Hi..
welcome to my blog. Its mainly about investments and unit trust.
I've been trying to incorporate with something interactive towards constructing this blog, but out of ideas. The topics are a bit dry, but i can explain to you in much detail with clearer views on unit trust if we could meet up and it would be at your own terms.

I've met a lot of people and had been asking around to people, why do they think that unit trust is not for them?
1) Maybe they do not understand the concept of unit trust
2) Wanted a much higher return within a short period of time
3) UTC's had been bragging and overpromised on the returns
4)Unit trust is too risky for them
and a lot more...

I would give my personal view on this. Unit trust investments are mainly for long term investments. You may want to keep and save your money for at least 3 years. The longer you save, there would be a higher chance of you gaining a much higher return. Plus, ringgit averaging cost is a useful tool to average and reduce your cost of investments. Another key word for unit trust is diversification. Don't put your eggs into one basket. This is the most important fundamental of doing an investment and everyone should know that. Do diversify your invesments and Unit trust do help you diversify your investments.

In addition, it is actually advisable to invest your epf (account 1) in unit trust. EPF actually offers on average 5% return per annum, and how do you expect that the money you have been saving for retirement could cover your cost of living afterwards. Its best that you find an alternative investments vehicle that could give returns more than the inflation rate rather making any losses after taking consideration the inflation rate.

Unit trust offers a lot more than what you expect. You may want to call me, to understand more about unit trust. There's no obligation of having to invest, I'm free and available to share my knowledge and what i have and you may consider it later on whether unit trust is the best investments vehicle for you or not.

Thanks
Mohd Faizal

Education Centre

How to Invest in Unit Trusts
There are generally 3 ways to invest in unit trusts funds, namely through Cash, Regular Savings or Investment through your EPF fund...
(More)

Benefits of Unit Trust Funds
The main advantages of investment into a Unit Trust fund is the reduction in investment risk by way of diversification as well as having approved professional investment managers manage the funds...
(More)

Types of Unit Trust
1) Balance Funds
2) Equity Funds
3) Exchange Trade Funds
(More)

Risks investing in unit trust
As any other investments, even unit trust does have risk.
Based on my personal views, the risk associated with unit trust is manageable. Risks are manageable trough diversification that is offered by unit trust. Risk of return being not guaranteed is manage through the idea of unit trust investments are for long terms investment so they could gain an average return through out the years of investing...
(More)

Secrets on Investing in Unit Trusts
There are 3 common strategies used in unit trust investment.
1) Ringgit Cost Averaging
2) Portfolio Re-balancing
3) Switching
(More)

News and Articles

EPF Investment Highlights
The Employees Provident Fund (EPF) Board, with the approval of the Minister of Finance, has declared a dividend rate of 5.65 per cent for the financial year ended 31 December 2009. The dividend rate was declared on the back of the highest ever net income achieved of RM19.63 billion....
(more)

About Public Mutual

Public Mutual Berhad (Public Mutual) is the largest private unit trust company in Malaysia and currently manages more than 70 funds with total NAV of more than RM37.8 billion for more than 2,320,000 accountholders. Incorporated in July 1975, Public Mutual began its operations in 1980 with the launch of the Public Savings Fund, and soon went on to become an industry leader and setting forth new trends in innovative fund development.

Market Share And Distribution

Public Mutual anchors 43.2 percent market share in private unit trust funds when measured by net asset value as at end-July 2010 (source: The Edge-Lipper, 23 August 2010).

Public Mutual markets its funds through its dedicated and trained unit trust consultants force which is currently the largest and collectively the most productive in the entire private unit trust industry. Public Mutual is linked extensively through its national network of branches, as well as agency offices to provide better service to the investors.

In addition, investors of Public Mutual can also take advantage of Public Bank branches that act as effective collections centres for Public Mutual.

Financial Strength And Track Record

Public Mutual as a wholly-owned subsidiary of Public Bank subscribes readily to the Group's excellence-oriented corporate culture and high standards of financial integrity in the management of its unit trust funds.

Public Mutual's Investment team comprises a group of 19 portfolio managers who are supported by more than 25 research analysts. Public Mutual adopts a value-based investment philosophy which incorporates a Top-Down and Bottom-Up approach in the investment process. The Top-Down approach takes into consideration factors such as the macroeconomic outlook, the current business cycle, interest rate trends and other economic factors. After assessing the overall market conditions, the Bottom-Up approach is used to construct the funds' portfolio.

Public Mutual is the most awarded unit trust fund manager in Malaysia with 159 awards received to date. This comprises 39 Islamic fund awards, which also makes us the most awarded unit trust fund manager in the Islamic unit trust fund sector. Notable accolades we received to date include:

• The Best Malaysia Onshore Fund House at the AsianInvestor 2010 Investment Performance Awards for third consecutive year.
• Reader’s Digest Trusted Brands Platinum Award for the Investment Fund Company category in Malaysia for the first time.
• Ten out of 29 awards presented at The Edge-Lipper Malaysia Fund Awards 2010, including Best Overall Fund Group.
• The Best Retail House – Malaysia and Best House for Offshore Funds – Malaysia, at the 2009 Asia Asset Management (AAM) Best of the Best Country Awards.
• The BrandLaureate 2010 for brand excellence in the Financial Services – Unit Trust Category for the fourth consecutive year..

Financial Planning

To help more Malaysians plan their personal finances, Public Mutual opened its Financial Planning Centre right in the heart of affluent Kuala Lumpur at 15^th Floor, Bangunan PBB, No. 6 Jalan Sultan Sulaiman to offer free financial health check to its unitholders and the general public. The centre is manned by a group of trained personnel who also conduct FP talks and workshops, particularly in unit trust investment planning to meet education and retirement planning needs. With the aid of our financial planning tool, namely, Financial Freedom FP Advisor, our UTCs are able to provide you with sound unit trust investment planning. Besides that, several user-friendly software were developed to help you in planning your finances. i.e. the Financial Freedom Retirement Planning and Education Planning software.

Customer Service

Public Mutual is committed to high quality customer service, which we strive to achieve through constant surveillance of customer satisfaction through our Customer Service Department and Mutual Gold (Priority Service). We are also dedicated to building capable and professional personnel to ensure we achieve service excellence. With this is mind, Public Mutual constantly provides sound guidance and professional education to our unit trust consultants and staff to ensure that they become experts in providing excellent service and qualified financial consultation.

Website: http://www.publicmutual.com.my

EPF Investments Highlights

EPF Declares 5.65% Dividend For 2009

Highest Total Dividend Paid Out of RM19.63 billion The Employees Provident Fund (EPF) Board, with the approval of the Minister of Finance, has declared a dividend rate of 5.65 per cent for the financial year ended 31 December 2009. The dividend rate was declared on the back of the highest ever net income achieved of RM19.63 billion. The net income represents an increase of 34.82 per cent compared to RM14.56 billion recorded in 2008 while the dividend rate for 2009 is a significant improvement of 115 basis points over the rate of 4.50 per cent paid out for 2008. In a statement issued today, EPF Chairman Tan Sri Samsudin Osman said, “2009 was a significant year for the EPF as it rode out the impact of the global financial crisis. While the EPF continues to be challenged by the fragile economic environment, our investments nonetheless delivered a sound performance for the year.” During the year under review, a total of 72.53 per cent of investments were devoted to Fixed Income Instruments in line with EPF’s prudent approach to investment, while 27.05 per cent was in Equities, and the remaining in Property. As at 31 December 2009, EPF’s investment portfolio grew 8.55 per cent or RM29.25 billion to RM371.26 billion compared to RM342.01 billion in 2008. These were invested in instruments detailed in the following table: EPF’S INVESTMENTS IN 2009 AND 2008 Asset Class Investments up to 31 December 2009 Investments up to 31 December 2008 Increase/ (Decrease) (RM billion) (RM billion) % (RM billion) % Malaysian Government Securities 93.11 25.08 96.16 28.12 (3.05) Loans & Bonds 152.96 41.20 137.25 40.13 15.71 Equities 100.43 27.05 87.95 25.72 12.48 Money Market Instruments 23.21 6.25 19.03 5.56 4.18 Property 1.55 0.42 1.62 0.47 (0.07) Total 371.26 100.00 342.01 100.00 29.25 For the 2009 dividend payout, the EPF requires RM3.43 billion to pay a one per cent dividend rate as a result of a larger membership base. This represents a 7.86 per cent increase over the amount of RM3.18 billion per one per cent dividend rate for 2008. Members can check their EPF Account Statement for the crediting of the 2009 dividend from Monday, 8 March 2010 onwards. “Barring any unforeseen circumstances, prospects for 2010 are greatly dependent on the economic performance of the country and internationally. Globally, financial markets continue to be volatile and this may have an impact on the price performance of our investments and future income. EPF will continue to focus on our key goals of preserving the capital of our contributors and ensuring a satisfactory real rate of return,” concluded Tan Sri Samsudin. About the Employees Provident Fund (EPF) The Employees Provident Fund (EPF) is Malaysia’s premier pension fund, providing basic financial security for retirement. The Fund is committed to preserving and growing the savings of its members in accordance with best practices in investment and corporate governance. It will always be guided by prudence in its investment decisions. As a customer-focused organization, the EPF delivers efficient and reliable services for the convenience of its members and registered employers. The EPF continues to play a catalytic role in the nation’s economic growth, consistent with its position as a leading savings institution in Malaysia. Date : 5 March 2010

Bullish views on unit trust in H1

By LAALITHA HUNT

INVESTORS may want to put their money in unit trusts this year especially in equity-linked funds, given its strong performance in 2009 and expectations that it will continue to perform well.

MAAKL Mutual Bhd chief executive officer Wong Boon Choy believes that following last year’s performance, fully invested equity funds will outperform in the first half of 2010, due to the continued improving macro economic indicators, positive corporate earnings momentum and ample liquidity supporting robust capital inflows.

As for the second half of 2010, more defensive equity funds such as those with stable dividend payouts or with flexible asset allocation are likely to fare better, Wong opines.

“This is because, we believe that the second half of 2010 will be a more challenging period with possible withdrawal of fiscal and monetary support worldwide, hence putting downside risks to corporate earnings especially those in cyclical sectors,” Wong says.

Wong Boon Choy ... ‘We believe the second half of 2010 will be a more challenging period.’

Meanwhile, Asia-Pacific funds are expected to outperform pure Malaysian-centric funds this year given the more visible earnings growth drivers favouring the former, Wong adds.

In terms of themes, Pacific Mutual Fund Bhd general manager (business development and marketing) Gary Gan says that funds investing in commodities, agriculture, technology, metals with linkage to emerging markets led by the BRIC nations with China at the forefront are expected to do well.

“We are also seeing signs of US stocks gaining interest again as many expect the United States to lead the developed world out of its slump,” Gan adds.

Morningstar Asia Ltd senior research analyst Y.T. Kum concurs, saying that investors prefer the strong recovery theme in Asia, namely Singapore and China and this trend is not expected to reverse.

Kum adds that the Malaysian economy has not been as resilient as other Asian countries over the past year.

“The speed of loan growth and capital market pickup in Malaysia is not as fast as other Asian countries such as China and Singapore. The pick-up of property market in Malaysia is also quite slow – the mediocre occupancy rate of offices does not point to a strong recovery. As a result, although the equity market gained on the back of improving corporate earnings, it failed to outperform other Asian markets over the year,” Kum adds.

However, MyFP Services Sdn Bhd financial planner and managing director Robert Foo advises against thematic unit trust funds because they may be trying to capitalise on a trend which may not be sustainable throughout the course of one’s investment time horizon which should be at least five years or more.

“Thematic funds appeal to investors who are affected by the herd instinct, which is not the wisest way to invest,” Foo opines.

Equity funds in Malaysia provided 36.36% in average returns last year (versus -33.16% in 2008) while mixed asset balanced funds registered 23.61% (-22.33% in 2008).

Meanwhile, bond and money market funds in Malaysia recorded 6.84% (-0.15% in 2008) and 2.09% (2.96% in 2008) respectively for 2009.

However, HwangDBS Investment Management Bhd head of equities Gan Eng Peng cautions that it would be a tougher year in 2010 to reap windfall returns.

Gan says that while growth prospects is expected to improve this year, implying higher corporate earnings and better stock market performance, the withdrawal of stimulus tools by governments as the economic conditions improve, will have a negative counter-balancing effect.

“This basically means, the natural upward bias of the markets will continue, but the upside will be limited on the back of less money chasing it,” Gan adds.

Gan shares that there will be a rise in demand for unit trusts this year from the public given the strong overall performance last year.

“This could prompt more equity funds being launched, especially in the first half of this year as the consensus outlook is weaker for the second half of 2010,” Gan says.

Meanwhile, last year’s best sellers like fixed income structures and protected funds are expected to continue to do well into at least the first half of 2010 for risk averse investors and institutions looking for better than fixed deposit returns.

Jeremy Tan, a licensed financial adviser with Standard Financial Planner Sdn Bhd says that although outlook for unit trusts were bright this year, it is not possible to match last year’s exceptional returns.

“At best, the returns on equity-linked funds would be a lower tiered double-digit percentage of over 10%. However, we should always look at unit trust investment on a longer horizon of at least three years and above, instead of on a year-to-year basis,” Tan adds

Risk of Investing in Unit Trust

As any other investments, even unit trust does have risk.
Based on my personal views, the risk associated with unit trust is manageable. Risks are manageable trough diversification that is offered by unit trust. Risk of return being not guaranteed is manage through the idea of unit trust investments are for long terms investment so they could gain an average return through out the years of investing.

What are the risks associated with unit trust?

1) Market Risks

Due to price fluctuations of securities invested in by the funds, the value of a unit trust investment may go up as well as down. The movement in securities prices is influenced by a number of factors, which include changes in economic, political and social environments.

2) Specific stock risk

Risk that is specific to a stock and is not correlated with the specific risks of other stocks. Examples of such risks are poor management due to departure of key management staff, loss of market share to competitors due to changes in the environment, and shifts in consumer demand due to changes in fashion and taste.

Any price fluctuations due to specific risk, of securities invested in by the funds, will affect the NAV of the funds. However, specific risk can be mitigated through portfolio diversification.

3) Inflation Risks

The purchasing power of income received from unit trust investments may not keep pace with inflation.

4) Currency Risk

The stock prices may be affected by the political and economic conditions of the country in which the stocks are listed. Unexpected events may stop the fund manager realising the full value of assets in those countries.

5) Borrowing risk

The price or value of units in a unit trust fund that invests in the equity markets fluctuates with the value of the underlying portfolios. Therefore when you borrow money to finance the purchase of units in a fund, there is a risk of capital loss. This is because you may either be forced to provide additional funds to top up on loan margins when the market goes down, or when interest rates go up you may be burdened with higher cost of financing.

6) Return not guaranteed

The income distribution is not guaranteed. There is a risk that there may not be any distribution of income for the particular fund.

7) Credit risk

Applies to debt-type investments such as bonds, debentures and fixed income instruments. The institution invested in may not be able to make the required interest/profit payments or repayment of principal.

8) Interest rate risk

Applies to fixed income securities, where the value of the investment may go up as well as down resulting from interest rate movement. The interest rate risk is a general economic indicator that will have an impact on DMP and PAXJI. It does not in any way suggest that DMP and PAXJI will invest in fixed income securities which are not approved by the Shariah.

9) Manager’s risk

Poor management of a fund by the Manager may cause the fund to decrease in value, which in turn may cause the capital invested by a unitholder to be at risk.

10) Risk of non-compliance

The risk that the Manager and others associated with the fund did not comply with the deed of the fund, the law that governs the fund, or the internal policies, procedures and controls. The non-compliance may expose the fund to higher risk that may affect your investments.

Types of Unit Trust Funds

Balanced Funds
Some investors may wish to have an investment in all the major asset classes to reduce the risk of investing in a single asset class. A balanced unit trust fund generally has a portfolio comprising equities, fixed income securities and cash.


Equity Funds
An equity unit trust is the most common type of unit trust where its concentration of investments is focussed in equities or securities of listed companies. Equity unit trust funds are popular in Malaysia as they provide investors with exposure to the companies listed on Bursa Malaysia. The performance of the units is therefore linked to the performance of Bursa Malaysia. A rising market will normally give rise to an increase in the value of the unit and vice-versa. There is a wide array of equity unit trusts available in the market, ranging from funds with higher risk, higher returns to funds with lower risk, lower returns

Exchange Traded Funds (ETF)
ETF is linked unit trust fund whose investment objective is to achieve the same return as a particular market index. ETF often have low expense ratios and can be bought and sold throughout the trading day through a stockbroker, on an exchange

Fixed Income Funds
Fixed income funds invest mainly in Malaysian Government Securities, corporate bonds, and money market instruments. The objective of a fixed income fund is usually to provide regular income.

Index funds
These funds invest in a range of companies that closely match (or “track”) companies comprising a particular index

International equity funds
International equity funds are funds primarily invested in overseas stock markets

Money Market Funds
Money market funds invest in liquid, low risk money market instruments that are in effect short-term deposits (loans) to banks and other-low risk-financial institutions, and in short-term government securities. Hence, money market funds in general have relatively lower risk and provide stable income returns.

Real Estate Investment Trusts (REITS)
REITs invest in real properties, usually prominent commercial properties and provide the investor with an opportunity to participate in the property market in a way which is normally impossible to the small time investor. By investing into REITS, however, it is possible to invest a small amount to gain exposure to the property market and have diversification in your portfolio.

Shariah Funds
The objective of Shariah funds is to invest into Shariah compliant investments which for example exclude companies involved in activities, products or services related to conventional banking, insurance and financial services, gambling, alcoholic beverages and non-halal food products.

Benefits of Unit Trust Funds

The main advantages of investment into a Unit Trust fund is the reduction in investment risk by way of diversification as well as having approved professional investment managers manage the funds.

Unit trust investments generally tend to invest in a range of individual securities. However, if the securities are all in a similar type of asset class or market sector then there is a systematic risk that all the shares could be affected by adverse market changes. To avoid this systematic risk, investment managers may diversify into non-correlated asset classes. For example, investors might hold their assets in equal parts in equities and bonds.

Affordability
As Unit trusts are a collective investment scheme, the investors can start with an investment amount as low as RM1000 for initial payment and as low as RM100 monthly.

Diversification
In addition, since the investors is investing into a diversified portfolio of investments, rather than an investment portfolio of one or two investments or shares, his risk is better spread out in line with the saying "don’t put all your eggs in one basket"

Liquidity

An excellent return or “paper profit” that cannot be "cashed-in" or converted back to cash (i.e. sold) does not necessarily mean a good investment as poor liquidity constitutes an additional risk factor for the investor. Hence, most investors prefer that their investment to be liquid. That is, that the investment can easily be converted back to cash. Unit trusts provide this feature as units can easily be bought or sold. Some funds can even return your investment to cash within the same day.

Professional Fund Management
Unit trusts fund managers are approved professionals in a highly regulated industry. Their license, background and expertise ensure that decision making is structured and according to sound investment principles. In the process, unit trust funds enjoy the depth of knowledge and experience that fund manager can bring. In the long term, it is this expertise that should generate above average investment returns for unit trust investors

Investment Exposure
For an individual investor, it may be difficult to have exposure to particular asset classes. For example, if an investor with RM20,000 wants to be invested into property, global equity and bond market, it would be impossible to simultaneously hold a direct investment portfolio in all of these markets. However, with unit trust investments, it is possible to spread the RM20,000 around to all of these asset classes concurrently so that the investor can gain the investment exposure he seeks.

Reduced Costs & Access to Asset Classes
If one investor were to buy a large number of direct investments, the amount they would be able to invest in each holding is likely to be small. Dealing costs are normally based on the number and size of each transaction, therefore the overall dealing costs would take a large chunk out of the capital (affecting future profits). Pooling money with that of other investors gives the advantage of buying in bulk, making dealing costs an insignificant part of the investment. In addition, since the fund managers invest in larger amounts, they are able to get access to wholesale yields and products, which are impossible for the individual investor to obtain. For example, unlike unit trust funds, most individual investors cannot have direct access to the Malaysian Government Security market because, amongst other reasons, the amount of each transaction could run into millions of Ringgit.

Regulated Industry
With the introduction of unit trusts in Malaysia came regulation from various regulators, especially the Securities Commission. The entire range of variables relating to the unit trust industry is governed by various legislations. The sole purpose of such regulations is to protect the interest of the investing public. Regulations provide investors with a level of comfort that they are investing in a safe investment mechanism.

How to invest in Unit Trust Fund?

There are generally 3 ways to invest in unit trusts funds, namely through Cash, Regular Savings or Investment through your EPF fund.

Cash or Lump Sump Investments
This is where an investor has a lump sum amount to invest into a unit trust fund. Over a period of time, the initial investment will increase as income is earned by the fund. When the investor redeems his or her units, the unit redemption price will reflect the accumulation and compounding of the invested capital over the relevant periods. It is this compounding effect over time which makes investment into unit trust funds attractive.

Regular Savings
An investor may invest in unit trusts funds by making regular (e.g. monthly or quarterly) investments to their fund. This is an ideal, disciplined and useful way to generate capital for a future need. By making equal and regular contributions over a period of time, the sum accumulated at the end of the period will increase. This is commonly known as dollar cost averaging. At the end of the period, the redemption (or sale) price of the units held will represent the accumulation of all contributions, plus returns generated from the total contributions since the first purchase was made. The effect is more noticeable the longer the holding and contribution period. This form of savings is the basis of most pensions fund accumulation e.g. the Employees Provident Fund.

EPF Members Investment Scheme
Investors may also invest into unit trust funds from their EPF Account 1 if he or she is eligible. EPF members can refer to their EPF statement as well as the Basic Savings Table to check their eligibility and quantum of investment allowed

The secret of investing in Unit Trust

by KCLau

There are 3 common strategies used in unit trust investment.

1. Ringgit Cost Averaging

Regularly invest a fix amount in a unit trust fund regardless of market trend is called the Ringgit Cost Averaging strategy. The actual market performance is fluctuating. When the equity market is high, you buy less unit with the same amount. When the market is low, you buy more unit. For long term, you will get much more unit in the lower price range.

2. Portfolio Re-balancing

Portfolio re-balancing is the process of bringing the different asset classes back into proper relationship following a significant change in one or more. More simply stated, it is returning your portfolio to the proper mix of stocks, bonds and cash when they no longer conform to your plan.

Example:

You start investing 50% in equity and 50% in fixed income fund.
1 year later, the equity rises and now your portfolio consist of 80% equity and 20% fixed income fund.
To re-balance your portfolio, you should sell 30% of your total fund in equity and invest it in fixed income fund so that the portfolio is maintained.

This is the simple principle of buying low, and selling high.

3. Switching

Switching will lock in the gain you made in your unit trust investment. Switching fees are low and definitely lower than the upfront service charge. When you are making profit from an equity fund, you can switch it to some lower risk fund to lock the gain instead of selling it for cash. When the market turn low, you can switch it back to equity fund.

Optimise Your EPF savings with Unit Trusts

Most of retirees spend all their EPF money within 3 Years of retirement
-The Star 13 March 2010-

Given that the average lifespan for a Malaysian is 75 years, if we retire at 55 and spend all our EPF money within three years, a lot of us will be wondering how to survive from 58 to 75.

Investing your EPF monies in unit trust products gives you the opportunity to earn higher returns (at acceptable level of risk) in the long term thus providing you with a potentially bigger pool of funds at retirement.

Why invest via EPF members Investment scheme?
1) No cash investment required
Investment is transacted directly from your EPF Account 1.

2) Diversification
Oppotunity to diversify your retirement funds with EPF approved funds

3) Capital appreciation
Opportunity to reap capital growth as the return on your investment to boost the total lump sum of your EPF savings

EPF Members Investment Scheme
1) The scheme allows EPF members to invest 20% of the amount excess of the required Basic Savings in Account 1

2) You can only invest through appointed unit trust management company by the ministry of finance

3) You are allowed to make you second withdrawal three months after your first withdrawal, provided you are still eligible

Minimum Investment Amount and Charge
1) Minimum investment is RM1,000
2) Service Charge per unit - up to 30% of net asset value per unit as regulated by EPF