Wednesday, September 23

CompareHero’s guide to investing in unit trusts


Diversification is one of the strategies through which you can minimise investment risks. If you choose to invest in stocks, you can diversify it by investing in the stocks of companies from different industries or in those of overseas companies to minimise geographic risks as well as by adding bonds to your portfolio.

Investing in stocks and bonds are common ways for you to invest but you can also look into unit trusts as an investment vehicle since these have benefits that are appealing to certain types of investors. Finding a unit trust that matches your investment goal will not be that challenging and you can reap some of the benefits that unit trusts provide investors with over other types of investments.


What are unit trusts?

It is an investment product. Essentially a pool of funds from investors who have the same investment goals, it is often managed by a professional fund manager. A trustee is appointed to oversee the funds and control the fund’s assets to make sure the fund manager adheres to the group’s investment goals.

This, of course, adds a layer of security to the investment. Also, it is known as the term unit trust because ownership of the fund is divided into units of entitlement.


Since when have unit trusts been available?

Unit trusts have a long history in Malaysia that stretches back four decades. Unit trusts have had a longer history elsewhere, particularly in the UK when M&G first launched one in 1931. The Federation of Investment Managers Malaysia says the Malayan Unit Trust Ltd. was the first to offer unit trusts in the country. That was in 1959.

There were only five unit trusts management companies in Malaysia during the first two decades following the launch of Malayan Unit Trust Ltd.’s unit trust so there was very slow growth in the industry during its early phase. Beginning in the 1980s, the government started to become involved in the oversight of the unit trust industry.

The 90s saw the fastest growth period in the industry and this was also the time when the Securities Commission was established in Malaysia.

The industry continued its growth trajectory into the new millennium. The FIMM says that the Net Asset Value of the industry grew from just RM43 billion in 2000 to RM169 billion in December 2007.

Today, Securities Commission data shows that there are now 38 unit trust management companies in Malaysia, offering close to 600 funds. The total net asset value of unit trusts in Malaysia is now at RM335.510 billion as of Dec 31, 2013.


Who oversees unit trusts?

The Securities Commission (Suruhanjaya Sekuriti) is the lead government agency in charge of overseeing the unit trust industry in the country. The Commission was established in 1993 under the Securities Commission Act. The Commission has the power to regulate all matters related to unit trust schemes as well as supervising exchanges, clearing houses, and central depositories among other duties.


Which companies offer unit trusts?

The Securities Commission has listed 38 approved unit trust management companies. These include CIMB-Principal Asset Management Bhd, Maybank Asset Management Sdn Bhd, Manulife Asset Management Services Bhd, and RHB Islamic International Asset Management Bhd among others.

These firms have offers close to 600 unit trusts that invest in a variety of assets including securities, bonds, and property.

This content is created by Floyd Sijmons for the readers of Borneo Post. Sijmons is the CEO of CompareHero, the most extensive Malaysian financial comparison platform today. He believes in the value of saving Malaysians time and money by giving them information they need to compare financial products in the market. For more, visit