The basic feature of unit trust investment is a form of collective investment that allows investors with similar investment objectives to pool their saving, and invested in a portfolio of securities managed by investment professional.
We can classify 5 mains categories of unit trust funds in Malaysia:
1)Equity fund: The major portions of equity fund portfolios are shares of listed companies. It’s available in the market with higher risk-higher return to those with lower risk-lower returns:
·Aggressive growth fund – generally invests in companies with higher capital growth, but with higher risk.
·Index fund- normally the return will closely resemble the performance of the stock market index, both in
terms of risk and return.
·Income fund – the fund will invest primarily in stocks that earn significant dividend income, rather than
companies that are expected to pay little or no dividends.
2)Fixed Income fund: Mainly invest in corporate bonds, government securities and liquid securities. Generally it will provide regular income with less emphasis on capital growth.
3)Property fund: Invest in real property. The fund returns are generated from rental income and capital appreciation. Most property units are listed on stock exchange, as the assets are highly illiquid.
4)Islamic fund: Investment in accordance with Syariah Laws. Main objective is to invest in a portfolio of halal stocks. Non-halal stock – companies produce or involved in activities, products or services and financial services, gambling, alcoholic, beverages and non-halal food products.
5)Balanced fund: invest in between Equity fund and fixed income investments.
By having good understanding of the above funds categories, we start to evaluate the funds to invest in, by considering our investment objectives and risk tolerance level.