A Personal Finance Blog for Malaysian: How to invest "right" in a mutual fund (a.k.a Unit Trust in Malaysia)?

Sunday, November 7, 2010

How to invest "right" in a mutual fund (a.k.a Unit Trust in Malaysia)?

Today attended the 2nd day of a 2 1/2 day class in "Learn to Invest In Stock Market - Tutorial 101". The trainer told us a bit of history in changes of Bursa listing requirement in the public spread and public shareholding.   Ok, cut it short, it means there are less retail investor nowaday as compared to in 1990s, especially the younger generation (below 40s) (Google this: Bursa Malaysia's Market Chat 2010/2011)


Extract of news

(吉隆坡22日訊)大馬交易所(BURSA, 1818, 主板金融組)首席執行員拿督尤斯利表示,隨著馬股散戶投資者趨向老化,交易所專注的其中領域,就是要培育一群可持續的散戶投資者,以使馬股具更高流通率及蓬勃活絡。
尤斯利指出,調查顯示,馬股散戶投資者趨向高齡現象,即以40歲以上為主。許多大馬年輕人避開股市,因為他們對股市有錯誤觀念,認為股市是“高度危險”、“昂貴”、及“難以學習”的東西
My opinion (without statistic to support) is most younger investors are actually "buy" unit trust to invest as compared to direct invest in Bursa. There are so many funds launch each and every year, if not because of the investors buying unit trust, how can all the fund manager launch more funds each and every year, right?

So, how many of these investors have actually make good return from the investment with Unit Trust? I don't have the statistic also, may be I should start a online poll with enough vote. Please vote at the end of this post.

To know how to invest "right", we must understand the pros and cons of invest via mutual fund.

The pros
  1. Can invest by regular saving in small amount of RM100 onwards
  2. Can start invest by small amount of RM1,000 onwards
  3. Can access to the service of professional fund manager (Assumption: sure better than average man on the street)
The cons
  1. Initial charges as high as 6%
  2. High management fee (but this is a debatable issue)
  3. Rules that control the operation of unit trust
  4. No advice or service from agent who sold you this 
  5. Good fund manager may change job but you will not be informed.
  6. Switching fund may be costly 
You just can't be too lazy to invest. A good fund may turns bad in years to come so a certain degree of understanding of what your-hard-earn money is parked with. You just have to learn as much as you can about investment vehicle that you have park your money with.

Ignorance may be very costly. If you work hard to earn money, isn't it logic to spend extra effort on part time basis to let your money make moeny for you?




Have your Unit Trust investment given you a good return?