Some investors may wish to have an investment in all the major asset classes to reduce the risk of investing in a single asset class. A balanced unit trust fund generally has a portfolio comprising equities, fixed income securities and cash.
An equity unit trust is the most common type of unit trust where its concentration of investments is focussed in equities or securities of listed companies. Equity unit trust funds are popular in Malaysia as they provide investors with exposure to the companies listed on Bursa Malaysia. The performance of the units is therefore linked to the performance of Bursa Malaysia. A rising market will normally give rise to an increase in the value of the unit and vice-versa. There is a wide array of equity unit trusts available in the market, ranging from funds with higher risk, higher returns to funds with lower risk, lower returns.
ETF is linked unit trust fund whose investment objective is to achieve the same return as a particular market index. ETF often have low expense ratios and can be bought and sold throughout the trading day through a stockbroker, on an exchange.
Fixed income funds invest mainly in Malaysian Government Securities, corporate bonds, and money market instruments. The objective of a fixed income fund is usually to provide regular income.
These funds invest in a range of companies that closely match (or “track”) companies comprising a particular index.
International equity funds are funds primarily invested in overseas stock markets.
Money market funds invest in liquid, low risk money market instruments that are in effect short-term deposits (loans) to banks and other-low risk-financial institutions, and in short-term government securities. Hence, money market funds in general have relatively lower risk and provide stable income returns.
REITs invest in real properties, usually prominent commercial properties and provide the investor with an opportunity to participate in the property market in a way which is normally impossible to the small time investor. By investing into REITS, however, it is possible to invest a small amount to gain exposure to the property market and have diversification in your portfolio.
The objective of Shariah funds is to invest into Shariah compliant investments which for example exclude companies involved in activities, products or services related to conventional banking, insurance and financial services, gambling, alcoholic beverages and non-halal food products.
