WHAT IS UNIT TRUST (Part 1)

I would like to share about Unit Trust. In general, unit trusts are a form of collective investment that allows investors with similar investment objectives to pool their funds to be invested in a portfolio of securities or other assets. A professional fund manager then invests the pooled funds in a portfolio which may include the asset classes listed below:

1. Cash
2. Bonds & Deposits
3. Shares
4. Properties
5. Commodities.

Unit holders do not own the securities in the portfolio directly. Ownership of the fund is divided into units of entitlement. As the fund increases or decreases in value, the value of each unit increases or decreases accordingly. The number of units held depends on the unit purchase price at the time of investment and the amount of money invested.

The return on investment of unit holders is usually in the form of income distribution and capital appreciation, derived from the pool of assets supporting the unit trust fund. Each unit earns an equal return, determined by the level of distribution and/or capital appreciation in any one period.

Unit trust investors are typically those with savings to invest, who neither have the time nor the inclination to hold portfolios of direct investments or shares. Rather, they prefer to invest in a secure, reputable investment vehicle which suits their purposes. 

We can choose Public Mutual Berhad as our fund manager in relation to this Unit Trust investment. For Muslim, there are many Shariah-compliant fund had been established out there especially by the Public Mutual Berhad. Thus, we may invest in such funds which permissible according to Shariah principle.

To be continued (Part 2)..