One of the major factors that deters me from investing in Unit Trust has always been the high sales charges and annual management fees. In Malaysia, sales charge averages at 5.5% and annual management fee at 1.75%. This also means that on the first year of your investment, you have lost at least 7.25% whether you like it or not.. So does it really make sense to invest in Unit Trust or Mutual Funds?
Where do I invest then?
Nowadays, I prefer investing in Exchange Traded Fund (ETF) which follows the performance of an index.
What is ETF?
ETF is an index fund that is listed on the stock exchange and trades just like any other stock. There are hundreds of ETFs created to track the different market indexes. For example, if you wanted to profit from the expected growth in the China economy, you could buy United SSE 50 China ETF.
This is United SSE 50 China ETF moves closely to the actual Shanghai Stock Exchange, hence the name SSE. So, when you buy a share of SSE 50 China ETF, it is the equivalent of you buying all 50 largest stocks of good liquidity listed on the Shanghai Stock Exchange (SSE).
And of course, I’m just using United SSE 50 China ETF as an example to show you what ETF is all about because this is one of the ETFs that I’m buying in Singapore Stock Exchange. There are hundreds of ETFs created by different investment banks which tracks different market as well as sector indexes.
Posted in Exchange Traded Funds | 
Tags: Different Market, Etfs, Exchange Traded Fund, Investment Banks, Management Fee, Management Fees, Sector Indexes, Tock