Some unit trust funds do declare dividends and unit splits to its unitholders. Please bear in mind that actual dividends received under the unit trust funds have been reflected in daily NAV and unit splits is just increase number of units holding by unitholders. Both actions, therefore, do not increase fund value as the price will be adjusted down by the same percentage declared. Worse still, if dividend is declared, it will incur personal income tax which will reduce unitholders’ return. In short, unless fund manager realize that the excess fund has limited investment opportunity, declaration of dividend for unit trust funds do not do any good for unitholders.
As only you yourself know what you really want and do not expect other people fully understand what you are thinking about. As unit trust investment is an operation on delegating your investment right to third party, namely fund manager, under trust, do not expect fund manager will act according what you intend to act. It is because they have deed of trust to follow.
For example, in the prospectus, it highlights the minimum exposure of the fund is 50% in equity. In case of equity market downturn, the manager can only reduce its equity exposure to the minimum 50% but not less than that. You therefore must seek for alternative way like sell your units or switch to conservative fund like bond fund.
Also, from the periodical investment performance report, you may realize that some of the counters hold by the fund manager may not be the counters you favor to but you just can’t control it.
Therefore, I strongly suggest you to carry out share investment by yourself as you will be in total control. Unit trust investment can be considered as a learning process in share investment or when you have limited capital. Once you gain enough experience on share investment or have enough money, by all mean, change your path to direct share investment.
Happy investing.
Tuesday, December 29, 2009
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I also think that I have more control in share market if doing enough homework. I can buy and sell online easily compare to unit trust which need to process through agents.
ReplyDeleteAnother thing which I am doubtful of is unit trust agent, especially public mutual fund. The requirement to become agent is too low that anyone can become an agent if he/she want to. How can I trust someone like them?
If I really opt for it, I will buy it ourself. If not mistaken, we can buy it online ourself right? Correct me if I am wrong. :)
Yes, we can buy unit trust online with more relatively much lower upfront charge.
ReplyDeleteAnother thing we need to bear in mind is that there are also hidden charges like management charges which is deducted from daily NAV that will also affect our investment return. That is why, if you have enough fund, it will be better to invest directly in share market.;)
Hehe..online is more cheaper than going through an agent that only seeks commissions
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