Unit Trust

Topics: Investment, Collective investment scheme, Bond Pages: 2 (571 words) Published: April 15, 2012
Unit Trust is a collective investment scheme that pools the savings of a large number of investors. The money collected is invested by the fund manager in different types of stocks, bonds, or other securities in various proportions depending upon the objective of the fund. The income earned through these investments and the capital appreciation realized by the scheme, after deducting the trading costs and expenses of managing and administering the fund are paid out to the unit holders in proportion to the number of units owned by them. Most of the unit trust funds in Malaysia are open-ended funds. The fund sells as many units as you and other investors want to buy and buys as many units you want to sell. This makes unit trust funds very liquid investments – though the price at which you sell may be less than your purchase price if the value of the fund has dropped. Here are some types of unit trust fund. First equity funds. An equity unit trust is the most common type of unit trust. The major portions of its assets are generally held in equities or securities of listed companies. Equity unit trust funds are popular in Malaysia as they provide investors with exposure to the companies listed on Bursa Malaysia. The performance of the units is therefore linked to the performance of Bursa Malaysia. A rising market will normally give rise to an increase in the value of the unit and vice-versa. There is a wide array of equity unit trusts, available in the market, ranging from funds with higher risk, higher returns to funds with lower risk, lower returns. Second fixed income funds. These funds invest mainly in Malaysian Government Securities, corporate bonds, and money market instruments such as bankers acceptance and fixed deposits. The objective of a fixed income or bond funds is usually to provide regular income, with less emphasis on producing capital growth for investors. It is possible, however, for fixed income funds to generate both capital gains and losses...
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