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Why Phillip Mutual
We are essentially part of the PhillipCapital Group of companies, a financial conglomerate with interests in stockbroking, futures broking and fund management and information technology.
The group was established in 1975, providing a comprehensive range of financial services to retail and institutional customers.
Today PhillipCapital Group is firmly established in the financial hubs of Singapore, United Kingdom, USA, France, Japan, China, Hong Kong, Malaysia, Thailand, Indonesia, Sri Lanka, Turkey, India, Dubai, Cambodia and Australia.
The group’s more than 35 years of experience in equities, futures and fund management will be harnessed to produce results consistent with each of the Funds’ objectives.
* For contributions into the PRS and deferred annuities effective from years of assessment 2012 to 2021
What Are Unit Trust Funds?
The investment scheme of a unit trust fund can be illustrated as a tripartite relationship between the manager, the trustee and the unitholders. The Manager is responsible for the management and operations of the unit trust fund whilst the Trustee holds all the assets of the unit trust fund. The obligations and rights of each of the three parties are specified in the Deed, (a legal document entered into between the manager and the trustee, and registered with the Securities Commission). The Deed regulates the duties and responsibilities of the manager and the trustee with regard to the operations of the trust fund and protects the Unitholders’ interests.
Unit Trusts or more commonly known in the United States as mutual funds, are a form of collective investment that allows investors with similar investment objectives to pool their funds to be invested in a portfolio of assets. These portfolio may include asset classes such as Cash, Bonds & Deposits, Shares, Property and Commodities. Investors or Unitholders do not actually purchase the securities in the portfolio directly, rather the ownership of the fund is divided into units of entitlement. As the value of the fund increase or decrease the corresponding value of each unit increases or decreases accordingly. The number of units held depends on the amount of money invested as well as the unit price at the time of investment. The return on investment in unit trust is usually in the form of dividend distribution and capital appreciation, derived from the underlying investment of the unit trust fund. Each unit earns an equal return, which is determined by the quantum of distribution as well as the capital appreciation.
Why Unit Trusts?
The main advantages of investment into a Unit Trust fund is the reduction in investment risk by way of diversification as well as having approved professional investment managers manage the funds.
Unit trust investments generally tend to invest in a range of individual securities. However, if the securities are all in a similar type of asset class or market sector then there is a systematic risk that all the shares could be affected by adverse market changes. To avoid this systematic risk, investment managers may diversify into non-correlated asset classes. For example, investors might hold their assets in equal parts in equities and bonds.
As Unit trusts are a collective investment scheme, the investors can start with an investment amount as low as RM100.
In addition, since the investors is investing into a diversified portfolio of investments, rather than an investment portfolio of one or two investments or shares, his risk is better spread out in line with the saying “Do not put all your eggs in one basket”
An excellent return or â€œpaper profitâ€ that cannot be “cashed-in” or converted back to cash (i.e. sold) does not necessarily mean a good investment as poor liquidity constitutes an additional risk factor for the investor. Hence, most investors prefer that their investment to be liquid. That is, that the investment can easily be converted back to cash. Unit trusts provide this feature as units can easily be bought or sold. Some funds can even return your investment to cash within the same day.
Unit trusts fund managers are approved professionals in a highly regulated industry. Their license, background and expertise ensure that decision making is structured and according to sound investment principles. In the process, unit trust funds enjoy the depth of knowledge and experience that fund manager can bring. In the long term, it is this expertise that should generate above average investment returns for unit trust investors.
For an individual investor, it may be difficult to have exposure to particular asset classes. For example, if an investor with RM20,000 wants to be invested into property, global equity and bond market, it would be impossible to simultaneously hold a direct investment portfolio in all of these markets. However, with unit trust investments, it is possible to spread the RM20,000 around to all of these asset classes concurrently so that the investor can gain the investment exposure he seeks.
If one investor were to buy a large number of direct investments, the amount they would be able to invest in each holding is likely to be small. Dealing costs are normally based on the number and size of each transaction, therefore the overall dealing costs would take a large chunk out of the capital (affecting future profits). Pooling money with that of other investors gives the advantage of buying in bulk, making dealing costs an insignificant part of the investment. In addition, since the fund managers invest in larger amounts, they are able to get access to wholesale yields and products, which are impossible for the individual investor to obtain. For example, unlike unit trust funds, most individual investors cannot have direct access to the Malaysian Government Security market because, amongst other reasons, the amount of each transaction could run into millions of Ringgit.
With the introduction of unit trusts in Malaysia came regulation from various regulators, especially the Securities Commission. The entire range of variables relating to the unit trust industry is governed by various legislations. The sole purpose of such regulations is to protect the interest of the investing public. Regulations provide investors with a level of comfort that they are investing in a safe investment mechanism.