WHAT IS A UNIT TRUST?

A unit trust is a form of investment which provides a relatively easy way to invest in the Malaysian stock market and other approved investments. It pools the financial resources of individual and corporate investors for the purpose of making large-scale investments in a broadly diversified portfolio of stocks and bonds, or other specialised instruments.

The organisation of a unit trust can be illustrated as a tripartite relationship between the manager, the trustee and the unit holder. This relationship is governed by the deed. The deed is a legal document drawn up by the manager and registered with the Securities Commission, which regulates the industry. It is designed to govern the operation of the fund and protect the unit holders. The trustee holds all assets of the fund and makes the transactions of securities and shares upon the request of the manager. Thus, the manager makes the investment decisions for the fund, but is not in possession of the investments.

Quite simply, unit trust is an easy and efficient way to enjoy the earning potential of large-scale investments, with the risks spread out over a broad selection of permitted securities.