40 Questions
What is one of the major benefits of investing in unit trusts?
To gain access to the experience of a professional fund manager
What is a characteristic of a professional fund manager?
Someone who has a good track record of investment returns
What is a risk associated with investing in unit trusts?
The prices of stocks underlying the NAV of the fund fluctuate
How do the underlying values of the shares of the investment portfolio affect the NAV of the fund?
They cause the NAV to fall as well as rise
What happens to the income produced by the fund?
It fluctuates
What is involved in the calculation of Net Asset Value (NAV) of a unit trust scheme?
The calculation of the total value of the assets minus liabilities
What is an advantage of diversification of assets in unit trusts?
It reduces the risk of investment
Why might an investor choose to invest in unit trusts?
To gain access to the experience of a professional fund manager
What happens to the Net Asset Value (NAV) of a unit trust scheme in response to changes in the activities of individual companies and general market or economic conditions?
The NAV or prices of units fall as well as rise
What is a risk that investors may face when the value of the unit trust scheme drops?
Unit holders might be forced to provide additional funds to restore their loan margin
What should a UTC ensure that an investor is given before an application is made?
A current prospectus
What is a potential consequence of poor management of a unit trust scheme?
The investment of unit holders will be jeopardized through the loss of their capital
What should a UTC provide to an investor in addition to a current prospectus?
An in-depth explanation of the prospectus
What is a type of risk associated with the purchase of equities?
Market risk
What should an investor be aware of when considering an investment in a unit trust scheme?
The value of the scheme can fluctuate
What is not a correct statement about a unit trust scheme?
The scheme is an investment with no risk
What is the main benefit of investing in unit trusts with borrowed money?
To increase the possibility of making a profit
What is the minimum amount required to invest in commercial property in Kuala Lumpur?
No minimum amount required
What is the primary goal of investors who invest in unit trusts with borrowed money?
To maximize potential investment returns
What is a benefit of investing in unit trusts?
Allows investors to gain exposure to different markets with a small amount of money
What is the relationship between the return on investment in unit trusts and the cost of borrowing?
The return on investment must be higher than the cost of borrowing
What are the possible forms of return on investment an investor can expect from investing in unit trusts?
Distribution, Capital Appreciation, and Interest
What is a suitable investment alternative for an investor who wants to gain exposure to the commercial property market in Kuala Lumpur but only has a small amount of money?
Investing in equity index fund
What is the risk of investing in unit trusts with borrowed money?
The risk of earning a profit that is lower than the cost of borrowing
What is the primary purpose of a Unit Trust Scheme (UTS)?
To allow investors to pool their savings and invest in a portfolio of securities
What is the maximum age for a qualified member under the EPF Members Withdrawal Investment Scheme?
60
What is the eligibility criterion for Account 2 balance under the EPF Members Withdrawal Investment Scheme?
Not eligible for withdrawal
How often can a member withdraw funds from the EPF under the EPF Members Withdrawal Investment Scheme?
Once in every two months
What is the correct statement regarding investments in a Unit Trust Scheme?
Investments can be made with any unit trust scheme
What is the primary source of income for Real Estate Investment Trusts (REITs)?
Rental income and capital appreciation
What would you normally expect to find in the annual report of a Unit Trust Scheme?
Auditor's report
What is the benefit of the EPF Members Withdrawal Investment Scheme?
Allows members to transfer funds from Account 1 to an approved UTS
What is the main purpose of the annual management fee levied by UTMC?
To cover the costs of managing UTS
What happens to the value of money market instruments when the interest rate increases?
It decreases
What is true about a bond fund?
It is best to buy when interest rates are peaking and bond yields are high
What happens to the equity portion of fund X when the stock market is increasing?
It moves positively
What is the average annual management fee levied by UTMC?
1.5% per annum
What is levied by the fund manager on the investment made by investors?
Manager's fees and charges
What is true about fund Y?
The value of money market instruments will decrease when the interest rate increases
What is the purpose of the fee charged by the trustee?
To cover the management expenses incurred by the manager
Study Notes
EPF Members Withdrawal Investment Scheme
- The EPF Members Withdrawal Investment Scheme allows members to make transfers from their Account 1 balance to an approved Unit Trust Scheme (UTS) subject to certain conditions.
- The maximum age for a qualified member is not specified as 60.
- Balance in Account 2 is eligible for this scheme.
- The scheme is another term used to describe a unit trust scheme.
Unit Trust Scheme (UTS)
- UTS is a form of collective investment that allows investors with similar investment objectives to pool their savings, which are then invested in a portfolio of securities or other assets managed by investment professionals.
- A member can make transfers from their Account 1 balance to an approved UTS.
- The return on investment for unit holders in UTS is usually a distribution and capital appreciation.
- The Net Asset Value (NAV) or prices of units may fall as well as rise due to market risk.
Investors and Unit Trusts
- Some investors investing in UTS borrow the application money to invest, expecting that the rate of return from investing in UTS will exceed the borrowing costs, thus giving rise to additional profit.
- Investors who invest in unit trusts with borrowed money may not be affected by changes in the base lending rate set by their end-financiers.
- Investors who invest in unit trusts with borrowed money may not be guaranteed to make a profit in the longer term.
Investment Alternatives
- A good investment alternative for an investor who wants to gain exposure to the commercial property market but with only a small amount of money is to invest in an equity index fund.
- Unit trust is an investment with risk, and investors should be aware of this before investing.
Unit Trust Management
- Unit Trust Management Companies (UTMC) must ensure that an investor is given a current prospectus and should provide an in-depth explanation of the prospectus before an application is made.
- The annual management fees that average around 1.5% per annum are levied by UTMC to cover the costs of managing UTS.
Risks and Benefits
- One of the major benefits of investing in unit trusts is to gain access to the experience of a professional fund manager.
- A professional fund manager is someone who manages in excess of RM500 million.
- Market risk is a risk that exists in unit trusts, where the prices of stocks underlying the NAV of the fund fluctuate in response to many factors.
- The Net Asset Value (NAV) or prices of units may fall as well as rise due to market risk.
Bond Funds
- A bond fund is best to buy when interest rates are peaking and bond yields are high.
- Manager's fees and charges are generally lower compared to the equity fund.
- Fund prices will fall when interest rate rises.
This quiz is about the rules and regulations of the EPF Members Withdrawal Investment Scheme, including age limits and withdrawal frequencies.
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