Are unit trusts any good?

[h.y.o.m]

Don't understand what you mean by the 5%.

Unit trusts offer professional management of a diversified portfolio in assets that are hard or even impossible to access for investors otherwise. However:

(1) Active managers as a group will underperform the market and most people cannot pick the winners ahead of time. Coupled with most investors' tendency to chase performance, it is likely that most people will underperform the market.

(2) The platform fees, unit trust sales charges, redemption charges, management fees etc. are excessive, resulting in even more underperformance. This is all the more obvious in the current era of low absolute returns.

(3) The rise of ETFs, a much more cost-effective investment vehicle, means there is no real reason to invest in unit trusts, unless you have a thing for a certain manager.

lzydata is right. Given that passive index ETFs are cheaper and outperform most fund managers, it is a no-brainer to buy passive index ETFs for retail investors. It does not mean fund managers in general are no good. Just that after deducting for their fees, they have to be really good to beat low-cost index funds.

However, I do believe that the best investors are the hedge fund managers. Unfortunately, they are pretty useless to retail investors like us because hedge fund managers do not want our business. We are too small to be worth their attention. Hedge funds are available only to high net-worth individuals.

I have written at length about relying on fund managers. Read if you are still interested.

Help your own money: Relying on fund managers

 

[lzydata]

your book is correct that most funds including hedge funds out there exist to make fee and commission with miserable performance. but there are some good ones with tracked record that can make your jaws drop and usually small in setup. they are known by a small elite circle of REAL private bankers internationally. the question is whether your banker is trolling or being serious.

Ah yes, most hedge funds are no good and most investors in them lose money, but ask your favourite banker and just say the magic word, and you will avoid all that. I wonder why Bernie Madoff's investors didn't think of that. They must not have known the right people.

 

[gobbyyy02]

There are pros and cons to investing in unit trust such as those from dbs, standard chartered etc… It's less risker than stocks for example, but the benefits you reap are more in the long-run, and your portfolio is diversified. So it depends on what you want.. I would say go for it, but don't just purely invest in unit trusts, do other investments too, main point is to match your financial needs and risk tolerance

 

[hwmook]

There are pros and cons to investing in unit trust such as those from dbs, standard chartered etc… It's less risker than stocks for example, but the benefits you reap are more in the long-run, and your portfolio is diversified. So it depends on what you want.. I would say go for it, but don't just purely invest in unit trusts, do other investments too, main point is to match your financial needs and risk tolerance

OMG, do not buy unit trusts from banks. They are blood suckers which will charge you high sales charge. Buy from fund distributers like FSM, poems, dollardex.

 

[Epps_Sg]

I have heard that some unit trust can outperforms the indexed STI ETF. I just came across 'First State Singapore Growth Fund' which seems to be such a fund, though it invest 70% in Singapore companies and 30% in Malaysia companies and it is actively managed. According to prospectus it seems to use value investing approach, hence i suppossed it is plausible that with value investing approach, this fund could have outperformed the STI significantly.