Unit Trust Products and Operations
Products and pricing
Retail funds include equity, bond, money market, balanced and Islamic funds; they may be open-end (units created and redeemed) or closed-end, while wholesale funds are sold only to qualifying investors. NAV per unit = (fund assets – liabilities) ÷ units in issue. Malaysia uses single pricing: subscription and redemption are at NAV per unit, with any sales charge disclosed separately. Pricing is forward: the price is struck at the next valuation point after a valid application is received.
Operations
Applications and money go to the management company, not to the consultant. Units are allotted after valuation; redemptions cancel units and proceeds are paid within the prospectus period. Retail investors have a cooling-off right (currently six business days) to withdraw. Management and trustee fees accrue daily and are reflected in NAV; sales charges are deducted from the amount invested.
Worked example
An investor pays RM10,000 into a fund with NAV RM0.5000 and a 5% sales charge. Net amount invested = RM10,000 ÷ 1.05 = RM9,523.81; units = RM9,523.81 ÷ RM0.5000 = 19,047.62. If NAV later rises to RM0.5500, value = 19,047.62 × RM0.5500 = RM10,476.19. The RM476.19 gain is before redemption charges and ignores the fact that the 5% charge already reduced invested capital. Reasoning: under single pricing, do not add a separate selling price to NAV; apply the sales charge to the gross payment.
Traps
Adding sales charge on top of a "selling price"; applying the charge to units rather than the investment; treating management fees as a separate cash deduction; assuming cooling-off applies to wholesale funds.