December 1, 2017

Why is Prospectus important for Unit Trust Investors?

Why is Prospectus important for Unit Trust Investors?

Recently I was asked with this question “How do we learn more on Fund Managers strategy or profile?”. Before I answer this question, it is good to know and always do our homework before deciding to invest in a unit trust fund.

The followings are useful and important documents to go through before investing in a Unit Trust fund:

Fund Prospectus

A prospectus in short is the key reference material used by both fund administrators and investors. We can find all sorts of important information regarding the Unit Trust Fund(s) that we intend to invest in. And the Fund Prospectus needs to be lodged and registered with the Securities Commission (SC) before issued to the public. Basically this is the mandate reference material for the Fund.

Things to look for when browsing or skimming the Prospectus:

  • Fund Name and launch date
  • Unit Trust Management Company (UTMC) – Fund House, Fund Managers, Key People
  • Fund Category, Fund Type and Investment Strategy used for the Fund – What is Permitted and Not
  • Shariah Compliant Information – Who, What and How (if applicable)
  • Managers and Trustee Information
  • Distribution Policies
  • Fees and Charges
  • General and Specific Risks Related to the Fund
  • Unit Subscription and Redemption Methods
  • Financial and Experts Reports
  • and many more ….

Product Highlight Sheet – PHS

Similar information as Prospectus but as a simplified version. Prospectus still supersedes as the key reference material in regards to Unit Trust Fund. In Product Highlight Sheet – PHS, we can locate the Investment Strategy information – mandated for the Unit Trust fund.

Information Memorandum (if available)

Similar information as Prospectus but as a simplified version. Prospectus still supersedes as the key reference material in regards to Unit Trust Fund. In Information Memorandum, we can locate the Investment Strategy information – mandated for the Unit Trust fund.

Fund Fact Sheet / Quarterly Fund Review

Similar information as Prospectus but as a simplified version and represented in infographic format layout. What is shown is this document is information on how the unit trust fund has been managed in the previous month or quarter. In Fund Fact Sheet / Quarterly Fund Review, we can locate the Investment Strategy information – mandated for the Unit Trust fund.

Prospectus still supersedes as the key reference material in regards to Unit Trust Fund.

Financial Interim Report

This report gives the financial highlight on how the fund is doing – better or worse. We can view information such as to where and how much the pool money that was collected from unit trust investors being used to comply with the mandates set inside the Prospectus.

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The above information is to illustrate on why Prospectus is important for Unit Trust Investors like you and me. Feel free to contact me and arrange a coffee or tea time to talk about few potential unit trust funds that you and I can invest in.

 

Unit trust investing is a process …. and as a smart investor, we should do our diligence before investing.

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