which should be carefully read through before making any decision to buy into the fund. You should ask for the most recent prospectus as they are renewed annually.

The law requires that unit trust prospectuses contain all such information as investors and their advisers would reasonably require, and reasonably expect to find, for the purpose of making an informed assessment of the unit trust scheme.

Hence, the prospectus would contain, among others:

• information on the management company and trustee
• information on the investment objective, strategy and other details of the fund
• description of the investor profile most suitable for the fund
• fees and charges
• historical information on the performance of funds that have been in operation for more than one financial period.

Investors have to be aware that only unit trust schemes that are approved by the SC may be offered for sale to the Malaysian public. An approved fund can be identified by the cover of its prospectus, which contains a statement that a copy of the prospectus has been registered and lodged with the SC.