For those who are still in the grey area or unsure what is the difference between Unit Trust and ASB, I hope this could help you in undertsanding the basic concept of the two. Either way both are an investment scheme and I encourage people to invest for future needs. Each and everyone has different portfolio, and by understanding better on what or how you going to invest, you can design your own perference that you are comfortable with, this has to start NOW not tomorrow or later, because as quoted by Benjamin Franklin "TIME is MONEY" happy investing.
UNIT TRUST
Various types
There are many funds available to cater for various needs of investors from different age group (i.e. for example 20-35 aggressive funds, 36-45, moderate/balance funds, 46-60 fixed income funds)
Some funds are specific for guaranteed annual dividend (PIDF, PIADF, PDSF)
Some funds have foreign investment flavor (PCIF, PGBF, PFEBF, PFES, PGSF)
Some funds focus on specific sectors to maximize the return potential from sectors which are benefiting the most at any specific time (PISSF, PFEPRF, PFECTF, PRSEC, PSMALLCAP, PSSF)
Some funds offer specific Shariah-compliant funds(PIBF, PITTIKAL, PAIF, PIEF, PISTF, PIOF)
Some funds offer exposure to fixed-income & money market investment (PISBF, PBOND, PINBOND, PIBOND, PMMF, PSBF, PEBF)
Fluctuate prices
Unit prices are based on NAV, which values fluctuates according to their underlying market value, calculated on daily basis. This characteristic allows investors the possibility of capital gains (as well as losses).
Islamic Fund Option
For those staunched Muslims who are very particular in ensuring their hard-earned income are 100% HALAL, they have the options to subscribe to Islamic funds as mentioned above. Public’s Islamic funds are vetted by the Shariah Advisory Council of SC.
Distribution
Except for income-based funds, distributions are incidental. Distribution rate can be higher or lower than ASB’s. However, Public’s track record speaks for itself. It has been paying consistent distribution for almost all funds for the past 10 years or so. (For Public Ittikal, total return from launching date of 10 Apr 1997 to 31 Dec 2007 is 261.13% or average 26.113% p.a. Total return refers to capital gain + distributions allocated during the period. Source of info: Public Mutual Adept system)
Distribution Calculation
Distribution is calculated based on number of units held at ‘cum’ entitlement and not prorated based on the timing of unit purchases.
For example, assume Fund “A” financial year end is May 31. On June 3rd, it declared a distribution of 2 sen per unit. if an investor purchases 10, 000 units on May 28th, he would be getting 10,000 x RM0.02 = RM200 equivalent of distribution (based on simple method)
High liquidity
Easy to buy & sell, redemption proceeds w/in 10 working days & 24-hour for Mutual Gold members.
Privately managed & good brand
Public Mutual is backed by Public Bank Group, voted the most prudent bank by local & foreign ratings’ companies. Also in a recent local survey, PBB is ranked no.1 in terms of good corporate governance
ASB
One type fund
For Bumiputra investors (mostly Malay investors) PNB offers Skim Amanah Saham Bumiputra i.e. ASB only, even though they can also invest in other funds offered by PNB, such as ASW2020 & ASGemilang, but these funds are also offered to non-Bumi investors.
Fixed price
Entry & exit price is fixed to RM1.00 a unit, no possibility of capital losses (as well as capital gains)
Not pure Islamic Fund
ASB fund comprises of Malaysian listed stocks including banking stocks such as Maybank to name a few, which is a NON-HALAL stock as prescribed by SC Shariah Advisory Council.
Distribution (known as Dividend)
Performance (as well as popularity) solely depend on the rate of dividend paid out annually. The trend however, has been on a declining rate. (ASB average returns for 1 year = 8%, 2 years = 7.65% & 3 years = 7.52%. Source of info: ASB annual report ended Dec 31, 2007)
Dividend Calculation
Dividend is calculated based on full year maturity and will be prorated if the investment is made less than 1 full year.
For example, ASB financial year-end is every Dec. Supposed an investor made an initial investment of $5,000 in Jan ’07 and subsequent additional investment of RM1,000 every 3 months, i.e. in Apr, Jul & Oct ’07. At book closing date, ASB declares an 8 sen per unit dividend over RM1.00 per unit price or 8% div rate.
The said investor will receive;-
Month Amt $ Div at 8% Div Amt $
Jan $ 5,000 12 mnth $ 400.00
Apr $ 1,000 8 mnth $ 53.33
Jul $ 1,000 5 mnth $ 33.33
Oct $ 1,000 2 mnth $ 13.33
Total $ 8,000 $ 499.99
Actual dividend rate earned 6.25%
Capital guaranteed
Fixed entry & exit price guarantees the capital preservation, but no capital gain opportunity
High liquidity
Easy to buy & sell and can be done within a day. Available through many branches of appointed agents, such as Maybank, RHB Bank, CIMB, etc.
Government backed
Managed by PNB, a major government agency, hence considered stable investment.
So from this can you now understand what is Unit Trust and ASB? Here I would like to show the comparison between the two
Public Ittikal (Unit Trust) vs ASB
Public Ittikal
Free insurance coverage by ETIQA Takaful (RM1 coverage for every 1 unit held), subject to minimum 5,000 units held & maximum insurance coverage of RM100, 000.
Unitholders aged between 18 and 59 are eligible for the coverage.
Eligible unitholders will be given group term life & group personal accident coverage.
Distribution based on # of outstanding units’ held, regardless holding time, as long as units acquired before the distribution is declared.
No maximum limit of investment per investor subject to availability of units.
Charges for Public Ittikal Fund: (Source of info: Public Mutual website)
Service Charge - Up to 5.5% of NAV per unit
Repurchase Charge - NIL
Annual Management Fee - 1.5% per annum of the NAV
Annual Trustee Fee - 0.07% per annum of NAV, subject to a minimum fee of RM18,000 and a maximum fee of RM600,000 per annum.
ASB
No insurance coverage.
Must maintain investment w/in 12-month period to enjoy full dividend, otherwise, dividend will be prorated accordingly.
Maximum investment RM200, 000 per investor (excluding units earned from dividend payout).
Management fee of 0.35% of NAV p.a.
Trustee Fee of RM500, 000 p.a.
Management Expense Ratio for year 2007 is 0.37% vs. 0.36% for 2006. It is calculated based on the ratio between total management fees and redeemed units expenses, with average unit for any financial year is calculated based on minimum monthly balance.
