• Unit Trust Funds Investment Guide

    When you want great returns on your investments, a unit trust fund is an option you can consider. For starters, you don’t have to manage your investments. A professional fund manager diversifies your money into various asset classes so you have better chances of higher returns.

    So, how do you start investing?

    There are three ways of investing in a unit trust fund - cash, regular savings, or EPF fund. Below we are going to break down each method so you can choose one that best suits your needs.

    Cash (Lump Sum Investments)

    This is when you have a certain amount in hand to invest in a unit trust fund. What makes this way more popular among investors is the compounding effect. Over a period of time, the money you invest will increase because of the income earned by the fund. The redemption price is the combination of the accumulated funds and the compounding during a certain period.

    Regular Savings

    With regular savings, you’re investing a money either on a monthly or a quarterly basis. This way of investment leads to more financial discipline and also generates a good amount of capital over time. The accumulated amount increases over time because you’re making equal and regular contributions.

    So, at the end and close to redemption, you’re looking at the combination of all your contributions and the returns you have received since you first invested. The returns for this way tends to be better over a longer holding and contribution period. One great example of is the Employee Provident Fund, which is designed to assist you during your retirement.

    EPF Members Investment Scheme

    While your EPF is created to help you during your retirement, you can use those funds to invest in a unit trust. However, you have to check your eligibility before withdrawing the money. You can check your EPF statement and the Basics Savings Table. This will give you insight into your eligibility and the amount of investment that is allowed.

    What are the Benefits of Investing in Unit Trusts?

    When you invest in unit trust, you will experience a number of benefits. However, the biggest advantage is reducing your investment risk. Because you’re investing in a wide range of securities with the help of a professional fund manager, your risk tends to be lower and you get better returns.

    Although, it’s crucial for your fund manager to diversify your investments into various asset classes to avoid high risk.


    One of the reasons unit trusts are popular is because your investment can be as low as RM100. This gives beginner investors the opportunity to foray into the investment market as well.

    Professional Fund Management

    When you entrust your money to your fund manager, you do it because of their expertise and their background in the industry. A professional fund manager has the knowledge and experience to ensure your money is invested in the right funds. Not only will this generate better returns for you but it also reduces the risk factor associated with funds.

    Exposure to Different Investments

    Holding a direct investment portfolio in various markets, especially as an individual investor, is difficult and tricky. With a unit trust, you have the opportunity to invest your money in property, bond, or the equity market. You can choose an array of asset classes under your fund, giving you the needed exposure to different markets and types of investment.


    With unit trusts comes ease in buying and selling. You can redeem your investment as and when you want it, you can switch between funds, and you can repurchase different units whenever you want. This means your investment is easily convertible to cash. In fact, some funds can return your investment in cash on the very same day.

    Things You Should Keep in Mind Before Investing in a Unit Trust

    It goes without saying that any form of investment has risk attached to it. So, if you’re planning to invest in a unit trust, here are some risk factors you should consider. These risks change depending on the market, policies, interest, inflation, and even your fund manager’s knowledge.

    Since you will be investing your hard-earned money, it’s important you understand all the risks associated with a unit trust.

    Market Risk

    Depending on the current situation of the market, the net asset value of your unit trust is subject to change. This could mean either you fund falls or rises, thus affecting the returns that are generated. The market changes can be attributed to various factors - political developments, regional, national, or global economic conditions, and even government policies. The reason these factors affect your unit trust is because the funds are invested in public listed companies.

    Management Risk

    Since you will be choosing a fund manager to handle your investments, it’s absolutely crucial they have the necessary expertise and market knowledge. If your fund manager doesn’t have a good hold on the market, it could translate to considerable losses, which will then affect the returns of your investment.

    Liquidity Risk

    When your investment cannot be sold or bought quickly and at a good rate, that’s when you face liquidity risk. And if your fund becomes temporarily or permanently illiquid, your fund manager will be forced to sell it at heavily discounted price. This then affects the value of your fund.

    Inflation Risk

    If there’s an increase in the consumer prices, chances are you’ll experience loss in the purchasing power of your investment.

    Interest Risk

    When there’s an increase in interest rates, the value of bonds and fixed income securities get affected. In turn, this also reduces the total net asset value of your fund. Even if your fund doesn’t have interest bearing instruments, like Shariah Funds, the interest rate environment of your country can also affect your investment.

    Compare other investment options and see which one works for you in the long-run.

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