Unit Trust Funds Investment For Beginners


Across the country, Malaysians are starting to pump money into the unit trust industry ensuring its continuous growth. Data from the Securities Commission (SC) shows that there are more than 16,779,119 unit trust accounts in the country as of November 2013.

Some experts attribute the increased take-up to improvement of unit trust products available now, with a lower level of risk compared to other investment vehicles due to the global economic crisis, the growing affluence among Malaysian investing public and most importantly the convenience of investing and increasing financial understanding in unit trust funds investment through the Internet.

According to Gerald Ambrose, CEO of Aberdeen Asset Management in the April 2013 issue of FIMM Today, Malaysia may be at the cusp of an investment cycle, the first since the onset of the Asian Financial Crisis in the late 1990s.

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Watch this video to gain a better understanding of unit trust/mutual fund.


In the wise words of Robert G. Allen, “How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”

As the cost of living continues to soar at an alarming rate far exceeding the current rates offered on savings account, it is imperative for Malaysians to look at alternative ways to save and even create wealth on top of their regular income.

“To mitigate the risk of outliving savings, an average Malaysian will either need to save more or invest to derive a rate of return which is much higher than the inflation rate,” says Wong Weiyi, general manager of Fundsupermart.com Malaysia.

From a purely practical standpoint, unit trust offers a good alternative for your cash than letting it languish under your bed at home – or in bank accounts.

The first step is the hardest

There are a number of reasons why unit trust is an attractive investment for young professionals; the most attractive of which is its ease of getting started.

According to iMoney.my, having an appropriate asset allocation can help investors manage the ups and downs of financial markets as different asset classes react differently to changing market and economic conditions.

“Most unit trust’s initial amount starts at RM1,000. Some even go as low as RM100 per month,” Wong says, adding that this small sum of money allows young investors to a basket of stocks, reducing the investment risk by way of diversification.

As fund managers manage the invested money in different bonds and stocks, creating a low risk and diversified portfolio for investors, the risk of losing all the investment is typically low.

“For an investor to lose all their money, every single stock within a fund (which can range anywhere from 50 to 60 stocks to over a thousand) has to go to zero, which is highly unlikely,” adds Wong.

Young investors who prefer to be more hands-on in their investment can opt to invest and monitor on unit trust funds online to get a wider range of products is made available.

“Investors get to choose different asset classes, equities and commodities from different regions, providing investors with more opportunities to invest.

“Other than the investment service, the portal also provides in-depth information on unit trust with handy historical data to make comparison with.”

Taking the leap

An investor’s risk appetite is usually determined by their time horizon and income stream, amongst other factors. For young investors, given their long investment horizon and a typically steady future income stream, they can adopt a more aggressive unit trust investment strategy.

“A young investor can set up a portfolio comprising more equities for higher returns.

“As unit trust investment is meant for longer term, it is not the best tool for speculative trading. There is also a longer interval involved in switching between funds,” Wong says.

Beginners, can always start with the recommended portfolios for different risk appetites.

Do-it-yourself investment

Merrill Edge 2013 Report shows that Gen Y has shifted the top financial priority from securing employment (2008) to saving for retirement (2013).

With this paradigm shift in financial priorities among young professionals, it is unsurprising that most of them are skewed towards understanding and delving into unit trust, with lower risk and no hassle.

By using a do-it-yourself portal to invest in unit trust, investors get more control over their investment, in terms of management and monitoring.

For the more advanced investor, it is also advisable to manage your funds by rebalancing your portfolio on a yearly basis or realign the mix of assets according to target.

“Investors can sell a fund that went off target and the money can be redeployed into another fund,” adds Wong.

Furthermore, the traditional way of investing in unit trust can incure a 5% to 6% sales charge based on the transaction cost (e.g. RM50 for every RM1,000 you invest!). By opting for a do-it-yourself investment, investors will only incur a minimal charge of 0.5% to 2%.

Facing today’s rising cost of living, investors should look at different ways to beat the upward spiral of inflation in Malaysia. This can rarely be done through savings accounts or even fixed deposit accounts.

However, investing in unit trust can potentially help you beat inflation.

“The best advice anyone can give to young investors is to start as soon as possible. The earlier you start, the more time your investment has to compound the returns,” advises Wong. “However, investors should keep track of the cost of investment, as some investment come with high transaction fees that will ultimately affect the return.”


wy02Subject matter expert

Armed with more than 7 years of experience analysing markets and unit trusts, Wong Weiyi, currently holds the position of general manager at Fundsupermart.com Malaysia. Prior to this, Wong was the deputy head of investment at Finexis Advisory Pte Ltd, one of the largest independent financial advisory companies in Singapore.

Fundsupermart Malaysia (FSM) is the online unit trust distribution arm of iFAST Capital Sdn. Bhd., a holder of a Capital Markets Services Licence (CMSL) and is licensed by the Securities Commission to deal in unit trusts and offer investment advisory services. It is also registered with the Federation of Investment Managers Malaysia (FiMM) as an Institutional Unit Trust Adviser (IUTA).

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