How do you choose the right unit trust for you?
7 TIPS ON INVESTING IN UNIT TRUSTS
- Compare returns to its relevant index
- Watch out for high fees
- Don’t time the market
- If you choose to invest in unit trusts, hold for the long term
- There is always a risk of losing money
- Don’t forget to diversify your investments
- Remember, unit trust companies and consultants are there to sell you a product. It’s up to you to do your own research
- Quiz: Unit Trust
Step 1: Find out credibility of fund
A good way to check a fund’s credibility is to check out the EPF’s list of approved funds by clicking here and going down to ‘Where You Can Invest’. The funds listed there must fulfil EPF’s minimum score of SACR 2.33. Basically, this score measures how steady a fund’s performance is over time. Funds with scores lower than SACR 2.33 are excluded because they do not perform well steadily.
Speaking of EPF: you may be able to transfer up to 30% of the excess amount of Basic Savings in your EPF Account to invest in those EPF-approved funds!
Aside from this, you can also check out Morningstar’s ratings as well by going to their website here. Morningstar uses its own set of criteria to provide you with clear ratings that show you just how credible a fund is so you don’t have to figure it all out by yourself.
On the website, go to Fund Tools, then to Funds to Explore, and click on the Snapshot tab. Here you’ll see a list of unit trusts as well as their Morning Star rating right next to each name. Click on that Morningstar rating column to sort the list by rating, so that you’ll see all the highest-rated funds right at the top of that list.