Introduction
to Unit Trusts
DEFINITION
Unit
trust fund is an investment scheme structured to allow investors
with similar investment objectives to participate in the money,
debt, equity and derivative markets. Professional investment managers
who channel their efforts towards achieving investment objectives
ranging from regular income to capital growth, will manage funds
collected from the scheme.
Unit
trusts are excellent vehicles for individual and corporate financial
planning due to their affordability, liquidity and relatively low risk nature.
HISTORY
OF UNIT TRUST
Foreign
and Colonial Government Trust was known as the earliest unit trust
originated from UK. The scheme was available for subscription
on 20 March 1868. There were a number of investment portfolios
held by a trustee and the selection was made responsible to a
manager. Investors will be issued sub-units and the creation of
further investment will only be allowed if spelled out by the
trust deed.
Following
to the schemes was several others that include The Submarine Cables
Trust. The trust invests into several cable companies despite
paying its members’ regular dividend, when the portfolios
are performing. They diversified their portfolio because the nature
of submarine cable companies was such a risky venture.
By
70’s, unit trust is beginning to gain its popularity in
the US, UK and Australia.
Likewise
in Malaysia, its first unit trust is First Malayan Fund established
in 1959, which was managed by Malayan Unit Trust Ltd.
Below
are brief recorded establishment of unit trust fund in Malaysia.
| 1966 |
Asia
Unit Trust launched its maiden fund AUTB Investment Fund |
| 1967 |
The
First Bumiputra Fund by Amanah Saham Mara Berhad was launched. |
| 1977 |
MIC
Unit Trust Berhad launched its First MIC Unit Trust. Now
the manager is known as KL City-Asmic Unit Trust Management
Bhd and currently managing three funds. |
| 1981 |
Kuala
Lumpur Savings Fund was launched, now is known as Public
Savings by Public Mutual.The important turning point in
the industry took place is when Amanah Saham Nasional (ASN)
was established by Permodalan Nasional Berhad (PNB). The
fund captured the majority bumiputra’s market and
the investing culture is being cultivated from there since. |
| Late
1980’s |
Witnessed
an emergence of several unit trust companies such as Arab-Malaysian
Unit Trusts Berhad, currently known as AmInvestment Services
Berhad and Commerce Trust Berhad. |
| 1990’s
|
Rapid
establishment of new unit trust companies and also the increase
of total funds’ size in the market. |
| 2002 |
Phillip
Mutual Berhad came into existence |
REGULATORY
FRAMEWORK FOR UNIT TRUST IN MALAYSIA
The
Securities Commission regulates the unit trust industry in Malaysia.
The Securities Industry Act 1983, Securities Commission Act 1993
and Guidelines on Unit Trust Funds are the principal legislation
governing the industry. The Securities Industry Act 1983, the
Securities Commission Act 1993 and the Guidelines are structured
to protect the investing public and outline the roles and responsibilities
of the Manager and Trustee. The formation of the Manager and the
appointment of the Trustee, Directors, Investment Committee and
Chief Executive Officer must be approved by the SC.
STATISTIC
OF UNIT TRUST IN MALAYSIA (source: FMUTM)
MAIN
PARTIES INVOLVED IN A UNIT TRUST
The relationship between the Unit
Holders, the Trustee and the Manager in a unit trust scheme is
governed by a Deed, a legal documentation, which outlines the
rights and responsibilities of all parties.
Illustrative Diagram of the Main Parties Involved in a
Unit Trust Scheme
ADVANTAGES
OF INVESTING IN UNIT TRUSTS
