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Malaysians’ Complete Guide To Investing In Unit Trusts

You’ve probably heard the older folks talk about unit trusts. Here’s what they are and why they’re so popular among Malaysians.


As a young Malaysian, you’ve probably heard your parents or older folks talk about investing in unit trusts (also known as mutual funds). Indeed, unit trusts are one of the more popular forms of investment, with most of the major banks offering unit trusts. Here is what you need to know about them before as you consider whether they are the right investment for you.

What Are Unit Trusts?

As its name suggests, unit trusts offers individual investors like you and me the opportunity to pool our money in a fund, which a professional fund manager then uses to invest, with the aim of  achieving the best returns. Unit trusts are run by banks or investment firms, and have specific investment themes. Some unit trusts invest in the local Malaysian market, others focus on technology stocks, and there also those that try to minimise risk by investing in a balanced portfolio of stocks, bonds, and gold.

You can think about unit trusts like an office potluck party. You and your colleagues are not sure what food to get, nor do you have the time to research. So everyone contributes a small amount of money, and you entrust the responsibility of picking the food to one of the managers who is an expert foodie. Your foodie colleague picks the food and everyone enjoys the food, in proportion to how much they contributed.

That, in a nutshell, is how a unit trust works. You are entrusting the job of investing to the fund manager, and it is their full-time job to try and grow your money as best as they can. Unit trusts can invest in a range of asset classes, including stocks, bonds, and commodities.

Here are the broad types of unit trusts that Malaysians can invest in:

Read Also: 13 Things You Need To Know To Start Investing In The Malaysian Stock Market

Should You Invest In A Unit Trust?

One of the biggest benefits of investing in unit trusts is that it does not require a large amount of money, time, or expertise.

Some banks and finance institutions allow you to start as low as RM100 a month. This makes it a good way for new investors, especially young Malaysians, to start investing. Also, because your money is being invested by a professional fund manager hired by the bank or financial institution, you do not need to constantly monitor the markets and do extensive research about individual companies.

Another benefit unit trusts offer is liquidity. This means you can easily buy more units or sell part or all of your investment any time, without being locked in.

Furthermore, unit trusts in Malaysia are regulated by the Securities Commission Malaysia (Suruhanjaya Sekuriti Malaysia) so you can be assured that there is at least one level of safety net and protection from fraud.

How To Invest In A Unit Trust?

In Malaysia, financial institutions that offer unit trust  are listed in the Federation of Investors Management Malaysia (FIMM)’s website.

You’ll notice that in list are prominent banks such as Maybank, CIMB, Hong Leong as well as the Public Bank, as well as private institutions like Kedah Islamic Management Berhad and Finnwealth Management Sdn Bhd.

In terms of choosing which unit trust to invest in, you need to consider a number of factors, such as the amount you’re comfortable investing in, the management fees that are charged, as well as the amount of risk you are willing to take. Some Malaysians would want to invest in funds that are Syariah Compliant.

Once you find a mutual fund that you are interested in, there are two ways you can start investing.

You can invest a lump sum payment via cash or cheque, or you can contribute a set amount monthly, a technique known as dollar cost averaging. Most financial institutions have a minimum amount of RM1,000 but there are some companies that allow you to invest as little as RM100 per month.

You can also  invest using your EPF. As you  know, no one is allowed to cash out from their EPF until they reach retirement age. However, you can  invest in approved unit trusts under the EPF Members’ Investment Scheme. There are limits to how much money you are allowed to invest, depending on your age.

Before You Invest…

Before investing, ensure that you have carefully read the fund factsheet and understand what exactly you are buying into.

It is important to remember that unit trusts are not a ‘get rich quick’ scheme. No one can predict for sure what will happen in the global markets, and even professional fund managers may make mistakes. Always keep in mind that past performance is no guarantee of future returns.

It needs time to mature and by investing in Unit Trust,However, it is still one of the best ways to invest if you have minimal time and knowledge on investment.

Read Also: 3 Simple Actions To Make Your Year End Bonus Last A Lifetime



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