The unit trust is a flexible way to invest money, and is involves 3 separate parties, who are the fund manage, the investor (unitholder) and the board of trustees. The units are all pooled into a fund, which is controlled by the fund manager, who makes decisions regarding buying or selling. The fund manager has a lot of responsibility, and although history does not mean the future is guaranteed, his reputation is a critical indicator of how the fund is likely to perform.
If you buy into a mutual fund, you are termed the beneficiary, as any profits are paid to you, rather than reinvested. Not all countries permit mutual funds, but a mutual fund in Malaysia is a viable investment, and with other countries like the UK and Singapore, there are perhaps a dozen nations where funds can be created. The many benefits for the investor include flexible payments and regular dividends, and with the right bank involved, you should receive satisfactory returns.
These are carefully selected people with the right experience and background, and their job is to ensure that the trust manager follows the objectives of the fund, and also to safeguard the fund’s assets. If you deal with an established bank, they would have their own mutual fund managers and trustees that have an excellent track record in this type of investment.
The Fund Manager
Definitely the most important role, the fund manager decides what to invest in, and this might take the form of stocks or bonds, or even small shares of companies. Having this expert in control gives the investor added confidence, and fund management really is performance based, so it is advisable to do some homework on the fund manager’s past performance. If the fund is managed by a bank, you can be sure they have more than qualified fund managers, and with a choice of a monthly investment or a single lump sum payment, the investor can choose how to partake in the investment.
One of the reasons why people like unit trust funds is that they are well regulated, with a board of trustees whose job it is to oversee the fund, and they are ultimately responsible for the fund’s assets. Some people are very reluctant to invest in anything that does not have good management, and with the right bank behind the fund, you are much less likely to suffer a loss. The fund manager would be very experienced, and his or her objectives are primarily profit based, and using their best judgement, would always strive to provide optimum returns for the unit holders.
Unit trust funds are not for everyone, but they are nevertheless a very popular way for investors to ensure their money sees a healthy return, and by dealing with an established financial institution, you can really narrow down the chances of an unfavourable outcome.