Guys, I think you got the idea all wrong...

It does not matter if it's a mutual fund, a trust fund, or you actually buy stocks on your own. It's an investment, period.

Whether you like it or not, investment involves the possibility of losses.

Take another example, what you are talking about is similar to what a business owner hire people for. For example, if you hire a cashier to work in your restaurant, are you expecting that the cashier will always be 100% accurate in his/her work? If you hire a cook for your restaurant, does it mean that he/she will cook 100% perfectly tasty dishes at all times? Come on, people...

A lot of people have the misconception, that once you buy the UT and pay the manager, you can forget about it and reap all the rewards well into retirement. Those people are hopelessly misguided by either their rose tinted glasses or agents who promised them sweet returns.

Any investment carries risk, and those risk are rightfully borne by those who invest and wish to gain profits. If you do not know how to handle the risk, or choose the right time for investment, then you are taking greater risks for your investment. All investment needs effort, nothing will come for free, you need to research properly before buying including the fund, the risks, holdings, fund manager and the right time to invest. If you invest blindly, serves you right on having negative returns on your investment. There are no one to blame, other than the one that pays the money.

The 5.5% sales charge is used to pay your agent, who is suppose to educate you on the above, if he does not do that then get rid of him. The 1.5% management charge is a payment for the manager to buy a basket of equities according the the deed/target of the UT. If the fund says that he must hold minimum 90% in china equities, he cannot and will not sell down to below the percentage, although the economy is crashing, country is bankrupting etc etc. The manager only manages the investment, and hope to beat the benchmark slightly, based on the right stock holdings. If the stock market crash, all stocks will be suffering so it is understandable that the fund will have losses.

It is then up to you to manage your investment according to your asset allocation portfolio, to either sell or buy more depending on the market sentiment and economy. So as a summary of the above, no one is responsible for your investment other then yourself. If you don't put in effort, then you will not reap any gains other than blind luck. 

I don't believe anyone has actually complained about the point you are making, ie that fund managers are expected to guarantee that you will not make a loss. I think almost everyone understands that the risk belongs to the investor.

The point is regarding funds that perform below the benchmark. The question is why are investors charged a management fee supposedly for the expertise of those managers, and yet they perform below the benchmark? Versus the alternative which is to simply buy the components of the benchmark, no expertise required, and get better returns with much lower management fees?

The reason, I believe, is like most things in life that some will do better, and some will not. Which funds to invest in, or not invest in, is ultimately the responsibility of the investor. And not just do whatever the agent says, unless that is exactly what you want to do

You have not been reading right, that's why I said in my previous post, YOU must do the research, so that you know what fund you are investing in. You don't just go invest blindly into whatever fund that is recommended by agents, that is your mistake and no one can help you. For me before I will even considering to buy a fund, I will do quite some research. Here are a sample of things you must read and understand.

1. General Stock Market & World Economy performance - I will not buy at peak, I buy at the bottom, DCA is rubbish.
1. Performance vs. benchmark 5 years minimum - I will not buy any fund which does not have min 5 years performance
2. Audited annual accounts - income, expenses, turnover, fund size, fund manager & policies
3. Fact Sheet - Monthly - Latest 6 months - Holding, percentage, regional risks, interest, equity vs. fixed income risks
4. Standard & Poors, Morningstar reviews - performance vs peers - I tend to buy funds which have dropped the least compared to peers during bad periods ie. 1997, 2001, 2008. Any fund will make money in a bull period, it takes skill to survive in bear.
5. Asset Allocation - You must have a proper asset allocation to diversify your risks.

You should not expect performance if you did not do your homework. It is your duty to choose, looks like you have bet on the wrong horse. In fact around 80% of the funds in the Malaysian market now is rubbish and most probably trailing the benchmarks (over 5, 10 year period). I will not buy those, will you? 

Did you know that you can earn 50% returns from Public Mutual?
Check this out:
http://ourpublicmutual.blogspot.com/2011/0...lic-mutual.html