The local unit trust industry, a popular form of managed investment, has been
greatly affected by the beleaguered local stockmarket. Generally, the local unit
trust performance received a heavy beating particularly for growth funds that invest
principally in stocks.
Some unit trust investors who thought that they were buying a lot cheaper not very
long ago may be disappointed with unit prices sinking even lower. Unit trust investors
should not panic and sell all their investment holdings amid the on-going market
Cutting losses on your unit trust investments which should be viewed as medium-to-long
term is certainly not a wise strategy. You should take the current attractive prices
as a buying opportunity.
Why worry about short-term declines if you are investing in unit trust funds for
your retirement which could be 10 years away?
If you are a disciplined investor, adopting dollar-cost averaging method (consistent
buying regardless of market scenarios) should be a more preferable thing to do. You
do not have to crack your head trying to identify the ýrealţ market bottom. The method
will likely help you to avoid making past mistakes of trying to time the market.
Dollar-cost averaging is a very simple method that can often reduce the volatility
of your portfolio. Although dollar-cost averaging does not guarantee that you will
not lose money but it minimizes your losses. Those who invests large sums at one
particular point are likely to suffer more if they had not timed their investments
Unit trust is not a vehicle for speculation and will more likely improve on any
market rebound. While avoiding the market right now seems to be the attitude adopted
by many, unit trust investors should in fact do the opposite - buy now at a greater
Always keep in mind that you invest in unit trust for long term. Forget about investing
in unit trust if you are a typical stock punter who buys stock XYZ at RM2.50 today
hoping that it will rise to RM3.70 tomorrow.
Like any other form of investment such as shares or derivatives, unit trust investments
involve some risk although it is generally termed as safe investment. The amount
of risk involved depends on the type of unit trust you select. In short, you should
not view unit trust as a totally risk-free investment.
It is hard to determine whether your unit trust is a good or bad one. If you have
been investing in a unit trust with asset allocation of more than 80% in stocks,
you should not be surprised to see double digit losses in your account - higher risk.