Get to know why you need a unit trust fund.

unit trust fund

This is a type of mutual fund scheme that is structured as an open-ended scheme, therefore investors can purchase and redeem units at any time. It invests in other securities, such as stocks and bonds. The trust deed of a unit trust fund structure must stipulate that the portfolio manager may use a wide range of investment strategies and techniques to achieve the fund’s investment objective, as stated in the trust deed.
Why do you need it

1.Tax efficient

This type of investment is allowed to enjoy tax breaks under the Income Tax Act,1961. This is a type of fund which allows enjoying untaxed dividends and capital gains. Capital appreciation is taxed at 20% while dividends are not taxed, this only applies to investors who hold the units for a minimum of 12 months before selling them.

  1. Department of economic affairs (DEA) introduced new regulations:

This type of investment is allowed to enjoy tax breaks under the Income Tax Act,1961. This is a type of fund which allows enjoying untaxed dividends and capital gains. Capital appreciation is taxed at 20% while dividends are not taxed, this only applies to investors who hold the units for a minimum of 12 months before selling them.

  1. Diversification:

Its scheme has been structured in such a way that it can help diversify your risk and can give you a good return on your investment. This type of fund is different from the other unit trust fund in Malaysia because it gives an investor the option to choose from the management style of each fund manager. Therefore, you can invest with a specific mutual fund for a particular strategy that you feel would be profitable for an essential asset allocation.

  1. Liquidity:
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In order to be able to get rid of any of these funds quickly, many investors may consider this type of investment especially when there is a sudden need for cash flow. This also helps them avoid expensive exit charges if they sell their units within a year or three years respectively.

fund.

  1. Professionals run it:

A professional financial advisor will do research on choosing a fund for you or suggest a list of mutual funds that have been picked out by him.

How to choose the right unit trust and what to consider:

1) Investment styles:

There are many investment styles with different characteristics and performance, each has its own advantage and disadvantage. Following are some common investment types i.e.: “Index Tracking”, “Growth”, “Value”, “Income”, and “Cautious”.

2) Risk/Reward Ratio (RRR):

Taking into consideration your age as well as financial position is extremely crucial when choosing the risk/reward ratio of your investments because this will help accomplish your fitness goal by making sure that you can reach it on time.

3) Investment objective:

Your investment objective must be compatible with your risk/reward ratio. This will help to ensure that you are on the right path in order to achieve your financial fitness goal in time. There are two types of objectives i.e.: “Accumulation” and “Capital growth”, this refers to the motive of an investor when choosing this fund for investment purposes.

4) Services offered by different funds:

Many investors look at services being offered by different funds, below are some common services stated on their website or prospectus: “Monthly income”, “Dividend reinvestment plan (DRP)”, “Dividend reinvestment share (DSR)”, and “Switches”.

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