How To Select The Right Unit Trust Fund?

In today’s unit trust industry, there are a variety of different unit trust funds for you to choose from. But the 1st step perhaps is to identify your risk profile, or your appetite for risk

There are generally 3 types of risk profile for the unit trust fund, namely Aggressive, Moderate and Conservative. Do take note of the risk profile of the fund that you are going to buy, as this represents your investment objective.

If you want your money to grow a larger sum in the future and your risk tolerance is higher, you may choose a fund with a risk profile: Aggressive.

On the other hand, if what you are looking to achieve is an ongoing income stream to pay for expenses and your risk tolerance is low, you may choose the Moderate or Conservative risk profile.

Every individual may have different investment objectives, risk tolerance and time horizons at any one time, therefore the variety of different funds. So the fund you invested in must be one that suit your objective.

A logical next step will be to look at the past performance or investment results. Unfortunately, it is impossible to predict a unit trust’s future investment performance. This will depend on the type of fund, the general market trends and the investments which a fund manager picks. Past performance figures are no guarantee of the future. A fund that has performed well in the past may not do so in the future and vice versa.

The summary of Do’s and Don’ts of Choosing a Unit Trust Fund

Do

- Decide which type of unit trust fund meets your saving needs.

- Shop around for a reliable unit trust company

- Check past performance records

Don’t

- Don’t choose any unit trust fund just because its performance has been good, make sure it is the right fund for you.

- Don’t pay too much attention to short term performance, good consistent performance over all periods is the best lead.

- Don’t decide on a unit trust fund just because it has low charges, good performance is far more important

- Don’t borrow to invest in unit trust