Portfolio Investment Management

Running Head: PORTFOLIO INVESTMENT MANAGEMENT
Portfolio Investment Management

PORTFOLIO INVESTMENT MANAGEMENT
Table of Contents
Introduction of the unit trust industry in Malaysia..................................................................................2
Fixed Income Funds.................................................................................................................................4
Money Market Funds...............................................................................................................................6
Difference between Fixed Income Funds & Money Market Funds........................................................8
Summary..................................................................................................................................................9
References..............................................................................................................................................11
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PORTFOLIO INVESTMENT MANAGEMENT
Introduction of the unit trust industry in Malaysia
A unit trust can be demarcated as a form of joint speculation (collective investment)
which is established under a trust deed. In a unit trust, a group of investors capitalizes into a
common fund which is further managed by a unit manager. The success rate of a unit trust
totally relies on the proficiency of the managers who manage the trust and experience of the
company (Abdullah & Abdullah, 2009). Some of the common types of investments which are
taken by a unit trust are securities, secured loan, properties, and cash equivalents. Unit trust
funds aim to attract investors such as retail investors, commercial investors and numerous
groups, through these stockholders basket of investments are formed, and these baskets are
called portfolio (Ontario Securities Commission, 2019).
The report familiarizes with the position of unit trust industry of Malaysia and
describes two different types of unit trust funds, which are Fixed Income Funds and Money
Market Funds. Furthermore, differences between the two types of unit trust funds will be
highlighted in the report. The report analyses the progress of the Fixed Income Fund for
previous years by analyzing the data of CIMB-Principal which is one of the leading financial
institutions of Malaysia. Similarly, the progress of Money Market Funds has been portrayed
in the report by analyzing the data of Kenanga Growth, Malaysia.
Unit trust was pioneered in the Malaysian marketplace in 1959 by a company named
Malyan Unit Trust Ltd. Later, the company changed its name to Singapore Unit Trust
Limited and after some time the company became a member of PNB (Permodalan National
Berhad) Group after being acquired by PNB International Ltd in the year 2000. PNB is now
considered as Malaysia’s leading asset manager. Development of unit trust fund in Malaysia
could be demonstrated in 4 phases (Mohammed, et. al., 2018).
From the year 1959 to 1999:
- Slow growth and lack of public interest
- Only 5 unit trust was developed
- The industry was controlled by several parties
- State government sponsored the unit trusts (Ripain, et. al., 2018).
From the year 1980 to 1990
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PORTFOLIO INVESTMENT MANAGEMENT
- Entry of government in the unit trust industry
- Observed a good public response
- 11 funds were launched
From the year 1991 to 1999
- Industry growth elevated
- Unit trusts were marketed
- Greater product innovation
- Influence of financial crisis (Ripain, et. al., 2018).
From the year 2000 till current date
- Strong growth in the year 2000
- Unit trust companies started launching offshore funds
- The industry growing till date
According to the statistics, by 31st May 2017, 528,996,000 units of the fund were
being circulated in the marketplace by unit trust industry; unit trust industry in Malaysia
continuously keeps increasing and demand for unit fund among populaces have also been
showing remarkable growth (Zumbo, 2013).
Today, there are more than 43 unit trust management firms in the Malaysian
marketplace. New companies are emerging in this industry: in the year 2012, more than 53
companies were registered in this industry (Ripain, et. al., 2018). According to the prediction
by Malaysia’s Security Commission, by the year 2020, the asset value of Malaysia’s unit trust
industry will raise up to $258.50 billion (Abdullah & Abdullah, 2009)
.
There are different types of trusts in the industry; each of them is categorized on the
basis of tenancy, risks, returns and different type of investment structures (Low, 2012). The
report will provide a portrayal of two types of unit trusts and differences between them.
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