Found in Australia, Ireland, the Isle of Man,
Jersey,
New Zealand, South Africa, Singapore, Malaysia and the UK, unit trusts offer
access to a wide range of securities.
Unit trusts are open-ended
investments; therefore the underlying value of the assets is always directly
represented by the total number of units issued multiplied by the unit price
less the transaction or management fee charged and any other associated costs.
Each fund has a specified investment objective to determine the
management aims and limitations.
Structure
- The fund manager runs the trust for profit.
- The trustees ensure the fund manager keeps to the fund's investment objective and safeguards the trust assets.
- The unitholders have the rights to the trust assets.
- The distributors allow the unitholders to transact in the fund manager's unit trusts
- The registrars are usually engaged by the fund manager and generally acts as a middleman between the fund manager and various other stakeholders.
Are you making profits?
The most accurate measure of a
mutual fund's performance is its gross profit or loss. It is the total
redemption value minus the capital invested. It's typically reported as
percentage return and is derived by dividing the gross profit by the amount of
your initial investment.
How can you know whether you have
profitted or not? It's simple. This is how you calculate.
For example: You invested
RM12,000 into fund ATC at a unit price of RM0.50 a year ago. This purchase will
result in your having 24,000 units of the fund. If the manager's current buy
price is RM0.52, your current value will be: 24,000 units x RM0.52 buy price
per unit = RM12,480. This means your gross profit is RM480.00.
Your gross profit is then: RM480
/ RM12,000 = 4%.
If your investment was made 2
years ago and the gross profit is the same i.e. 4%, then your annualized profit
is approximately: 4% / 2 years = 2% per annum.
Gross profit % and Annualized
profit (ROI% p.a.)
Gross profit is profits without
consideration of the duration of investment.
Annualized profit: When the
investment duration is for periods longer than a year, the annualized profit is
measured by dividing the gross profit with the number of years invested (as in
the example above).
Among the key factors that
influence gross profit are:
- the direction of the overall market or markets in which the fund is invested,
- the performance of the fund's portfolio of investments, and
- the fund's fees and expenses.
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