Top 5 Important Facts about Unit
Trust that Agents will not tell you
By KK Lee
http://www.myunittrust.info
Profile
• As unit trust consultant since year 2007
• Founder of myunittrust.info
• Active forumer in local chinese forum
Myunittrust.info
• A Malaysian unit trust fund information
sharing portal
• Info sharing is not limited to single fund
house, but all unit trust funds
• Objective:
– To provide information of all unit trust funds in
Malaysia as well as industry news update.
– To educate investors about unit trust
investment
Top 5 Important Facts about Unit Trust that Agents
will not tell you
1. Distribution does not add value to your
investment
What normally agents tell you
about distribution?
• This fund gives distribution every year, you
should invest in this to generate more
passive income…
• This fund will have distribution next month,
you should invest into it now…
• This fund distribution is average 6%,
higher than FD interest rate…
In fact… (1)
• Distribution does not add value into your
investment
• After distribution, the fund NAV will be
adjusted accordingly
• The total net worth of your fund NAV will
be same before and after the distribution
• Even though normally funds only give
distribution when have profit, fund
manager can give distribution when fund is
lossing
Top 5 Important Facts about Unit Trust that Agents
will not tell you
1. Distribution does not add value to your
investment
2. Unit Trust is long term investment
What normally agents tell you
about unit trust investment?
• Unit trust can give return 8-12% a year,
much higher than FD interest…
• You put in FD, 1 year only earn 3.5%. If
you put in unit trust, 1 year can earn 812%...
In fact… (2)
• Malaysian equity fund service charge is up
to 6.5%
• Normally, unit trust funds will take 3-5 years
to generate more return as the service
charge is already 6.5% in the first year
• Reasonable expected return:
– Equity fund: average 8-9% per annum over long term
– Balanced fund: average 6% per annum over long term
– Bond fund: average 4-5% per annum over long term
Top 5 Important Facts about Unit Trust that Agents
will not tell you
1. Distribution does not add value to your
investment
2. Unit Trust is long term investment
3. Bond Funds
What normally agents tell you
about bond funds?
• Bond funds return is low, almost same as
FD interest. If you want to earn money,
better invest in equity funds…
• If you don’t want to invest in high risk
funds, you can invest in balanced funds…
In fact… (3)
• Bond funds service charge is lower
compared to equity funds
• Can be used to lower the overall risk level
of unit trust fund portfolio
• Save service charge compared to
investing in balanced fund
Top 5 Important Facts about Unit Trust that Agents
will not tell you
1. Distribution does not add value to your
investment
2. Unit Trust is long term investment
3. Bond Funds
4. Low fund price does not mean it’s cheap
What normally agents tell you
about fund price?
• This new fund price is only RM0.25, very
low, so high potential to increase…
• This fund price drops to RM0.15, very
worth to buy now, can get a lot of units…
In fact… (4)
• Fund price is not an indicator when
comparing funds
• A RM0.25 fund is not necessary more
worth to invest than a RM0.50 fund
Top 5 Important Facts about Unit Trust that Agents
will not tell you
1. Distribution does not add value to your
investment
2. Unit Trust is long term investment
3. Bond Funds
4. Low fund price does not mean it’s cheap
5. Past performance does not guarantee
future performance
What normally agents tell you
about fund performance?
• The one year return for this fund is 30%
now, you should invest in this…
• This fund performance is in top 3 this year
for the 1 year period, you should invest in
this fund…
In fact… (5)
• Although most of the brochures or agents
tell you that past performance does not
guarantee the future performance, agents
still recommend based on past
performance
• Top performing fund in the past 1-3 years,
maybe the worst performance fund in the
following year