Unit Trust

Definition It is a collective investment scheme where money from many investors is pooled together for collective investment. Conceptually, it can be illustrated as a tripatite relationship between the managing company, trustee and unit holders, that was governed by the deed registered with the Securities Commission of Malaysia. As it is professionally managed fund, unit holders stand to gain managers expertise, liquidity for redemption, easy transaction, and diversification. In Malaysia, most trust funds are quoted which means that the price will vary according to the closing composite index of BMSB , based on their respective net asset value.However, there are also unit trust fund not quoted which means the price is fixed for buying and selling.(example fixed price of RM 1.00 that is specially designed by Pemodalan Nasional Berhad (PNB) for its Amanah Saham Bumiputra (ASB),Amanah Saham Wawasan, and Amanah Saham Didik.

Types Of Unit Trust Fund The open - end fund This fund is open ended as there is no fixed pooling of money and no limit for the number of units of shares to be bought and sold. This is because that shares and fund are not listed on BMSB. Unit holders are free to buy and sell at manager price in any business days. Therefore, when investors buy units, more fund are available for investment by the management company while redemption reduce it.

The closed end fund This fund is closed ended as it has a fixed capital base and number of unit of shares to be offered to the public. The trading mechanisms is similar to Initial Public Offering (IPO). Unit holders are in fact the share holders of the issuing companies whose business is also buying and selling of shares and other financial assets. This fund is required to be listed on BMSB and hence, price will be determinred by the market forces as any other quoted ordinary shares. It also does not issue and redeem shares on continuous basis.In other words, once the shares were listed officially at BMSB, they would be traded between existing holders and potential buyers.

Advantages of unit trust investment Diversification It allow the investor to invest in a broader range of securities than they could when investing investing on their own. This diversification or spread minimized the risk for unit holders as compared to direct investment in stock market.

Liquidity There will be easier to buying and selling the units compared with investing directly in shares companies where prices and opportunity to transact depend on the supply and demand at that time. As such, unit holders can redeem their investment at any business days at managers price

Continuous Professional Management Trust professional fund managers managed investment. They managed the fund in a structured manner as opposed to the individual investor who may invest randomly. This take the worry out of the day to decision to buy or sell an investment where the fund manager does it for all for unit holders professionally.

Access to broader array of financial assets Fund manager can trade in investment normally inaccsessible to the individual investor, such as government and corporate bond. Unit trust enable an individual investors to enjoy the benefits of diverse financial assets with a small with an small capital outlay as unit trusts represent a pool of funds from many investors.

Affordability Unit trust investment involves a minimum capital outlay as most funds accept investment, small or large, thus making it affordable for the average investor to get started.

Valuation of unit trust Valuation Point Refers to such a time on a business day as may be decided by the manager wherein the Net Assets Value (NAV) of the fund is calculated. The final valuation for each business is carried out at the end of the day immediate upon closing of the BMSB. Only one valuation of the NAV of fund is conducted under normal circumstances on each business day at the close of BMSB. The NAV per unit is obtained by dividing the NAV of fund by the number of unit issue, rounding to 4 decimal place. The NAV per unit thus forms the basis for the computation of the selling and repurchase price. Example: If total NAV is RM 600 million and number of units is 2 million units, the valuation of NAV will be as follow: Total NAV No.of units NAV per unit(RM) 600,000,000 2,000,000 600,000,000 2,000,000 RM 300

Net asset value per unit -