Best Strategic Approach to Unit Trust Investment

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Conventionally, unit trust investment has been viewed as a passively kept investment vehicle by professional advice. The basic idea of unit trust investment is pulling all capital from retail investors and let professionally trained fund house officers to manage market fluctuation. The purpose is to help those who have money to invest stock market but refuse to learn how to maneuver stock investment. These cash rich individuals would entrust their capital to others to invest.

Unnecessary Losses

Consequently, many reported that they have lost their money invested in unit trust. These miserable individuals are normally those who are ignorant about the nature of stock market and refuse to learn about market investment. They were charmed by sale agents or so called consultant to believe that these fund houses can generate an awesome return based on their fund past performances. Investors can sit back, relax and enjoy return of investment in long term. How long is long term? No one has really asked, and the answer can be ambiguous even if it is asked. But somehow these rich thoughtless individual would believe these unit trust consultant for various reason.  

Worst still, professional investment circle, especially online write up information often give misleading wrapped up but beautiful academic information for new investor. Information such as setting up Investment Objective before you invest is one of the most misleading pieces of information this professional circle ever gives. Aside from regular saving plan, there is no other way market investment can generate a calculated rate of return to any one participating market investment long term. Hence it causes misunderstanding and disappointment.

If anyone started with such an objective and plan in mind with the duration of a certain time span investing a lump sum, he will surely find such advice devastating or destined to unnecessary disappointment. Because unit trust participants garner return of investment from the stock market. Stock market behavior is always non predictive.  Invest passively with unit trust fund houses might not necessary help you gain the return you have calculated according to your plan and objective. It might even produce losses when the market is bearish like current market condition.

Invest with a Correct Way

As such, it is always advisable to learn how to do investment yourself, especially through DIY online, instead of laying aside your money with fund house managers passively. Thanks to advance online technology nowadays that make everything can be done online. Unit trust online investment portals can be easily found on the website in Malaysia. Recommended portal are such as, or others.     

Whoever wants to learn how to do investment, the easiest way is do it through online unit trust portal, rather than going straight to stock market where 90-95% of participating investors failed to make successful or positive return over the years.  Involving investment through unit trust DIY way, rather than stock, will be like riding on the shoulder of the giants in the battle field. (For more strategic discussion on DIY way, please read Strategic Unit Trust Investment section of this blog write up.)

Stock market environment will be like an ocean where bigger fishes prey on smaller fishes. It is a zero sum game where no one really earns anything, but merely an activity of taking advantage from the stronger ones over the weaker ones. If we invest through unit trust, we will be like riding on the back of the giant fish, taking advantage over smaller fishes (retail stock investors) on the ocean.

Focus on the Forest, not the Tree alone

Most professional write up online advising unit trust investments are also erroneous. They often advise investors to study the fund carefully before they invest through a particular unit trust. They have forgotten investment is dealing with the stock market reflecting the underlying economy where the fund is invested. If the economy where the fund invested is doing well, the stock market will grow.  So will the fund. It’s like advising a forest student to study the specific tree but neglecting to look at the forest where the tree is grown.

Studying individual fund will be like a study looking at a particular tree alone but forgetting the forest.

They often mention about management fee, annual expense ratio, trustee fee etc to warn investors to be aware of. These are actually non essential information for individual investor. (For detail discussion, please read Misleading Information 2.) They are all reflected in the fund performances over the years.  All these performance data can be gathered easily through a simple online search via free portal such as Morningstar

In understanding the fund before you invest, you just need to know where the fund is investing, their past performances as compared to the same group of fund, their fund entry and exit charges and platform fees if any; after this, you will be ready to go. Normally, the name of the fund itself will tell you clearly where the fund is investing. If not, the prospectus or fund fact sheet will tell it all.  Those technical fee and expenses mentioned above are not important for us as retail investors. Reading through those figures will often confuse investors who normally do not have accounting background. These figures are there for academic comparison and transparency purposes, not for us as retail investors.

The most important factor for investor to consider investing via unit trust is the market condition. All investor needs to have a basic (not in-depth) understanding about economy before you invest. This information is normally available freely online news portals or printed daily newspapers. There is no need to do detail research like stock involvement before an individual invest. Not like stock investment where investors have to do a lot of “home work” before he picks an individual stock to invest. If anything goes wrong, he will be blamed for not doing enough “home work”.  In reality, it might not be so.

As such, I often post these economic update articles on my Facebook page, Investment Interest Group.  Tracing this news would normally sufficient to understand market sediment and decide on the right atmosphere to invest.

Best Capital Protection

Losing your capital while you invest through unit trust is not necessary if you do it correctly. I believe those who are frightened seeing losses in their unit trust investment are not doing it correctly. Even for a time like now, while Malaysia market or global markets are having correction, those who follow my unit trust investment advice still able to see their investment positively inching up, including mine.  That should be how easy it is with unit trust investment. Invest into the market, not the fund itself. But you have to do it strategically, prudently, attentively and correctly.

Those who experienced frustration or struggling with the stock market investment, regardless options, futures, indexes, cryptocurrencies, derivatives or any others, I would strongly advise you to switch to unit trust investment, but when you invest, you have to do it properly, uniquely (not following professional advice in passive investment style)  and wisely, especially through the DIY method.   

Happy reading and make your wiser choice of investment vehicle change!

For more discussion, please visit Unit Trust Investment: A Better Choice than Stock

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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions.  This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to conclude individual decision.

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