I think it's also good to know the 1.5% annual service charge that's levied by UTs.

UT's are showing positive returns as the economy has been expanding since 97.
What's worrying is, when there's a drop in the economy will UT's survive?
Afterall, you need to put your funds in UT for at least 3 years to see substantial returns (compared to FD), and our economy will may not boom for so long.

i think the biggest problem in Malaysia UT industry is the high purchasing charge.5 to 6.5% is more than FD return rate and almost head to head with the Base Lending Rate (BLR).

i myself hav 'lost' RM10 when i start my unit trust investment last month (note i buy at public mutual promotion time,if not the lost will sure bigger)because of the purchasing charge.offcourse during this share rising period i already break even,but hey,do share market always rise?

i hope goverment can do something to regulating unit trust industry on the purchasing and exit charge issue......there is a company even charge 4% for its bond fund.

I appreciate the statement. But, I guess it is for that matter alone, the agent should advise the client as to the appropriate time to switch so as to maximize the returns. Too bad, if the switching is not done at the most opportune time but as long as your reasons are solid and valid enough and if the investor agrees, I do not see anything wrong.

As for me, a few months ago, when the Thai Govt does the flip flop, I have my agent trying to advise me to switch. When I query back as to how that can affect Msian market, she told me domino effect. Sounds reasonable, but I doubt our govt would want to screw themselves by putting up capital controls just as when they have painstakingly brought it down. Hence I did not switch and it was a good decision. My agent instead called me back and asked me for the reason for not switching!

I dont think anyone can predict the direction of the market. It has to do a lot with broadbase knowledge of the product and industry one is in. The problem in Malaysia is, one can still excel by being just ordinary so not many are willing to go the extra mile to be extraordinary.

highest initial charge for a bond fund is 1.5% from ING Bon Islam. 4% will most likely be a balanced fund or income fund.

most bond fund will have 0 ~ 0.25% initial charge as part of processing fee.

Please correct me if i am wrong,but from newspaper and the company website,i saw CIMB,OSK and HLG's bond fund have entry charge higher than that.

If you want to put an article "understanding unit trust" you should also put all the small terms and condition and not try to hide them.

The 6.5% levied is not chargeable every year.....it's 1 time charge which is upon the redemption of all your units....I can confirmed this as I just sold few of my funds......example intial price when I bought at RM0.25, but because of the initial 6.5% charge so my funds kicked off with the value of RM0.2347.....fair enough

After 2 years say my funds value grew from 0.25 to 0.40 so the return is 60% and not 60%-6.50*2=47%

Many people are in great confuse about this. Another things is that all the management fees and all other fees have been incorporated into the 6.5% so investor need not worry about other charges.....your profit is as simple as the

[ Buying price (not selling price)* no of units in your hand ] /inital capital =%return


So its current NAV/ 0.25...Trust me I just sold of all those funds of mine. OSK is the same as well

However I do not know how it goes for other fund houses in terms of charges.

This post has been edited by chaoshero: Apr 9 2007, 10:57 AM

If someone post something on how to buy XYZ but do not tell you when NOT to buy, you should know what to expect. If you don't, you need more painful lessons to learn that.

This applies to insurance, unit trust, FD and so on...

Dreamer

The thread is still under progress and more update on the way. (Thats why i put a date on every update.)

But yet people generally is impatient and straight away jump to conclusion without looking at the whole content.

i think we are buy unit trust on selling price(6.5% service charge+NAV).you pay with selling price every time you invest,so in other word you pay the 6.5% charge on every time you invest too.the buying price or NAV is been use when you redem or sell your unit back to the unit trust company.

regards the management fees,that 1.5% charge,it charge you annualy,means every year,not per the frequent of your invest,ofcourse if you did not hold your unit fully a year,you need not be charge the management fees .another thing is,the management fees is a indirect cost,it deduct from the fund profit,not directly charge to us.

however,my above statement does not necessery say that Chaoshero's statement is wrong,the situation he write maybe is true on his fund,because i do not buy that fund.

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Added on April 9, 2007, 9:11 pmDeadalus,i agree that we need to give you some time to improve this treat.however,due to the sensitive of investment,hope you can give the negative aspect and all the don't we need aware when invest on unit trustas soon as posible.it is for the healthy growing of this topic.i look forward your tread can be a healthy,rasional and give people full picture related to unit trust investment.

This post has been edited by athlon 11: Apr 9 2007, 09:30 PM

Just take note that all the write-up here is abstracted from the reading material released by Federation of Malaysian Unit Trust Managers (FMUTM). I just summarise it for easier reading, but it seems to me that it is getting wordy.

1) You do know that posting summary from some where without any comment from you means that you implicitly agree with them.

2) My opinion is simple and direct. If you do not KNOW HOW TO CALCULATE, do not buy anything other than FD. Or else, you will lose a lot of money and not knowing it. Everyone want to sell you something because they can earn commission from you.

Dreamer

Deadalus, your siggy... "Legitimate Investment that yields 8~15% return a year" is rather misleading. The fact that Unit Trust in equity do follow the trend of equity market and therefore they do lose money. An example was my GM who have been in constant discussion with me over investment matters.

He invested in PBF from Aug 1996 to April 2001. About 5 years. In that duration he recorded a loss of 15% on his investment of 250k. Since then he has not revisited the idea until I pop it up to him. Throughout the tenure, his agent never advise him to switch despite the fact that fateful event of 1997. Obviously happily enjoying the commission from 250k worth of investment.

My point here is;

Investors are noobs. They need agents to be aware and to advise them to the best of their knowledge and not merely agents that act as messanger and postmen.

I do agree that towards certain extent inveting in UT do lose money, but my style is I always buy newly launch fund and never ever buy those funds which are already at its historical high.....suppose like if a fund XXX from 0.7999 soar up to 0.9886 and someone who buys it around there has a very huge potential to witness the very very major downfall maybe to 0.4125.....not only you lose your initial capital, but also it took a long time to recover up to that historically high value and then realized your cost of investing.

So to mitigate further the risk of losing much investing in UT, buy only at those newly launch fund.....and in markets high usually fund houses will offer balanced or income fund rather than equity fund......

On the contrary. Newly launch funds tend not to perform as well as seasoned funds. Whether the fund will continue to go up or not has nothing to do with the fact that it is at its all time high and thus wont go up anymore kind of thing.

Therefore it is most important to understand the inclination of the fund. For example specific Index Fund is only invested in index linked counters. Small cap funds are supposedly invested in counters with very small paid up... etc. So I guess your assumption is not accurate per se. But, what I do is to obtain a copy of their annual report to actually view the counters that they are in and at the end of the day make a decision whether to switch or to continue with the fund.

Unit Trust in Malaysia have matured a lot since their inception. From what I see in the annual reports, they are genuinely investing in true blue chip counters and those with potential. Hence I rather trust my EPF funds in the hands of these fund managers than for it in EPF's hands bailing out ailing GLCs.

it is been advice than in Malaysia,someone should not invest more than RM100k in equitity or balance fund due to the high service charge.

after read a lot articel in the unit trust pinned,i agree with most senior that we should always monitor our fund performance instead of blindly invest.if say after 3 years we invest the particular fund it still lost or the return is worst than fixe deposit,we need to consider switch or withdraw.

One thing I find very very very misleading is what they advertised in returns. What they advertised in returns is not what you will get and the difference can be up to 30-40%.

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Added on April 12, 2007, 11:15 amDeduct from fund profit or fund balance? 1.5% of 100K fund balance or 1.5% of 10K profit. Both are different things and can impact the returns significantly.


This post has been edited by PowerDunk: Apr 12 2007, 11:15 AM

The fixed management fee (generally 1.5%) is charged based on 1.5% of its fund NAV annually not from profit. So even the fund is losing money, they still charge 1.5% of its NAV. Whatever their performance is, unit trust company surely make money from it and won't lose a single cent.
If the fund perform well then NAV is increase then they earn more from the 1.5%.

Just they quietly charge on its fund NAV that's you won't notice. If only charge 1.5% from profit then fund house will have difficulty to survive considered that they need to rent offices, personnels, trading facilities and miscellaneous expenses on it. Then one year, the fund lose money then who is goind to pay all the expenses at that year?

Read carefuly the fund prospectus, it is charged on NAV nor profit.

Here is the link of eg. of fund incurring fee

http://www.eonbank.com.my/Individual_Banki...ct_balanced.htm

This post has been edited by cherroy: Apr 12 2007, 02:55 PM

Hwang-DBS has launched a new Fund with a focus in IndoChina (Vietnam, Laos,Cambodia).

I think it is the first fund in Malaysia to really look into the emerging opportunity in those omitted market in IndoChina. Interesting indeed.

But it has a minimum investment requirement of RM 100,000, which not many people can afford.

http://www.theedgedaily.com/cms/content.js...1f39e0-bd07972e

their so call 20%++ increase performance is mainly on the fund's NAV.for investor who want to stick long (3 years ++)in that particular fund,this kind of increase didn't bring much meaning,because you are not selling your fund now .don't forget the fund price not only can up,it can down too!

so for long term investment in a fund,their annual income distribution and unit split are more important than the xx% ++ performance increase.