Thursday, October 16, 2008


There are many different types of unit trusts but, in general, they can be categorized as below:

  • Bond and Money Market Funds are funds that invest in fixed income securities (which are long-term debt) and in short-term debt (for example, commercial papers) respectively.
  • Balanced Funds (a mix of equity and bonds) are funds which have a good combination of both debt and equities (stocks) in the portfolio; the asset allocation is normally on a 60:40 basis or 50:50 basis. Hence, the term ‘balanced’.
  • Islamic/Syariah Funds are various funds which comply with Syariah principles and are normally approved by an appointed Syariah Board. These funds do not invest in companies which are involved in usury (riba’ like banks) and in businesses which are ‘non-halal’, like breweries, or gambling.
  • Equity Funds are basically funds which invest in stocks which are listed, either locally or offshore. A subset of equity funds is thematic funds. These invest in stocks of specific niche sectors, for example, in the China Market, the luxury sector or alternative energy sector.
  • Capital Guaranteed/ Principal Protected Funds are funds where the principal amount invested is protected if held to maturity period (for example, 3 or 5 years). Sometimes the fund may have a guarantee (provided by a reputable bank) on the principal; this may enhance the attractiveness. But note that the returns for these funds are not guaranteed.

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