Monday, December 12, 2011

How to Monitor Your Unit Trust

I find that a lot of people do not monitor their unit trust holdings and price.
They didn't know that monitoring their unit trust account is as important as if you had a share and you're monitoring your share price.
The reason being everyone was being advised by their unit trust consultant that unit trust investment is for long term and once you get in you don't get out until you need the money. These unit trust consultants will also ask you for monthly commitment into the unit trust so that you'll benefits from the average price.

Somehow these strategy works in certain ways but there do have times when the strategy doesn't work. The reason this strategy was implemented because it is easier to communicate these strategy to the general public who has little knowledge about investment. It also helps the unit trust consultant to be able to get their commission each and everytime you invest and increase your fund size.

For beginner investors who wish to continue with the strategy, they of course can continue using it. But for people who like to learn more and know more about how you can actually gets the best return out of your unit trust, then you should continue to learn a bit more on how to monitor the price of the unit trust.

Unit Trust is a basket of investment assets which might includes of equity, fixed income or commodities. Unit Trust often being categories into different category include growth fund, income fund, equity fund or so. These are generally telling you how your unit trust fund invest your money. Growth Funds normally means they will look for something the fund managers think might have a grow potential for example the emerging market equity or some of the small to middle cap stocks which has growth potential. They select many stocks and put them into a basket which they called it as portfolio. This strategy are particularly used to grow your money and you can only grow your money if you know that the market has a lot of upside meaning the stocks market is growing for the next few years. If the market is up at it's peak and you're putting money every month to increase your capital (imagine you're doing that in the year 2007) and when the market crash you're definitely at the losing side because although the fund managers tried to buy a basket of stocks to avoid one single stock can influence the downside of the whole portfolio, somehow during market crash; everything including your cooking pot has to go down.

This shows that monitoring the market is good even for unit trust investors. You might not need that much information monitoring the market but you still need to know when the market is near it's peak or not.

You can monitor your unit trust price. In a bull market (or up market), typically all funds are showing good return and a good unit trust should not show just show you big returns. On the other hand, a good unit trust fund should show you consistent return. The word CONSISTENT is really important so that you can have a peace of mind when things doesn't move too right you can know that your fund manager are still very much having a consistent upside on their portfolio.

To always monitor your unit trust price, you can check at http://invest.com.my/personal/funds/price/
It will shows you all the prices of all unit trust and also you can compare different funds together.

Do your own excel file and keep a record on a few top performing funds and check for their consistency.
I've see some funds having 40% up during bull market and 60% down during bear market. How can we say that their 40% is performing when we know that during up time, the whole market is actually showing you good return? Learn from starting to monitor the price of these funds. You don't want to see big up and big down. You want good upside and moderate negative or manageable negative during market up and down.
  • Share On Facebook
  • Digg This Post
  • Stumble This Post
  • Tweet This Post

0 comments: