3 Ways to Pick the Best Unit Trust in Malaysia (Advisory & DIY Method)
Which is the best unit trust in Malaysia? As always, the answer is it depends. What is your definition of ‘best’?
If you think ‘best’ means ‘highest returns’, then let me just say: you’ll never know which one will generate the highest returns because no one can predict the future. See the end of the article for best/worst performing funds in 10 year period.
However, there are a few ways to pick a good enough unit trust in Malaysia, something that has a good chance of generating returns AND suits your risk profile. You can find these unit trusts via:
- Fund management companies, or
- Recommendation from financial planner, or
- Process of elimination
I’ll be covering all three methods in this article, read on below. Additionally, I’ll also cover:
- Unit trusts with low sales fee (you can get these without agent)
- ASB vs Unit Trust investment: Which is better
- ETF vs Unit Trust investment: Which is better
Disclaimer: NOT FINANCIAL ADVICE. Just sharing the process that I used to select the best unit trust in Malaysia for myself. Get other people’s advice too.
Method #1: Fund management companies
Suitable for: complete beginner investors. Need a person to talk you through the products and process. Maybe unit trust is your first investment.
Do you have a preference for any of the fund management companies? Some people base their decisions on that. They trust Company A so they pick what Company A offers. Some companies win investment awards, which is an indicative (not guarantee) of good performance.
If so, go find unit trust agents who sell those products. They’ll be happy to hear from you, they’re always looking for clients.
Note: Just make sure you pick fund management companies approved to operate in Malaysia. Find the official List of Unit Trust Funds and Approved Management Companies in Securities Commission.
Method #2: Recommendation from financial planners
Suitable for: Intermediate and expert investors. Unit trust is not your first investment.
Some people get unit trust recommendations after their financial planner reviewed their investment portfolio. Perhaps their current investment portfolio has too much exposure in X, so they were recommended to find Y to balance/diversify a bit.
Tbh, this method is the most recommended way to find best unit trust in Malaysia for yourself. Unlike unit trust agents, who may be motivated by sales and commissions, financial planners are bound by Code of Ethics to give objective recommendations to their clients, aka you.
The catch is, of course, is there are fees involved. Read more in: 4 Places to Find A Financial Planner in Malaysia
Method #3: Via process of elimination
Suitable for: DIY investors, from beginner to expert
Last but not least, this method is for people who don’t want to meet anyone at all. You prefer to get your fund recommendations from financial websites, media or other sources. After all, fund management companies and unit trust portals frequently publish articles and videos giving fund recommendations, so why not learn yourself?
The problem with this method is you will quickly run into a problem: you still end up with too many fund recommendations, and get overwhelmed with the choices anyway. There are literally hundreds of unit trusts to choose from.
This is exactly what happened to me, so to reduce the available choices, I used the process of elimination to choose the best unit trust in Malaysia.
Here’s how it works.
How I used the process of elimination when choosing the best unit trust in Malaysia
- First I eliminated all unit trust funds with high sales charges. Anything over 2% is high for me (see section below for unit trust platforms with low sales fee)
- Second, I narrowed it down to PRS unit trust only (PRS unit trust is one subtype of unit trust) (I want the tax relief) (you can get PRS funds with 0% sales charge)
- Third, because I am still young, I decided to focus on Growth funds. Therefore, I eliminated Conservative and Moderate funds
- Fourth, I eliminated non-Syariah funds. The Muslim guilt is real
- Fifth, I eliminated funds that invested heavily in Malaysian equity. Figured I have enough of those in my other investments and prioritise other countries/regions/sectors
- Sixth, I also took into account the possibility of investing part of my EPF money into unit trust. However, as I didn’t reach the minimum threshold, this option is eliminated for me
All these eliminations drastically reduced my unit trust options, from hundreds to literally a handful.
You might go through some more process of elimination. Some people might not want to invest in industries they think are dying/ don’t believe in, or don’t align with their values, or whatever. For example, I have a preference for Sustainable and Responsible funds, or ESG funds as well.
What to do next?
Okay, so by this point, you should have only a few unit trusts to consider. All you have to do is read up the factsheets and longer reports, or cross-reference them with other recommendations to make your final pick. Make the best possible pick with the information you have.
Remember: if you can’t pick just one unit trust, nothing’s stopping you from getting two or a few at the same time. You can put a few hundred/thousand to each, no problem (depends on the funds’ minimum investment requirement).
As mentioned, part of my elimination process is eliminating all unit trusts with high sales charges, or above 2%. But where to find them? Unit trusts with low sales fee used to be hard to find, but not any more:
Where to get Unit trust with low sales fee in Malaysia
The way I see it, if none of the fund management companies can guarantee returns on the unit trusts they sell, then might as well get the ones with the lowest fees. The less you pay in fees, the more your funds will grow in size.
All of these platforms allow you to invest in unit trust (and mutual funds) yourself, with less than 2% sales fee (some are even 0%).
Which of the above should you pick? Go back to Method #3 – process of elimination. Refer to the chart below:
- Best Invest by BIMB (Bank Islam subsidiary)
- EZInvest by HSBC
- eunittrust by Philip Mutual
- Raiz (partnership with PNB) (careful because there’s a RM1.50 monthly fee for balance under RM6k)
- Versa (via Versa Invest)
|Platform||Got Shariah funds?||Got PRS funds?||Got app?||Got bonus?|
|MyASNB||Yes – Harus||No||Yes||May have campaign|
|FSMOne||Yes||Yes||Yes||1% maximum sales charge|
|Best Invest||Yes||No||Yes||May have campaign|
|EZInvest||Unsure||No||Yes||May have campaign|
|eunittrust||Yes||Yes||No||May have campaign|
|Raiz||Yes – Harus||No||Yes||RM5 bonus|
ASB vs Unit Trust investment: Which is better
You might be wondering, ASB vs unit trust, which is the better investment?
(ASB or Amanah Saham Bumiputera is one of the 16 funds offered by Amanah Saham Nasional Berhad)
Objectively speaking, ASB is better if (1) you are Bumi, and if (2) you are looking for consistent returns. It is extremely unlikely for ASB returns to go into negative returns, which can happen to unit trust investment in some years.
More importantly, at 0%, ASB’s sales charges is hard to beat. Plus, you can consider leveraging ASB loan as well.
On the other hand, unit trust may be better if you want exposure to different:
- Countries (Malaysia, US, China, etc)
- Markets (Developed Markets, Global Emerging Markets, etc)
- Regions (Asia, Europe, Greater China, etc)
- Sectors (Healthcare, Technology, etc)
- And more.
ETF vs Unit Trust investment: Which is better
However, unit trust is not the only way to get exposure to some countries/markets/regions/ sectors etc. You can also get ETFs from:
Again, you can get a few, not one or the other. I have ASB, unit trusts AND ETFs. The more important factor in successful investing is you consistently invest every month.
However, if you are considering between ETF vs unit trust investment, I can say that it is possible to get lower fees on ETF, especially via robo advisors.
Important: Profits are NOT guaranteed
Early in the article, I mentioned how you’ll never know which one will generate the highest returns because no one can predict the future.
Let me say that again. No one, including the fund management company you got it from and the unit trust consultants, can guarantee profits.
The unit trust you pick could be the best performing unit trust in Malaysia 10-year period,
Or it could be the worst performing unit trust fund in Malaysia the same time period.
(Don’t be swayed by unit trust with high returns on short timeframe, because it’s almost never sustainable. The longer the timeframe, the better)
I know this can be hard to grasp for some people, especially if you’ve been told you should invest in unit trust to grow your money. Hopefully yes, maybe no.
So if you have a hard time with this, and need someone to help to guide you through the process emotionally, it might be worth doing Method #1 or #2 instead of #3. Just engage their services and pay the sales charges or consultancy fees.
This way, you get to ask their advice on what you should do if the unit trust you picked didn’t give the returns you wanted. (Plus, you get to blame someone else, not yourself lol)
Hope this article helps you in the process of picking the best unit trust in Malaysia for you to invest in. Now, I want to hear from you – if you invest in unit trust, how did you make the decision?
Great comparison. For unit trust, besides the sales charge, there is also the ANNUAL management fees which can be between 1-3%. I feel this is the one that will eat into your profits since it is charged annually. I think some people don’t realise this – I know I didn’t until 10 years after I’d kept my money in unit trust.
Thanks for highlighting annual management fee, that is a great reminder (and the reason why I added a section on ETF vs unit trust)
Nice article. Was wondering, what sort of annualised returns can one expect from UTs, long term that is (10-20 years)? How has it been for you so far (only if you don’t mind sharing la)?
Is it possible to get double digit annualised returns?
Each UT will give you an expectation of annualised returns, of course with ‘past performance does not indicate future performance’. The range of returns depends on how risky it is.
It is highly improbable for any UT to give you double digit annualised returns every single year for 10-20 years. Any agent/fund management company that show you double digit returns will probably show selectively (ie the years when the the market is doing exceptionally well)
For my own unit trust (PRS- high risk), it ranges from -16.66% to 32.10%