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Top 5 Important Facts about Unit Trust that Agents will not tell you

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.

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Top 5 Important Facts about Unit Trust that Agents will not tell you

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  1. Top 5 Important Facts about Unit Trust that Agents will not tell you By KK Lee http://www.myunittrust.info

  2. Profile • As unit trust consultant since year 2007 • Founder of myunittrust.info • Active forumer in local chinese forum

  3. 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

  4. Top 5 Important Facts about Unit Trust that Agents will not tell you • Distribution does not add value to your investment

  5. 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…

  6. 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

  7. Top 5 Important Facts about Unit Trust that Agents will not tell you • Distribution does not add value to your investment • Unit Trust is long term investment

  8. 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 8-12%...

  9. 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

  10. Top 5 Important Facts about Unit Trust that Agents will not tell you • Distribution does not add value to your investment • Unit Trust is long term investment • Bond Funds

  11. 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…

  12. 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

  13. Top 5 Important Facts about Unit Trust that Agents will not tell you • Distribution does not add value to your investment • Unit Trust is long term investment • Bond Funds • Low fund price does not mean it’s cheap

  14. 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…

  15. 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

  16. Top 5 Important Facts about Unit Trust that Agents will not tell you • Distribution does not add value to your investment • Unit Trust is long term investment • Bond Funds • Low fund price does not mean it’s cheap • Past performance does not guarantee future performance

  17. 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…

  18. 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

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