About Unit Trusts
What is a unit trust?
A trust has been described as: “…the relationship between a person and persons called the trustee(s) who owns or holds property… for the benefit of another person or persons called beneficiaries.”
When the interest of the beneficiaries is divided into units, the trust is called a unit trust. A unit trust is therefore simply a vehicle for pooling the investment resources of a number of individual investors.
The unit trust is constituted through a document known as a Deed which brings together and binds the various parties to the Deed.
Investors with common investment objectives pool their savings into a Fund managed by professional fund managers. A unit trust fund is normally a medium to long term investment vehicle.
The Fund will be invested in a diversified portfolio of equities, fixed income instruments, and other assets in accordance with the objective of the Fund and as permitted by the Deed and the Guidelines.
Therefore, a unit trust will provide investors with the opportunity to invest in a well-diversified portfolio of investments, which they would not have been able to as an individual investor.
What are the benefits of investing in a unit trust?
The benefits of investing in unit trust include:
Diversification involves spreading investments across a broad range of different asset classes to reduce risk. A mixture of cash, fixed income instruments and shares means that the effect of temporary downturn in a particular asset sector will have less effect on the overall returns. Unit trust funds provide you the advantage of diversification, which may not be available to you otherwise.
Professional Fund Management
The professional fund managers make investment decisions based on extensive ongoing research of various factors such as economic trends, market trends and financial strengths of the company they invest in. Professional fund management has long been available to large institutions and high net worth investors. Unit trust funds make this kind of financial expertise accessible to everyone.
With unit trust investments, the manager is obliged by law to repurchase your unit trust investments when asked by you to do so. You may redeem all or part of your units on any business day. This element of liquidity is a very important consideration and benefits that unit trust investments have over other forms of investment.
Security – Independent Trustee / Custodian
Your interests are protected by the provision of an independent trustee (who acts as a custodian) to hold the fund’s assets for them and oversee their interests on an ongoing basis.
You are relieved of substantial administrative burden and time spent in direct research, trading and managing of the funds. These duties will be conducted by the manager. You will be relieved from the tedious task of keeping records on managing stocks and shares, investments research, and market analysis.
Potential Medium to Long Term Capital Gain
A unit trust investment can be used to provide for longer term needs such as children’s education or better retirement savings. By investing in securities, unit trust investment provides the opportunity to reap capital gains (if any) as part of the returns on your investments.
Low and Affordable Capital Outlay
You are usually needs only a small initial capital (e.g. RM1,000) to invest in a professionally managed portfolio of many securities held by a unit trust fund as compared to a usually higher amount needed for investing directly into the capital markets, and enjoy the same benefit accorded to others when investing in high-priced securities. Furthermore, additional investments in unit trust fund are usually made in even smaller sum (e.g. RM100).
What are the potential risks of investing in a unit trust?
- Trust Account Application Form.
- Transaction Form – Investment.
- FATCA/CRS Self-Certification Form (Individual).
- Personal Data Protection Act Form.
- Investor Suitability Assessment Form.
Attach the required documents
Due to price fluctuations of securities invested in by the funds, the value of a unit trust investment may go up as well as down. The movement in securities prices is influenced by a number of factors, which include changes in economic, political and social environments.
Specific stock risk
Risk that is specific to a stock and is not correlated with the specific risks of other stocks. Examples of such risks are poor management due to departure of key management staff, loss of market share to competitors due to changes in the environment, and shifts in consumer demand due to changes in fashion and taste.
Any price fluctuations due to specific risk, of securities invested in by the funds, will affect the NAV of the funds. However, specific risk can be mitigated through portfolio diversification.
The purchasing power of income received from unit trust investments may not keep pace with inflation.
The stock prices may be affected by the political and economic conditions of the country in which the stocks are listed. Unexpected events may stop the fund manager realising the full value of assets in those countries.
The price or value of units in a unit trust fund that invests in the equity markets fluctuates with the value of the underlying portfolios. Therefore when you borrow money to finance the purchase of units in a fund, there is a risk of capital loss. This is because you may either be forced to provide additional funds to top up on loan margins when the market goes down, or when interest rates go up you may be burdened with higher cost of financing.
Return not guaranteed
The income distribution is not guaranteed. There is a risk that there may not be any distribution of income for the particular fund.
Applies to debt-type investments such as bonds, debentures and fixed income instruments. The institution invested in may not be able to make the required interest/profit payments or repayment of principal.
Interest rate risk
Applies to fixed income securities, where the value of the investment may go up as well as down resulting from interest rate movement. The interest rate risk is a general economic indicator that will have an impact on DMP and PAXJI. It does not in any way suggest that DMP and PAXJI will invest in fixed income securities which are not approved by the Shariah.
Poor management of a fund by the Manager may cause the fund to decrease in value, which in turn may cause the capital invested by a unitholder to be at risk.
Risk of non-compliance
The risk that the Manager and others associated with the fund did not comply with the deed of the fund, the law that governs the fund, or the internal policies, procedures and controls. The non-compliance may expose the fund to higher risk that may affect your investments.
Who Should Invest?
There is a wide and ever increasing range of unit trusts available. Funds are classified as into different sectors depending on the objective of the funds.
Different combinations of the above factors will lead to differing levels of risk. In today’s competitive environment, there is practically a unit trust fund that caters to every level of risk tolerance for each individual investor. Hence, there is a fund for everyone.
Which fund should I invest in?
The type of fund you choose will be dependent upon your investment objective, time horizon and risk tolerance (i.e. the amount of risk you are prepared to take). An investor seeking security and stable income streams should opt for an income fund where the associated risks are lower. A more aggressive investor who is relatively younger, of good health and with no dependents should opt for a either a balanced or growth fund where the associated risks are generally higher.
Islamic Unit Trust Funds
What is an Islamic Unit Trust Fund?
Islamic Unit Trust Funds, more commonly referred to as Shariah funds are a group of specialized collective investment funds which offer investors the opportunity to invest in a diversified portfolio of securities that are managed and selected by professional portfolio managers in accordance to Shariah principles.
What is the difference between an Islamic and non-Islamic unit trust fund?
A Shariah Fund offers similar benefits to any other fund with the same investment objective; the only difference is that it only invests in companies that are in compliance with the Shariah principles as outlined by the Shariah Advisory Council (SAC) of the Malaysian Securities Commission. Like all the other non-Islamic Funds in Malaysia, Shariah Funds are regulated by the Securities Commission and placed under the same stringent regulatory criteria.
What kinds of companies are Shariah Funds allowed to invest in?
In classifying these securities as approved securities, the SAC has applied a standard criterion in focusing on the core activities of the companies listed on the Bursa Malaysia.
Companies whose core activities are not contrary to the Shariah principles are classified as approved securities. The securities that are excluded from the list of approved securities are based on the following criteria:
- Financial services based on riba (interest);
- Manufacture or sale of non-halal products or related products;
- Conventional insurance;
- Entertainment activities that are non-permissible according to Shariah;
- Manufacture or sale of tobacco-based products or related to Shariah;
- Strockbroking or share trading in Shariah non-approved securities; and
- Other activities deemed non-permissible according to Shariah.
In addition, companies with activities involving both permissible and non-permissible elements must have good public perception or image and that the core activities of the company are important and considered maslahah (‘benefit’ in general) to the Muslim ummah (nation) and the country, and the non-permissible element is very small and involves matters such as ‘umumbalwa (common plight and difficult to avoid) ‘uruf (custom) and the rights of the non-Muslim community which are accepted by Islam.
Can Non-Muslims Invest in Shariah Based Unit Trust Funds?
Yes, Shariah based funds are opened to all investors.
Investing with Pheim Unit Trusts
What are the funds managed by Pheim Unit Trusts Berhad?
- Pheim Emerging Companies Balanced Fund
- Dana Makmur Pheim
- Pheim Income Fund
- Pheim Asia Ex-Japan Fund
- Pheim Asia Ex-Japan Islamic Fund
Who is the External Investment Manager?
The External Investment Manager is Pheim Asset Management Sdn Bhd.
How am I kept informed about my unit trust?
- The NAV per unit, selling and buying prices are published on T+2 day in the leading daily newspapers and can also be obtained directly from Pheim Unit Trusts through this website. (click here)
- Upon receipt of your completed application form, the required document(s) and payment, a Temporary Receipt will be issued followed by an Acknowledgement of Investment will be sent to you once the payment has been cleared by the bank.
- A statement of investment will be sent every six months. It shows the balance of units together with all transactions made since the last statement.
- The annual/ interim report will be sent to you within 2 months of a Fund’s financial year end or mid financial year.
When the Fund distributes its income, we will send you the income distribution voucher (Tax Voucher), which sets out the information that is needed to complete a tax return.
What are the fees and charges involved in investing with Pheim?
- For PECBF, DMP, PAXJ and PAXJI – the maximum sales charges are – Manager (5%); Individual Agent for the Manager (5%); and Institutional Unit Trust Agent (5%).
- No sales charge for PIF.
Annual Management Fee
- For PECBF, DMP, PAXJ and PAXJI – 1.5% p.a. of the Fund’s NAV. The fee is calculated daily and paid to the Manager on a monthly basis.
- PIF – 1.0% p.a. of the Fund’s NAV. The fee is calculated daily and paid to the Manager on a monthly basis.
- For all funds: 0.07% p.a. of the Fund’s NAV subject to a minimum fee of RM18,000/- (excluding foreign sub-custodian fee).
- The fee is calculated daily and paid to the Trustee on a monthly basis.
- There is no limit as to the frequency of switches. You will be given one (1) free switch per account within a calendar year (i.e. January to December).
- For any subsequent switching request during the year, you will be charged a 1% switching fee of the repurchase proceeds or RM100, which ever is lower, which will be deducted from the repurchase proceeds.
- Switching from Shariah-based fund to a conventional fund is discouraged especially for Muslim unitholders.
For a full tabulation of the applicable fees and charges, kindly refer to the prospectus for more information.
What should I do if I need to change my particulars?
Any change of personal particulars must be informed in writing to Pheim Unit Trusts via post or fax (follow up with original document via post or by hand).
Can I transfer my investment?
- A unit holder can transfer all or some of his investments to another person within the same fund. The minimum transfer is 1,000 units.
- A transfer fee of RM50 is incurred per transfer but Pheim Unit Trusts has the right to accept or refuse to register a transfer.
- The procedure for transfer is as follows:
- Fill up the transaction form and indicate that it is a transfer
- Both the transferor and the transferee must sign the form
If the transferee is not an account holder, then the transferee has to open an account by filling in the Trust Application Form.
Investing with Pheim Unit Trusts
How do I invest?
How do I make an additional investment?
What is the maximum investment amount?
There is no maximum limit on the amount invested.
Is there a Regular Investment Plan and if so, how do I invest?
Yes. An investor may enter into an agreement with Pheim Unit Trusts Berhad to make regular investment in a Fund on behalf of the investor. These payments can be for a set amount (subject to a minimum investment amount of RM100) at regular intervals such as monthly or quarterly.
Please click here to find out more about the Regular Savings Plan Investment Process.
What is the frequency of the regular investment?
Monthly or quarterly
What does cooling off rights refer to?
A cooling-off right is a grace period for qualified investors to reconsider their investments. It refers to the rights of an investor to obtain a refund of his investment in the Fund. The cooling-off period of any Fund is 6 business days commencing from the date of receipt of the application form and payment of investment in the Fund.
Qualified investor refers to investor who invest for the first time in any of our Fund and exclude corporation or intitution, staff of PUTB and persons registered to deal in unit trusts of PUTB.
The refund for every unit held by you pursuant to the exercise of his cooling-off right shall be the sum of:
a) the NAV per unit on the day the units were first purchased; and
b) the sales charge per unit originally imposed on the day the units were purchased.
Investors applying for units through EPF Member’s Invesment Scheme may be subject to the terms and conditions imposed by the EPF. The cooling-off period for this scheme starts from the day the payment is received from EPF.
When a cooling-off right is exercised, the money will be refunded to the applicant within 10 days of receipt of the notice of cooling-off by the Manager. For EPF investment, the cooling-off proceeds will be returned to EPF for the credit of the said applicant’s account.
Withdrawals & Switches
Can unit holders withdraw their investments?
- A unit holder may withdraw all or part of his/her units on any business day subject to a minimum redemption amount of at least 500 units.
- If a unit holder wishes to withdraw all of his/her units, the minimum redemption amount above will not apply.
- If a unit holder wishes to withdraw part of his/her units, he/she is advised to always maintain an account balance of 1,000 units. Pheim Unit Trusts reserves the right to levy an Account Maintenance Fee of RM10 in the event the Units of a Fund held by a unit holder are below 1,000 units.
- The withdrawal process is as such:
Please click here for more details on withdrawals.
How long will it take to receive my withdrawal (i.e. redemption) proceeds?
A valid redemption request before the cut-off time ( 4.00 p.m.) on any business day will be processed on the same day using the price set at the close of the business day (forward pricing).
If the said redemption request is received after the cut-off time, the redemption request will be processed on the next business day using the price set at the close of that business day.
If the application is received on a non-business day, the redemption will be processed on the next business day using the price set at the close of that business day.
Pheim Unit Trusts will pay the proceeds to the unit holder within 10 calendar days upon the receipt of the complete redemption documents.
How am I paid when I sell my units?
All redemptions will be paid via a crossed check to the unit holder under his/her name.
Can I submit one transaction form for different transactions?
No. Each transaction must be filled in a separate transaction form i.e. unit holders who wish to do a switch and a transfer must fill out two (2) separate transaction forms.
Can I request that the Management Company make my withdrawals payable to a third party?
Unfortunately not. All withdrawals will be made out ONLY in the name of the account holder. There will also be no issuance of any cash cheques.
Can I switch between unit trust funds?
Yes. A unit holder can switch all or parts of his/her investments of a particular Fund to the Units of another Fund managed by Pheim Unit Trusts.
Step 1: Complete the Transaction Form
Complete and sign the Transaction Form for redemption and switching purposes.
Step 2: Submit the Transaction Form
Submit the original copy of the transaction form to Pheim.
For more switching details, please contact our friendly customer service officer (603) 2142-8888.
Are there any charges for switching?
For switches between any of the Funds, a unit holder will be given 1 free switch per account per calendar year. For any subsequent switching request during the year, unit holders will be charged a 1% switching fee of the repurchase proceeds or RM100, whichever is lower. The fees will be deducted from the repurchase proceeds.
Distribution Policy & Tax Related Issues
How do distributions come about?
Distributions come about when the Funds earn money from the dividends and profits realised from the underlying assets in which the External Fund Manager invests in.
When will distributions be declared?
Distributions (if any) will usually be declared at the end of a financial year or any specified period as may be approved by the Trustee.
Are distributions fixed?
How are distributions paid?
By selecting the proper option in the Master Trust Application Form, unit holders may choose their distributions to be:
- Paid out – cheque sent to your registered address
- Reinvested into additional units of that Fund.
- All income reinvestments will be effected based on the NAV per unit as at the end of the distribution date. The income will be credited at the NAV per unit.
All income reinvestments will not be subject to the minimum additional investment requireme
What happens if the unit holder fails to bank in the income distribution cheque with in six (6) months from the date of issue?
The units will automatically be reinvested into additional units of that Fund.
Is it beneficial to reinvest the distribution or cash out?
It is generally considered beneficial to reinvest the distribution because reinvestment provides a convenient and cost effective way for you to increase your investment in the Fund without incurring any charges e.g. sales charge.
Can I be allowed to change my distribution instruction?
Yes you can. A unit holder may notify Pheim Unit Trusts 14 Business Days prior to the distribution date on any change of income distribution instructions.
Is it better to invest prior to a distribution?
There is no difference between investing just prior or after a distribution. This is because the Funds’ unit trust pricing would be adjusted after the distribution to reflect the amount that has been paid out.
Do I need to pay tax on the capital gains derived from the principal investment?
No. Under the Malaysian law, there are no capital gains taxes being imposed on unit trust investments.
Are cash distributions subject to tax?
Yes, income distribution received from a unit trust by a unit holder or beneficiary (whether an individual, company or institution) is treated like any other investment income and would fall under the Income Tax Act 1967. However, since the cash distribution has already been taxed at source (before the distribution), you are entitled to claim a tax credit. A tax voucher will thus be sent to you at the end of Calendar year for tax credit against your tax liabilities.