Author Topic: For Beginner: What is Unit Trust?  (Read 15705 times)

Offline jeybon

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For Beginner: What is Unit Trust?
« on: February 13, 2006, 12:17:26 AM »
Would like to share these:

   A unit trust is a professionally managed investment fund which pools together the money of investors having similar objectives. The aggregate sum is then invested in a diversified investment portfolio comprising stocks, bonds and other assets in accordance with the declared investment objective of a fund. The price of a unit reflects its Net Asset Value (NAV) derived from a fund's assets less its liabilities and divided by the number of units in issue. Unlike stocks, whose prices are changed at each trade, a fund's NAV is based on the closing prices of the stocks in its portfolio on each trading day.
   To protect investors' rights and interests, an independent trustee will ensure that the unit trust fund manager complies with the requirements of the Deed, the Securities Commission's Guidelines on Unit Trust Funds and the Securities Commission Act 1993. The unit trust fund manager also appoints an approved company auditor under the Companies Act 1965 to audit a fund's accounts before they are published in the fund's annual report.
Regards,
Jeybon

Offline fung

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Re: For Beginner: What is Unit Trust?
« Reply #1 on: May 12, 2006, 04:29:07 AM »
To money makers, after learning what is Unit Trust, consideration can be given to become a Unit Trust agent. :)
Cheers,
~fung~

Offline DenLee

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Re: For Beginner: What is Unit Trust?
« Reply #2 on: May 27, 2006, 10:54:05 PM »
Yup, that's the best choice.  In fact, when a unit trust agent bought the units from his own account, he pays only 3% instead of 6% for the fees.
Regards,
Denlee

Offline julez.lim

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Re: For Beginner: What is Unit Trust?
« Reply #3 on: May 28, 2006, 08:20:17 PM »
Coz.. Even if the agent were to pay 6%, the agent would earn back 3% or more..

Offline cdbox

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Re: For Beginner: What is Unit Trust?
« Reply #4 on: August 16, 2006, 12:12:26 PM »
To money makers, after learning what is Unit Trust, consideration can be given to become a Unit Trust agent. :)

Yes, because agents don't have basic salary + epf contribution. they survive by earning commission only. It is fair by paying them little commission because of their services to the investors.

Offline julez.lim

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Re: For Beginner: What is Unit Trust?
« Reply #5 on: August 16, 2006, 08:29:24 PM »
Question is how professional is their service? I am not targeting all agents... But there are some agents whose main obj is to earn the commission and never put their clients 1st.
If the agents is well verse with market changes and provides quality advice, then, I don't mind he earn some of my cash

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #6 on: August 16, 2006, 08:43:15 PM »
And a lot of them barely knows about investing.
Talk to a couple of them before and they always tell me it is very risky to invest myself.
So I told them how I invest - all the TA methods I used.
All I got was "uh-uh" and "Charts also can lose"
Which I said, "Yeah, I know that. So how do YOUR fund manager trade?"
Which they have basically no convincing answer.
Five points a day, keeps you out of harm's way.

Offline julez.lim

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Re: For Beginner: What is Unit Trust?
« Reply #7 on: August 16, 2006, 08:54:32 PM »
Let's face it. Most don't have a license to give investment advice. Only some who guard themselves with more knowledge and also paper qualification...
I tested some of them... To my surprise, I got same response as Maxforce

Offline rob2001al2001

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Re: For Beginner: What is Unit Trust?
« Reply #8 on: December 18, 2006, 06:34:29 PM »
What are TA methods? What are chartings?
This discussion puts me off unit trust. To imagine I would invest the next 14 years there??

Offline uvirra

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Re: For Beginner: What is Unit Trust?
« Reply #9 on: December 18, 2006, 08:21:16 PM »
What are TA methods? What are chartings?
This discussion puts me off unit trust. To imagine I would invest the next 14 years there??

Any type of investment do need some self study and research to be done before one get involved in it.
Unit trust is more suitable for people who can't take much risk. But you still need to do some research. Don't blindy buy any fund, find out more information about it.
TA (Technical Analysis) is used by some people when they buy unit trust, but I feel rather than doing TA on  unit trust, its more worth it to do on stock markets.

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #10 on: December 19, 2006, 12:33:57 AM »
 ;D

let me try to do something here...

give me some time, after i am free, i help to put some question in my blog for u all to ask ur agent, and see how they answer.

of coz, answer will be provided lah.

now ^ buzy until like hell..............


The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #11 on: December 19, 2006, 12:36:13 AM »
first question come to mind...

is the market efficient in malaysia? if so, how about in US? how u judge is the market is efficient or not?


second, can the mutual fund avoid systematic risk, if yes, how?
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #12 on: December 19, 2006, 12:37:37 AM »
 ;D
of coz, not try to embarass any agent lah, just testing if they really know, as a financial planner or are they salesman only..

if salesman ah... then better dun trust your money with them.
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline Energy

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Re: For Beginner: What is Unit Trust?
« Reply #13 on: December 19, 2006, 01:40:32 AM »
;D
of coz, not try to embarass any agent lah, just testing if they really know, as a financial planner or are they salesman only..

if salesman ah... then better dun trust your money with them.

maybe we should avoid those too young looking people?
hard to judge lar
the one who has nothing, has everything.

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #14 on: December 19, 2006, 01:51:36 AM »
Rob,
If you re looking at 14 yrs horizon, it d be better to use FA - Fundamental Analysis as opposed to TA.

Booffett,
I kacau daun a bit.
You CANNOT avoid systematic risk.
You can only reduce it.
OKlah, dunwan say all, later u say I no fun.
Kacau too much :P
Five points a day, keeps you out of harm's way.

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #15 on: December 19, 2006, 11:06:12 AM »
actually, you cant avoid systematic risk OR reduce them. its undiversifiable.

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #16 on: December 19, 2006, 09:25:59 PM »
 ;D
the question is to trap agent lah...

so they are lead to say yes... and may be tell u the reason is becoz fund manager like to diversify, fund manager very smart or etc...

wahhahaha....

actually yes or no also can be the answer... from my perspective

yes, if, use price and volume analysis to buy mutual fund, or might better use dollar cost averaging  to profit from systematic risk....

but, dollar cost averaging is only for those who dont know the market much...
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #17 on: December 19, 2006, 09:40:29 PM »
Actually you can, but not price volume analysis or dollar cost averaging.
Another way is hedging in opposite direction.
E.g.
Index Fund shorting the Index Futures.
You d effectively reduce your systematic risk as well.
But not completely eliminating it.
Five points a day, keeps you out of harm's way.

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #18 on: December 20, 2006, 09:14:52 AM »
how does price and volume analysis safeguard you from systematic risk?

reducing systematic risk via shorting index futures? unfortunately, you cant do that in our country. even if thats possible, would they converge? also, should you be able to reduce systematic close to a negligible amount, shouldnt you only earn a risk-free rate of return?
 

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #19 on: December 20, 2006, 10:10:21 PM »
how does price and volume analysis safeguard you from systematic risk?

reducing systematic risk via shorting index futures? unfortunately, you cant do that in our country. even if thats possible, would they converge? also, should you be able to reduce systematic close to a negligible amount, shouldnt you only earn a risk-free rate of return?
 


so, are u fundamental or technical? or hybrid?

the way i need to answer u highly depends on which ideology u insist.

i am intuition trader, so i talk on feeling... scare later my answer cant fit ur taste
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #20 on: December 21, 2006, 10:45:00 AM »
hmm...i guess im a mixture of FA and quantitative finance ;D

Offline uvirra

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Re: For Beginner: What is Unit Trust?
« Reply #21 on: December 21, 2006, 12:52:36 PM »
how does price and volume analysis safeguard you from systematic risk?
reducing systematic risk via shorting index futures? unfortunately, you cant do that in our country. even if thats possible, would they converge? also, should you be able to reduce systematic close to a negligible amount, shouldnt you only earn a risk-free rate of return?
What do you mean shorting index futures can't be done in Malaysia? First of all I think you should find out what is Futures before you start to say its not possible in Malaysia. Yes, you can short a futures but not the stock market directly yet. Bursa is planning to implement shorting on stock market next year. It sure going to make the market very volatile.

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #22 on: December 21, 2006, 03:17:22 PM »
cool pls enligthen me then, to be honest i've never traded futures. perhaps you would like to share your experience with us. im just commenting based on what i observe, technically short selling index futures is allowed, is there sufficient demand from the opposite end to generate an active futures market? at the moment, the futures index is only standing at a volume of 10k or so. also, are there limitations on speculative positions? another thing is index fund sizes are enormous, ranging in hundreths of millions, will it be possible to optimally cover a fund from any shortfall? bear in mind the contract size, number of contracts needed to cover your index fund and the current daily volume hovering at the 10k mark...possible???

if im wrong, do correct me :)

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #23 on: December 21, 2006, 06:08:58 PM »
Sigh... need to explain so many things...
First of all, kindly look at FKLI movements. Analyse them. Volume may be 10K a day. But look at the relations with OI. Do some homework before asking or commenting on FKLI. It is not technically allowed or technically disallowed. Shorting is a NORM in FKLI.
Secondly, I m saying it is possible. I m not saying it should be done. I m not a big fan of hedging as hedging is always a sure lose - in the sense that even in best possible scenario, you d still lose something. However, there are many instances whereby funds are required to hedge. Hence there is such a thing called Hedge Fund.
Thirdly, there is no 100% hedging. If there is, I doubt anyone wants it anyway. There is no 100% negative or positive correlations between two stocks or two investments.
Five points a day, keeps you out of harm's way.

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #24 on: December 21, 2006, 11:18:50 PM »
i know whats a hedge fund and sorry we still cant have them here in Msia. you too might want to do some homework on what hedge fund is all about, just because it has the word "hedge" it doesnt mean the fund hedges, thats the conventional thought.  :)

when you say shorting is normal in FKLI, are you talking from personal experiences? are you in the fund management line? as far as im concern, friends of mine who are in fund management has a different opinion.

well of course there can never be a 100% hedge, the notional amount from the number of futures contracts you use to cover a fund will never match 100%. thats why optimal hedge ratio exist.

my question now is, if shorting is a NORM in FKLI, why are there so many underperforming funds in Malaysia? shouldnt a fund manager be able to limit losses on his 100m index fund by shorting approx. 100m worth of futures contracts? afterall 100m is enough to replicate a portfolio which can mimic KLCI nicely to bring the correlation up.

need not sigh Maxforce, we're all here to learn and give, perhaps you could clear my questions. keep an open mind ;)

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #25 on: December 21, 2006, 11:31:01 PM »
Another cocky beginner.
Whether hedge fund is in Msia or not is irrelevant. I was merely pointing out that there is such a thing called hedge fund.
Shorting is normal in FKLI. I trade FKLI.
You mentioned - unfortunately, you cant do that in our country
You did not however mentioned whether it can be done or cannot be done by any particular party.
I shorted every now and then in FKLI. Thats enough to say you were *.

"why are there so many underperforming funds in Malaysia? why are there so many underperforming funds in Malaysia? afterall 100m is enough to replicate a portfolio which can mimic KLCI nicely to bring the correlation up."
As I have said before, I m not a fan of hedging. I ve always find them pointless. The cost of hedging will bring down your profits. If you weren't comfortable with the risk in the first place, don't trade.
Another point. Consider this. If there is 100% correlation, would there be anyone who would use it? I think not. Because ultimately every investment/trading is not about minimising risk with no gain. But maximising profits with minimal losses.

Shorting is a normal everyday occurance in FKLI. Accept that fact.   
Five points a day, keeps you out of harm's way.

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #26 on: December 21, 2006, 11:54:57 PM »
keep the insults to yourself alright. constructive criticism are enjoyable, words like cocky, *, etc wont help. like you mentioned im a beginner, you're suppose to help ppl out.

i accepted the fact that shorting futures is allowed, like i said, "to be honest ive never traded them before" but i have friends in fund management who talked about difficulting in shorting futures when it comes to index funds.

on my question, you didnt answer it, i asked why are they underperforming if shorting futures was such an easy case. you answered "i'm not a fan of hedging, i've always find them pointless". how does that answer my question?

on the correlation factor, yes there can never be a 100% as i've mentioned. fund managers are actually working hard to come up with index funds capable to correlating 100% with the KLCI. why not?

keep it clean maxforce...

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #27 on: December 22, 2006, 12:06:13 AM »
Sorry, I m under no obligation whatsoever to help anyone out. Speaking of which, no one is obligated to help you either.
AND if you could read between the lines, I AM helping you. If not, I wont waste time replying to you.
Now, good step you re accepting that shorting in futures is a norm. Case closed there.

Dont dwell too much on the CFA books. Index funds?
I dislike them either.
Why? If market is doing well, you re doing good.
But what happens when market crash like 97?

Correlating with 100% of KLCI?
Not good either. Same reasons above.

Point is, no point correlating with CI.

Why are they underperforming if shorting CI was such an easy case?
Look, if CI is bullish, and they shorted, tell me, would they be more underperforming or what?
2006 is considered a good year. CI trended upwards. So if there are any underperforming funds (which there are), tell me, what does it got to do with whether they could short the CI or not?

Point is, hedging is pointless here too.

The reason why the funds are underperforming are different story altogether. From mismanagement, poor TA skills, typical Malaysian mentality of not my money, embezzlement (if any) to whatever. But thats another story. If you d like to know why funds are underperforming, I d need a longer than one post. In fact, I d invite booffett to give his view first. :P
Five points a day, keeps you out of harm's way.

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #28 on: December 22, 2006, 12:21:50 AM »
about the CFA stuff, some really rubbish, some very useful... no a single yes or no can conclude any answer.

well, fund in malaysia not performing? i feel some very good loh, like public mutual (able to survive in our country tat got many snakes, crocodile, tiger, and of coz sheep)... after all Malaysia u think is a golden area for investment? wahahaha...

somehow, why perform so good in fund managment, might better set up passive investment ideology and focus on marketing effort... and of coz, fund manager also need to spend time to convince other why they are getting the 1.5% management fees right --> so they cant full time manage ur money lah...

just tolerate with it lah...
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #29 on: December 22, 2006, 12:26:28 AM »
now thats a better reply. thats the way it should be...

agree with certain things you say but i dont think hedging is pointless. its only pointless if you're certain on how long the market can remain bullish/bearish. the slide the other day after what the thai gov did was unexpected, hardliners dip pretty bad, now hedging would help a little there wouldnt it.

correlation of 100% gives a perfect hedge, well given a choice i would take that perfect hedge if it ever exist.

booffett's view is too much on TA, not my liking but i'd love to hear about FA and math finance  :)


Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #30 on: December 22, 2006, 12:30:06 AM »
Slide after Thai was unexpected? If you re using FA, it would be expected.
If you re using TA, you d expect a down, but the quantum wise was unexpected for me.

100% correlation? To CI? or to your other investments?
100% correlation to CI is easy. Buy all the 100 CI component stocks.
Perfect hedge to your other positions? How da heck are you going to make money!???
Five points a day, keeps you out of harm's way.

Offline booffett

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Re: For Beginner: What is Unit Trust?
« Reply #31 on: December 22, 2006, 12:31:19 AM »
now thats a better reply. thats the way it should be...

agree with certain things you say but i dont think hedging is pointless. its only pointless if you're certain on how long the market can remain bullish/bearish. the slide the other day after what the thai gov did was unexpected, hardliners dip pretty bad, now hedging would help a little there wouldnt it.

correlation of 100% gives a perfect hedge, well given a choice i would take that perfect hedge if it ever exist.

booffett's view is too much on TA, not my liking but i'd love to hear about FA and math finance  :)



oh my god, i eat FA, sleep FA, play FA, u say i am TA...

hedging, kekekekek, is costly actually... particularly in volatility market like now, BSM option pricing will shoot up like hell....
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #32 on: December 22, 2006, 12:33:01 AM »
Hahahaha yeah... missed that one!!!
Maybe you re more suited for TA :P
Five points a day, keeps you out of harm's way.

Offline itoslemma

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Re: For Beginner: What is Unit Trust?
« Reply #33 on: December 22, 2006, 12:46:17 AM »
got no money for that 100 stocks haha. well the whole point of achieving that optimal hedge ratio is to minimize risk, you stand to offset whatever your fund loses when the market dips.

so booffett is FA? but he talks about TA all the time.

volatile market, are we seeing warrants at a premium? :)

Offline Maxforce

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Re: For Beginner: What is Unit Trust?
« Reply #34 on: December 22, 2006, 12:53:10 AM »
If that is the case, then even if your hedge to CI is 100%, the dip in CI will only kill you.
how would that minimise your risk and how would the hedge help in the thai caused dip?
Five points a day, keeps you out of harm's way.

Offline julez.lim

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Re: For Beginner: What is Unit Trust?
« Reply #35 on: December 23, 2006, 08:23:08 AM »
Seems like this topic has diverted to FA and TA..

Nevermind. Guys, have you heard of something called beta? Pretty sure booffett knows bout it.
COuld it be a useful tool in stock investment/speculation? I learnt there's some way to calculate intrinsic value of a stock with beta

Offline Energy

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Re: For Beginner: What is Unit Trust?
« Reply #36 on: December 29, 2006, 01:48:34 AM »
just a silly newbie question

is REIT consider unit trust?
i mean unit trust that manages properties
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Offline jeybon

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Re: For Beginner: What is Unit Trust?
« Reply #37 on: December 31, 2006, 01:54:53 AM »
Yes.  That's why it's called Real Estate Investment Trust
Regards,
Jeybon