More About Unit Trust Investment

Investment Planning with Unit Trust In Malaysia

Unit trust or mutual fund is becoming more popular as a component of Malaysians’ investment planning. We provide here some information on the basics of unit trust or mutual fund.

What is Unit Trust or Mutual Fund

Unit Trust or Mutual Fund is a collective investment vehicle for people with similar investment objectives. These people pool their financial resources together and invest in a fund which would then invest the fund in securities, bonds or money market. The fund is managed by a group of professional fund managers.

Unit Trust or Mutual Fund is a long term investment scheme. It capitalizes on the power of compounding interest to generate investment returns for its unitholders. Hence, it is not suitable for people seeking short term gains in the financial markets. It is a financial planning vehicle which is often used for retirement planning, savings, children education planning and also for a stable income, such as bonds and deposits.

The funds invest in different assets classes such as securities or equities, bonds, properties, deposits and commodities. It provides investors with investment returns in the forms of dividends and capital appreciation. It provides investors, in the mid to long term (3-20 years), a better returns compared to normal bank savings accounts and fixed deposits.

Types of Unit Trust or Mutual Fund

 Equity Funds

This is the most common type. Investment in this fund allows investors to own units in securities or stocks listed in Bursa Malaysia. In the long term, investors earns dividend and profit from its capital appreciation. Equity is a excellent investment for those doing retirement planning or saving for children’s education in the mid to long term.

There are many different types of equity funds to cater to investors’ risk appetite. There are Equity Local Fund, Regional Fund, Balanced Fund, Mixed Assets Fund, Index Fund that tracks the performance of Bursa Malaysia and Shariah compliant funds to cater to the needs of Muslims.  Of course there are also funds that invest in international markets such as US, China and Australia. Some of the equities funds are also approved for EPF–MIS (Member Investment scheme).

Equities provides better investment returns compared to savings and fixed deposits. Over the long term, this investment preserve or better the purchasing power of investors’ funds against inflation.

Bonds or Fixed Income

This is also known as Fixed Income Funds. It is a debt instruments issued by corporates to borrow money from investors. It promises to pay an fixed return over a fixed period of time.

Bonds issued by Malaysian government is called Malaysian Government Securities (MGS). Islamic bond is known as SUKUK fund. Bond provides a stable income for more conservative investors. Bonds are excellent investment for retirees who want a stable income during their retirement periods.

Money Market

This is short term deposits funds. It is very low risk and highly liquid. This fund invest in short term debt instruments that can range from several days to less than a year. This is an excellent investment for short term and risk averse investors.

REITS (Real Estate Investment Trusts)

This fund allows properties lovers to own some of the best properties in the Malaysia! By investing in units in REITs, small investors would gain exposure in the property market. A choice to diversify their investment portfolios.


As the name suggests, it is a fund with a mixed of equities, bonds, money market etc. It provides diversification and reduces risks for investors. 


This is a shariah compliant fund, catering to the investment needs of Muslims. This fund does not invest in businesses involved in non halal products such as gambling, alcohol, non halal food and non-Islamic financial institutions.



Investing involves a certain amount of risk. Individual investors would require knowledge, expertise, time and objectivity to manage their investment portfolios successfully. Unit trusts or mutual funds offer investors many benefits as listed below.

  • Affordability – Investors can start their retirement planning, children’s education planning or any other financial goals planning with as little as RM100.
  • Diversification – As the saying goes, don’t put your eggs in one basket. Unit trusts or mutual fund spread and lower the risks for investors.
  • Liquidity – Investors can buy and sell easily, as compared to investment such as property. Investments that are not liquid pose additional risks to investors.
  • Professional Fund Management – Unit trusts or mutual fund is managed by trained professional. They relieve investors of the stress and subjectivity or emotions involved in managing your own investment portfolios.
  • Wholesale investment cost – When investing directly or individually, investors face cost, brokerage or fees that would likely be higher. Unit trusts offers economics of scale.
  • Regulatory – Unit trust industry is a highly regulated industry. It is regulated by various regulatory bodies such as the Securities Commission. Hence, investors can be rest assured that their retirement fund or children education is invested in a safe investment instrument.

Many Malaysians believe that they do not have enough saved for retirement. According to reports, 68% (2/3) of EPF members have less that RM50,000 in their EPF savings when reaching 54. Most of them, after withdrawing their EPF savings at age 55, spend their savings in less than 10 years.

As life expectancy is improving due to better living conditions and healthcare, it is advisable that we start our retirement planning as young as possible. Average male Malaysian is expected to live 72.5 years and female 77.4 years. Hence, it is of paramount importance that Malaysians prepare themselves well for retirement. Capitalize on retirement initiatives such as Private Retirement Scheme (PRS), Private Retirement Scheme – Youth (PRS-Youth) and EPF-Member Investment Scheme. EPF-Member Investment Scheme is a scheme approved by EPF, allowing members to invest certain portion of their savings in approved funds to boost the value of their retirement funds.Contact or WhatsApp +60123898648 for more professional consultation.