What Is Unit Trust Investment

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Honesty, Dignity and Integrity

noreply@blogger.com (Unknown) — Sat, 13 Dec 2008 16:37:00 +0000

A person dealing with unit trust should at all times strive to act with honesty, dignity and integrity. He should conduct himself and should encourage others to market and distributes unit trusts in a professional and ethical manner that will reflect credit on him, fellow registered persons and industry.

In particular, the person dealing with unit trust must not misrepresent or recklessly represent:-

His qualification or that of the management company represent;
The products and/or its characteristics offered by the management company he represent; and
The past investment performances of the fund he is marketing.

Unit Holders’ Liabilities

noreply@blogger.com (Unknown) — Sun, 15 Jun 2008 14:24:00 +0000

Please have a look at this clause which I found in one of the Unit Trust fund prospectus and may be you share your view about it.

Unit Holders’ Liabilities

No unit holders shall by reason of the provision of the Deed and the relationship created thereby between the unit holders, the Trustee and the Manager be liable for any amount in excess of the purchase price paid for the unit, and shall not be under any obligation to indemnify the Trustee and/nor the Manager in the events that the liabilities incurred by the Trustee and the Manager in the name or on behalf of the fund pursuant to and/or in the performance of the provisions of the Deed exceed the Gross Assets Value of the fund, and any right of indemnity of the Trustee and/or Manager will be limited to recourse the fund.

Switch - Reinvest in Other Unit Trust Scheme

noreply@blogger.com (Unknown) — Sun, 08 Jun 2008 14:26:00 +0000

A unit holder may request that the proceeds from the disposal of his or her units be reinvested in another UTS offered by the same Unit Trust Management Company. This transaction is called 'Switch', and may be broken down into a repurchase of units in one Unit Trust Scheme and a sale to that investor of units in another Unit Trust Scheme.

The processes are largely the same as those described in section 3.2 and in this section, except that the payment for units repurchased by UTMC s automatically processed as the application amount for units in the second UTS.

Often a switch will be in an investor's best interest as UTMC may reduce or waive the fee on application for units. A switch will be useful in varying a client's portfolio as a result of changing market conditions or personal circumstances.

However, the person who is dealing in unit trust PDUT must be aware and also inform that although switching fees may be waived, sales charges may be incurred.

Cooling Off Right

noreply@blogger.com (Unknown) — Tue, 27 May 2008 16:59:00 +0000

As a safeguard to all investors who may have purchased units without fully understanding the Unit Trust Scheme purchased, or who may have been mislead by the Person Dealing with Unit Trust, most authority has imposed upon Unit Trust Management Company an obligation to provide an investor with opportunity to reconsider his or her purchase. This is known as the "Cooling-off" right, which must be disclosed in the prospectus of Unit Trust Scheme.

The cooling-off right, to be exercised within six business days, gives a first time investor the right to a refund of his or her application money without deduction of any sales charges.

The guides lines on Unit Trust Funds stated that the refund for every unit held by the investor, pursuant to the exercise of his or her cooling-off right, shall be the sum of:

- The NAV per unit on the day the unit trust were first purchased; and
- The sales charge per unit originally imposed on the day the units were purchased.

The cooling-off right is only accorded to a first time investor other than those listed below:

- A corporation or institution;
- A staff of the Unit Trust Management Company (UTMC);
- Person Dealing with Unit Trust (PDUT)

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General Principles Dealing With Unit Trust Investment Scheme

noreply@blogger.com (Unknown) — Sat, 24 May 2008 15:32:00 +0000

Honesty, Dignity and Integrity
A registered person dealing with unit trust should at all times strive to act with honesty, dignity and integrity. A person dealing with unit trust should also conduct himself and should encourage other person who are also dealing in unit trust to market and distribute unit trusts in a professional and ethical manner that will reflect credit on himself, fellow registered persons dealing in unit trust and the unit trusts industry itself.

In particular, the registered persons who are dealing in unit trusts must not misrepresent or recklessly represents :-

His qualification or that of the management company he represents.
The product and or it characteristics offered by the Management Company he represents.
The past investment performance of the fund he is marketing.

Conduct, which is dishonest, would include any omission of a material fact. A material fact may be defined as one which would cause the customer to appreciate that the unit trust fund is different from that actually represented to him.

Fair Dealing
A registered person should at all times deal in a fair and equitable manner. Aggressive and offensive sales practices should be avoided.

Good Faith
A registered person should always deal with good faith and with the best of intentions. The customer is to be treated with respect and should be given full disclosure of all information pertinent to his investment decision.

Unit Trust at Malaysian Government's Official Portal

noreply@blogger.com (Unknown) — Mon, 19 May 2008 11:17:00 +0000

Here are article I found at Malaysian Government Official Portal which is talking about legislation of Unit Trust Scheme and Industry in Malaysia.

Unit Trust

Unit trust funds are investment schemes structured to allow investors with similar investment objectives to participation in the money, debt, equity and derivative markets.

Professional investment managers, who channel their efforts towards achieving investment objectives ranging from regular income to capital growth, will manage funds collected from the schemes.

Unit trusts are excellent vehicles for individual and corporate financial planning due to their affordability, liquidity and relatively low risk nature.

Click on the link for more information
The Securities Industry Act 1983
Securities Commission Act 1993
Guidelines on Unit Trust Funds

You can either follow the above links or click HERE to read more on this article at Malaysian Government's Official Portal.

Avoid Past Performance Trap

noreply@blogger.com (Unknown) — Wed, 14 May 2008 08:34:00 +0000

Through out my career with Unit Trust, I found that there are two mistakes commonly made by investors in unit trusts.

The first is choosing a fund based purely on its past performance. We should always bare in our minds that past performance did not guaranteed future performance.

The other mistake often made by investors is to invest in four or five different funds- a great idea for diversification, but not if they all invest in the same type of shares.

In any market worldwide different types of shares perform best at different stages of the economic cycle.

It's important that in a long-term investment such as unit trusts you diversify into funds that invest in different types of shares.

Here are smoe pointer we should take a look rather than base our decision solely on fund past performance.

The fund manager's style and philosophy. You should have a basic understanding of the fund manager's investment style and philosophy.

This includes aspects such as:

Are they stock pickers or do they take a view on economic indicators and then buy into specific market sectors?
Are they aggressive, neutral or conservative investors?
Does the manager take full responsibility for the fund or is it a collective view by the investment house?

Once you have an idea of the fund manager's style, you can see if it fits your own risk profile.The shares the fund invests in. Determine the type of shares in which the fund is allowed to invest in terms of the fund mandate and its objective. Are they blue chip, middle company shares or small company shares? The sector in which the fund is categorized is not always an accurate indicator of the fund's assets.

Once you have determined all this, you can start creating your portfolio of funds. This is the relatively easy part, because you have done all the leg work already.

My personal opinion is to choose two or three fund managers whose investment philosophy matches yours. Then select five or six funds from the different categories of funds.

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Building a nest egg for your old age

noreply@blogger.com (Unknown) — Sun, 11 May 2008 07:42:00 +0000

A friend of mine asked me this very interesting question which I would like with you today.

“Why should I invest with Unit Trust Investment Scheme while actually I can invest myself with equity market?”

Wow! For your information my friend is a long time player with equity market where he makes his living out of it.

Here is my answer to him.

In the past decade, the local unit trust industry has burgeoned into one of the most popular investments for individuals. The virtues of unit trust funds are numerous. They are totally transparent investments - you see all costs and their daily value is easily obtained.

The prime reason for the popularity of equity unit trusts is that their underlying investment is in the stock market and this gives individual investors the chance to grow their capital under the guidance of an expert, the fund manager.

Unless you are likely to inherit great riches, the way to wealth for most people is to invest in assets that give the best chance of capital growth in the long term. The stock market has proven, over the past 30 years, to be the best vehicle to achieve this.

But equity unit trusts are not without their health warnings. They are definitely long-term investments to be held for a minimum of three years. If you intend to liquidate your investment within three years then equity unit trusts are not for you; rather go for an income unit trust fund (if it's for at least a one-year term) or a bank account or money market unit trust fund (for shorter periods).

Investors in equity unit trusts need to be brave - the stock market rises and it falls. Hardy investors will sit through the down times and build up a treasure chest of wealth for their old age.

Personally Invest –> Worried about the up and down of the equity market
Unit Trust Scheme –> Let the Fund Manager Worried about it

May be you guys can share you opinion or you may have different answer to this question…

Deciding on the fund for you

noreply@blogger.com (Unknown) — Tue, 06 May 2008 13:19:00 +0000

BUYING a unit trust scheme should be a considered decision - after all, picking the fund that is right for you directly affects your wealth.

These are few tips to help us out :

Know what you want from your investment-Your return requirements.
Do you need a current income, capital growth, or a combination of the two?
Your risk tolerance - how much price volatility are you comfortable with? If a unit price that jumps wildly will give you sleepless nights, then a high-risk fund is not for you, even though it could give you a higher return.

Your time horizon - the longer you intend holding your units, the more volatility you should accept. As a rule, units should be kept for at least three years.

Know your financial adviser - The best way to find an adviser is by asking a trusted friend or family member for the names of their advisers. Then try them out with a visit. Your goal is to find one who is competent, qualified, and professional, who cares for you, and whose services will be ongoing. Ask about your adviser's track record. Ask about your adviser's research capabilities. Ask about the costs of investing - and know exactly what you are paying for. Ideally, your adviser should be rewarded for helping you improve your returns, rather than by commission earned from flogging you a product.

Know your market - A unit trust is merely an instrument that can be used to gain access to the stock market (say, a general equity fund), or to certain sectors of the market (say, an industrial fund). If the stock market experiences a setback, the performance of your funds will reflect this (to a varying degree depending on its shares held). Look forward and not backwards - don't simply invest in last year's winners without further analysis. Consider the tax implications - aim to maximize your after-tax returns.

Know your fund - Choose a fund which is managed by a fund manager with a good track record (and this may not necessarily be the best fund management company). Check that there is a competent and stable investment team behind the fund manager. Ensure the fund mandate is the same as your investment objectives. Ensure the size of the fund (either very large or very small) does not prohibit the manager from adhering to the mandate.

Did you know?
When investing just before an income declaration date your initial charges will be calculated also on the income distribution that will be paid back to you (or reinvested) in the near future?

It's not the size that counts?

noreply@blogger.com (Unknown) — Wed, 30 Apr 2008 07:00:00 +0000

DOES the size of a fund (the amount of assets under management) affect its investment performance? Most consultant would says the old adage "it's not size, but technique" applies even to unit trusts.

But it is more accurate to see the performance of a fund as affecting its size. The large funds in the market today have grown because of their good past performance.

The same portfolio management skills are required for large or small funds. However, in the case of large funds, an important factor influencing performance is the fund's ability to buy or sell large volumes quickly - the portfolio's tradability.

In addition, it's often difficult for large funds to acquire significant exposure to the shares of smaller companies (that may add spice to the portfolio).

Top-performing small funds tend to attract investment quickly, and thus soon become large funds. These rapidly growing small funds are possibly the most difficult to manage, as the high daily cash inflows need to be managed effectively.

But many rapidly growing funds can sustain performance with good management and thus their larger size has not had a negative effect.

Underperforming small funds are unlikely to attract large inflows and so remain small. Some larger funds are poor performers while others have performed well, making it difficult to generalize on size.

Vital Information to Help New Investor

noreply@blogger.com (Unknown) — Mon, 28 Apr 2008 07:18:00 +0000

Objective
It is important an investor knows and understands the stated objective of a fund, as this tells you what a fund is trying to achieve, and how it will attempt to do this.
If a fund says it will invest in equities for capital growth, and the investor is looking for a low-risk investment to generate a regular income, then the fund is obviously not suited to that investor.

Target market
The target market profiles the type of investor who the fund manager feels is suited to the fund.

Charges
Investors should know the fee structure of a fund so that they can see what portion of their investment will actually be invested.

Minimum investment
Most funds have minimum investment amounts for a lump-sum investment and a recurring monthly savings plan.

Past performance
Although past performance is in no way a guide to future performance, it can tell you how funds have fared in comparison with their peers.

Past two income distributions
It is important to know how much income a fund expects to yield, especially if regular income is your main concern. There is, however, no guarantee that the fund will yield the same figure in future.

About the fund manager
The human factor plays a significant role in a fund's performance. The manager's personal details are important as they give investors an indication of how experienced he or she is.

If a fund has recently changed hands, watch the fund carefully because the new manager could introduce significant changes to the fund's portfolio which could have an effect on the fund's performance.

Investment Attitude
Here the fund manager explains his approach in investing the fund's assets.
Fund managers have different theories as to what to invest in and how to achieve the best results.

What is a money market fund?

noreply@blogger.com (Unknown) — Sat, 26 Apr 2008 02:59:00 +0000

It is a type of unit trust fund. Where general equity unit trust funds buy shares on the stock market and pay you a largely dividend income, money market funds are invested in money market instruments and pay you an interest income. It is much the same as having your money on call at the bank, except you earn a higher interest rate.

This is because the money market fund pools your money, let's say 20,000, with other people's money to total, say, 1-million, and is thus able to command the higher interest rates available in the wholesale money market.

The funds' other main advantage to smaller investors is that, unlike bank fixed deposits, you are able to withdraw your money on demand.

Money market funds are invested in interest-earning instruments such as bankers’ acceptances, treasury bills and NCDs. These may sound like gobbledegook, but broadly they are the financial instruments used by banks, government, and local municipalities to borrow money.

As an individual investor you won't have access to the wholesale market unless you have over 1-million to spend.

Money market instruments are all short term; the funds have been lent to the government or institution for less than a year.

The average term of all instruments held by the fund has to be less than 91 days.

How does money market fund work?
The price of each unit of the fund is 1, and this is constant. Where you make your money is on the interest income paid out to you.

The rate quoted in newspapers is the average interest rate the fund has paid out over the last seven days - the purpose of this calculation is to smooth out short-term fluctuations to give you a better idea of the fund's performance. Interest is calculated on a daily basis, but all payments are made at the end of each month.

It is important to note that the rate quoted in the paper can be misleading as it may make you think you are earning more than you are. The rate quoted is an effective rate, which means you only earn this if your money is on deposit for the entire year with all interest being reinvested and therefore compounded - you will not be earning this rate if you take your money out sooner or if you withdraw your income.

Please pay close attention to its nominal rate as this is the rate you should use to compare with what the banks are offering. A nominal rate is the amount you actually earn each month.

There are costs for the investor to pay. The funds offer either a low or no entry fee, and a relatively low annual cost.

The quoted interest rates on funds are stated net of the annual fee.

Dispelling the myths surrounding unit trust investments

noreply@blogger.com (Unknown) — Thu, 24 Apr 2008 09:47:00 +0000

UNIT trust funds are fast becoming the investment of choice for many people nowadays.

The reason for unit trusts popularity is clear: they provide investors with a convenient and efficient means of implementing a sophisticated and diversified equity investment strategy.

However, investing in unit trusts is not a substitute for thorough investment planning.

Any investment you make must suit your overall investment strategy, and also fall within your desired asset allocation (the amount of your assets to be invested in equities, bonds, property and cash).

There are several myths around unit trust funds which have arisen among investors.
Here are six of the more popular myths we need to clarify..

Myth 1: Investing in unit trusts is a strategy in itself
Not at all. Unit trusts are an investment tool, and therefore a means to an end.

Myth 2: A unit trust is a unit trust (that is, they're all the same anyway)
Wrong. First, funds are grouped into categories or sectors according to their broader investment focus.

For example, general equity funds invest across a number of sectors in the stock market, whereas specialist equity funds focus on specifically designated areas of the stock market - such as small market-capitalisation, emerging companies, or predominantly international shares.

Secondly, even within a category or sector, funds vary dramatically as they have different mandates, investment styles and objectives, risk profiles and past performances.

It is therefore extremely important that the unit trust you select matches your own investment objectives and risk profile.

Myth 3: Holding two funds provides automatic diversification benefits
Maybe, but probably not. Different management companies may run similar funds investing in similar shares, thus offering minimal diversification benefits.
The end result could be that you are either over-exposed to a disappointing stock or under-exposed to the top performing stock.

Invariably, impatient investors who have a propensity for switching end up chasing last year's winners.

However, switching may be appropriate where a fund has consistently underperformed over a long period (say two years or more), or where a fund's mandate has changed, or your risk profile or investment objectives have changed and the fund is no longer suitable for your needs.

Evaluate your unit trust funds as a portfolio, therefore, rather than as individual entities.

Myth 4: Cash is a risk-free alternative
Cash is certainly less volatile, but it may not provide the returns required to meet your objectives. And capital appreciation of your unit trusts is tax-free, unlike returns on your cash, which are fully taxable.

Over the longer term, the stock market has outperformed most other forms of investment. Don't rue missing the next bull run. Let time be your hedge against market volatility.

Myth 5: Selecting a unit trust fund can be left to my financial adviser
It can, but only as long as the adviser is fully appraised of your needs and investment objectives.

If so, he or she will be able to select an appropriate fund from a range of options to suit your needs.

The adviser should also recommend changes in your unit trust portfolio as your needs and investment objectives change over time.

Myth 6: Switching unit trusts helps improve returns
Switching between funds incurs costs that could offset any capital appreciation.
Also, it may add risk to your portfolio as you try to time the market or select the next winner. Anyone who believes they can consistently select the next winner just before it zooms to the top is dreaming!

Build a Diversified Investment Portfolio With Unit Trust Funds

noreply@blogger.com (Unknown) — Tue, 22 Apr 2008 09:03:00 +0000

Unit Trust funds offer an easy way to own shares in a variety of investments (stocks, bonds, etc.) without having to invest a lot of money at one time.

When you purchase shares of a Unit Trust fund, you're pooling your money with other investors and letting the Unit Trust fund (which is simply a professional money management company) invest and manage the money to help meet the fund's specified investment goal (e.g., growth, income or a combination of the two). This lets you quickly build a diversified portfolio with a low minimum investment.

Note: There is no guarantee the Unit Trust fund will meet its objectives.

When to Consider Investing in Unit Trust Funds
Because they are professionally managed and offer diversification with a small initial investment, mutual funds are suitable for most investors. In fact, because of their simplistic nature, they have become one of today's most popular investments.

Selecting One or More Unit Trust Funds
Selecting which mutual funds to invest in is far from easy. Various types of Unit Trust mutual funds are available in today's market, and each fund has a different investment goal and risk level. Finding mutual funds that are right for you means knowing your investment goals, risk tolerance and investing time frame. It also involves researching a wide range of funds so that you understand:
• The fund's investment objective and risks
• The fees, charges and expenses associated with the fund
• Which investments are included in the fund
• How the fund overlaps with or complements your other investments
• Its performance over time (although past performance is no guarantee of future results)

Investors should carefully consider the investment objectives, risks, changes and expenses of an investment company before investing. Your Financial Advisor can provide you with a prospectus containing this and other important information. Please read the prospectus carefully before investing or sending money.

Investing in Unit Trust funds involves risk. Your principal and investment return in a mutual fund will fluctuate in value. Your investment, when redeemed, may be worth more or less than the original cost.

Unit Trust Fund Performance Indicators

noreply@blogger.com (Unknown) — Tue, 15 Apr 2008 03:36:00 +0000

In reviewing the performance of unit trust funds, an investor must be familiar with the following definitions of fund returns or performance indicators:

Total Return
The percentage change in a fund’s price (adjusted for splits and distribution paid out) for the period.

Average Annual Return
The percentage change in a fund’s price (adjusted for splits and distribution paid out) for the period devided by the number of years under review. It is used to compare unit trust returns over periods exceeding one year.

Distribution Yield
Distribution paid on unit holders out of the unit trust’s income (derived capital gian, dividend and profit income) measured as percentage of a fund price.

Performance Benchmark
The performance of any given fund is usually objectively evaluated by comparing it with the performance of an appropriate chosen benchmark.

Remain Calm Through Market Turbulence

noreply@blogger.com (Unknown) — Fri, 11 Apr 2008 09:16:00 +0000

In the wake of the turbulence of stock markets in recent months, unit trust investors may be tempted to either sell or buy. However, investors are advised to remain calm and practice dollar cost averaging with their long-term goals in view.

When regional and global markets succumbed to panic selling in August 2007 and more recently in January 2008, the severity and sharpness of the correction was large enough to make unit trust investors ask themselves whether they should redeem now to stem further losses or buy more units at currently low prices. In fact, if they practice dollar cost averaging, they need not concern themselves with these timing issues. Dollar cost averaging enables investors to automatically buy more units when prices fall and fewer units when prices rise.

It is especially during times of market volatility that individual investors should remain focused on their long-term investment goals and keep their emotions from influencing their investment decisions. A disciplined and methodical approach to investing is the key to long-term investment success.

Unit trust investors are advised to buy and hold their investments for the medium to long term. The buy-and-hold principle is based on the notion that a good investment will generate reasonably attractive returns over the medium to long term. This also means that investors are able to distinguish between daily movements in the market and the underlying long-term value of their investments. Professional fund managers buy and hold for the medium to long term as they are prepared to wait patiently over several years for their investments to reach their intrinsic or fair values. For the unit trust investor, the 'buy-and-hold' strategy can also be applied by holding on to a well-selected unit trust fund over a period of at least three years.

There are some investors who believe they can achieve superior returns by timing the purchase and redemption of equity funds to profit from the stock market’s short-term movements. These investors are tempted to engage in timing the market especially in an environment where equity markets are volatile. Such investors who wish to make quick gains in the stock market by switching from one fund into another fund will often be disappointed. Market timing strategies that are often recommended by 'investment experts' have seldom been successful. This is because stock markets are inherently volatile and are impossible to predict with numerous factors, both domestic and foreign, affecting daily and weekly fluctuations in stock prices.

Investors who wish to take a more active approach with their investments by timing the market will expose themselves to many risks. In order to profit from the market's short-term trends, the investor has to correctly predict the market's trend and its turning points.

Without the appropriate skills to discern signals and time the entries and exits, the market timer may not only miss opportunities, but also potentially suffer the blow of rapid losses. Also with a higher frequency of fund switching, investors will have to incur increased transaction costs.

Investors who are concerned about market volatility are advised to practice dollar cost averaging as this strategy enables investors to focus on the long-term investment goal and not worry about the prevailing level of the market. Dollar cost averaging is simply investing a fixed amount of money in a financial asset (such as a unit trust fund) on a regular basis (monthly, quarterly, biannual) regardless of the market cycle. By investing a fixed amount on a regular basis, investors will buy more units when the market is lower and fewer units when the market is higher. This strategy will produce a lower average cost of investment than the average market price over any given period.

In addition, investors are also advised to rebalance their portfolios regularly at least once a year to ensure that their portfolio allocation reflects their investment objectives and risk profile. Thus if, as a result of an uptrend in stock prices, an investor's equity exposure has exceeded a level consistent with his risk tolerance, he can trim a portion of the equity funds and switch into bond or money market funds to rebalance the asset allocation accordingly. Maintaining a target asset allocation reduces the risk that the portfolio becomes too concentrated in a single asset class.

In conclusion, unit trust investors should always focus on achieving their medium to long-term investment goals. The practice of dollar cost averaging and regular portfolio rebalancing are effective tools that help investors remain focused on the long term horizon and prevent them from over-reacting to short-term movements of the stock market.

Dollar Cost Averaging Priciple in Unit Trust Investment

noreply@blogger.com (Unknown) — Wed, 09 Apr 2008 07:05:00 +0000

Dollar cost averaging (DCA) is a good investment-building strategy. By investing a fixed amount of money at regular time intervals over a long period, investors are lessening their exposure to market risk.

There are three keys to any dollar cost averaging plan for the common sense investor: 1) regularity 2) frequency and 3) long-term consistency. Invest the same amount on the same days of each month in the same mutual fund or stock. The more frequently you invest, the more opportunities you have to take advantage of dollar cost averaging. Finally, it is essential that you keep-up dollar cost averaging over the long term.

The more fine grained your investing frequency via dollar cost averaging, the better. In other words, it is better to invest $100 on twelfth days of the year than $1200 on one day in the year. The reason for this is that you have more opportunity to naturally buy more shares at lower prices and fewer shares at higher prices.

When it comes to making dollar coast averaging strategies for your investments, no other investment option is as good a fit as unit trust funds. In fact, the structure of unit trust funds is such a way that they are quite perfect for a dollar cost averaging strategy. This is particularly true because of the fact that mutual funds usually don’t involve transaction fees, and small, systematic investments are encouraged.

For those who want to use a DCA method for their investments, it would be a good idea to employ certain strategies to maximize the benefits that are given by dollar cost averaging.

For the average investor, a good long-term strategy is to regularly invest a portion of salary or other income through DCA. Even though investing a lump sum at the most crucial time could eventually bring in more returns to your investment compared to doing dollar cost averaging, it is very hard to determine that moment of opportunity when the time is right. Even experts fail. In fact, it is not uncommon to hear horror stories from people who purchased a lump of shares at the peak of a market only to see the value decrease for several months or even years. As a long-term strategy, DCA is more appropriate to help increase return potential and lower the average cost per share.

One good benefit is that with a dollar cost averaging investment stance, you can breathe a little easier and feel more comfortable taking the safe option especially when the market is very uncertain. Nothing is more reassuring knowing that you have made a sound investment decision. But also keep in mind that a dollar cost averaging stance means that you need to make continued investments. You must assess your ability to continue purchasing even through low price level periods. An investor must remember that the market will always undergo bearish or bullish periods that can last for months, if not years. It is this constant movement of the investment market that makes dollar cost averaging a good strategy only for long-term investments. It is also why it is not a good choice for those who are looking for a short-term investment strategy.

For those who want to get into a dollar cost averaging strategy with unit trust scheme, certain facts should also be considered. Even though unit trust funds, because of its low, percentage-based expense ratios, have been identified as the perfect vehicle for dollar cost averaging it would still be a good idea to exercise a lot of prudence and caution. There are unit tust funds that charge low balance fees, sales loads, purchase fees and even exchange fees. It is a good idea to read the disclosure materials given to you prior to making any investment decisions. You should also make sure that you are aware of all the incurred expenses that are associated with your investments.

Ultimately, strategies that are based on a dollar cost averaging investment stance require patience and a healthy dose of self-restraint for interested investors.

Duties and Responsibilities of the Trustees

noreply@blogger.com (Unknown) — Mon, 07 Apr 2008 15:44:00 +0000

The trustees of the funds will perform among others, the following duties and responsibilities:

To act as the custodian of the funds and safeguard the interest of the unit holders.

To exercise all due diligence and vigilance in carrying out its functions and duties in accordance with Deed, respective Authority Guidelines, and respective country's governing authority act.

To ensure that the Manager manage and administers the funds in accordance with the Deed, Authority Guidelines, Securities Act and law.

To ensure proper records are kept of all transactions, dividends, interest and income received and distributed in respect of the funds.

To ensure that the manager keeps the Trustee fully informed of the details of the manager's policies in investments and any changes thereof.

To ensure the accounts are audited at the end of each accrual period by the auditors and the Managers, on behalf of the Trustees forwards to the unit holders (at their last known registered address) a copy of the audited accounts within two months after the financial year end.

Child Education Planning – My Younger Son

noreply@blogger.com (Unknown) — Sat, 05 Apr 2008 16:22:00 +0000

Every student enters secondary school with the potential to continue his or her education after graduation. While some would prefer to be educated at local university, others may want to seek higher learning abroad.

However, most parents are finding it difficult to put together a realistic financial plan as foreign and local university costs are escalating annually. The respective Central Banks of various countries also shown that, inflation is growing at an average rate of 3 percent per annum.

As an illustration, here I would like to share with you my university education fund planning for my younger son who was born 6 months ago.

Basic Information
Child Name :Irsyad
Child Age :0 Year Old
Age to Enrol University :18 Years Old
No of Years Left to Enrol University :18 Years
Name of University Intended to Enrol :University Malaya
Field of Study Intended To Enrol :Medicine
Number of Years to Complete The Study :5 Years
Current Tuition Fees Per Year :RM 2,000.00
Current Living Cost Per Year :RM 6,000.00
Total Current Cost Per Year :RM 8,000.00
Total Current Cost to Complete Intended Study :RM 40,000.00

Calculating Future Cost Due to Inflation
Average Inflation Rate Per Year : 2.6%
Total Future Cost to Complete Intended Study : RM 63,491.05

Single Investment I Made Yesterday For My Son
Total Future Cost to Complete Intended Study :RM 63,491.05
Expected Investment Rate of Return :10%
No of Years Left to Enrol University :18 Years
Amount I Invested Yesterday :RM 11,420.00

Simple Analysis
Total Future Cost to Complete Intended Study :RM 63,491.05
Total Amount Invested over the period :RM 11,420.00
Total Return (Compounded Interest) :RM 52,071.05

Potential Risks of Investing in Unit Trust Scheme

noreply@blogger.com (Unknown) — Mon, 31 Mar 2008 08:21:00 +0000

Market Risks
As unit trust funds generally invest in listed securities, they may be susceptible to fluctuations in the performance of the stock market. Changes in the economic, political and sosiological environment will affect the stock market and changes in the share prices will then affect the price of the unit.

Specific Risks
Risk that are specific to individual companies or shares that a unit trust fund may have invested in rather than the market in general.

Fund Management Risks
The selection of the securities which make up the assets of the unit trust fund is a subjective process and hence, securities selected by the manager may perform better or worse than the overall market, or as compared to other unit trust funds.

Management Company Risks
This risk refers to the possibility that the manager may not adhere to the investment guidelines or restrictions of a unit trust fund. Poor management of the investments of the unit trust fund may jeopardise the investment of the unitholders.

Credit/Default Risk
Fixed income instruments such as bonds, term deposits and debentures constitute credit risk if the institution invested in is not able to make the required interest payments or repayment of principal.

Interest Rate Risk
The interest rate risk is particularly significant in bond funds as the investments made by the bond funds generally depend on forecasting movements of the interest rate. Prices of the bonds generally move inversely to the interest rate which means that as interest rate rise, prices of bond will decline and vice-versa.

Liquidity Risk
This refers to the fund's ability to quickly and easily trade, at a reasonable price into and out of positions. The bond and/or private debt securities market is not as liquid as the equity market.

Inflation Risk
This risk refers to the risk that the value of the unit trust investment may be eroded if inflation is constantly higher than the rate of returns on investments.

Financing Risk
This risk occurs when investors take a loan to finance their purchase of units of a unit trust fund. In the event that the value of their investments drop to a certain level, the financier may require additional collateral and the investor may be unable to meet the requirement.

Regulation of Unit Trusts
Only unit trust schemes which are approved may be offered for sale to the public. Such schemes must comply with requirements stated by government. In some countries it is primarily regulated by the Securities Commission.