It took just two stories in the vernacular press a few days ago and a few words from our Prime Minister and the whole Unit Trust industry in Malaysia stood condemned in the eyes of the public.
Can you believe that it was claimed by the press that an estimated 80% of EPF members that withdrew from their EPF savings to buy into unit trust schemes had suffered losses amounting to RM600mil?
Yessiree, that’s a lot of money indeed but I’ll believe the quantum if there are concrete facts to support the claim. In fact, the Federation of Malaysian Unit Trust Managers (FMUTM) president, Tunku Dato’ Ya’acob Tunku Abdullah, has gone on record to say that this is an unsubstantiated claim.
And you know how newspapers are, lah. Some of their writers lurve grandstanding. Bad news makes ‘em look good, good news doesn’t. 
Tunku Ya’acob said that according to an S&P report, the average return from Malaysian equity funds was 26% over the past three years.
People who buy unit trust must be prepared to hold onto their investment for the mid- to long-term. Unit trust is not something for quick gains.
My own strategy is simple. You can buy into unit trust any time. But be prepared to buy more when the price goes down. Of course, nobody can predict when the bottom of the trough will be reached but effectively, when you buy more units at a lower price, you are lowering the average cost of your total investment.
Some unit trust consultants will preach the effectiveness of Dollar Cost Averaging. What this means is that after you make an initial investment, you continue making monthly investments regardless of whether the market goes up or down. It makes good sense to follow this strategy but it makes better sense to practise Dollar Cost Averaging when you notice the market going down rather than up.
Unfortunately, most people do not practise Dollar Cost Averaging. Why? One reason is because they do not know much about it. Another reason is because once they saw the market going down and the unit trust prices going down too, they panicked and dared not invest further. And a third reason is, their unit trust consultant is also panicking and does not know what to do.
Do you have a qualified unit trust consultant that you can depend on? When they are not dependable, they contribute to this perception by our Prime Minister and the newspapers.
I’ve seen consultants who are more interested in making a one-time fast buck from unsuspecting people than really providing good advice to their clients.
I know of consultants whose single ploy is to push sales for today and don’t worry about tomorrow. To them, it’s a matter of letting the future take care of itself. To me, this is wrong. Don’t they feel anything when they do that?
Just recently, I came across an elderly couple, in their late, late 60s, who were advised some years ago by their friendly unit trust consultant to buy into some aggressive equity funds. Then he promptly disappeared.
When I got around to know this couple, they had made a paper loss of almost 30% over the years.
This couple invested with their cash but they could have jolly well used their EPF money too, if they were eligible. They suffered loss because they were too trusting. Or maybe gullible is a better word.
I hope you are not one of them. Insist to hear from your unit trust consultant. If he is not around, go see the unit trust company and insist on some real service.