Remember the LORD for it is he who gives you the ability to produce wealth and so confirms his covenant... Deut. 8:18

Sunday, August 22, 2010

Capital Protected Unit Trust Funds

Beware of the terms & conditions when you do invest in capital protected trust fund.
You may not get your money back immediately after the maturity period. It does vary from institution to institution but just beware, it's not what it seems in terms of liquidity and projected gain.

Take for example, ING Capital Protected Baraka Fund . Maturing in early July 2010 after 3 years, it has not pay out the money to its investors. It has a hidden built-in clause (not disclosed verbally by its sales personnel at time of sales) that permits it to to take as long as 2 months after its maturity to return the money to its investors.
The fund has not performed as projected (min 6% to max 30%) but instead has yielded zero gain to its investors.

Lesson for all..?
No two trust funds are alike so choose carefully. Have the sales staff to explain in details the prospectus, if necessary, page by page. Look at the historic performance of the company trust funds bearing in mind that good fund managers are always head-hunted and pinched so there's no guarantee that previous performance of the funds can be extrapolated.

Learn to handle your own investments. Trade the market and start by investing in dividends paying stock counters. Learn from the many bloggers who share their ideas and opinions so unselfishly. Start small and invest consistently. And don't worry too much about price fluctuation when buying into good companies, eg. if you think TM at RM3.50 is expensive then what do you think will be its price in 5 years, 10 years, 15 years period when your kids grow up to buy into the stock market...?
happy invest....

4 comments:

limko said...

Forget about Capital Protected fund! Take the example of ING Commodities Barakah fund, zero return after three years when everyone know commodities has gone up how many folds? May as well keep in FD! If anyone is prepared to go through the brochure and terms and conditions line by line as suggested, then you may as well spend your time learning how to invest yourself.

I say, Forget about Capital Protected fund, it protects the income for the fund manager only, not you, the fund buyer.

Remnant 613 said...

Well said.

CheahSweeKuan said...

Maybank Capital protected funds are the same. almost zero return. Maybank is not prepared to hire our local fund managers. They got one from overseas and his performance is dismal. The poor fund buyers are currently supporting the expat fund manager life style while they got zero return. You are right Limko, it protects the income of the fund manager not the fund buyers.

Kris said...

Yes. I agree. I will shun capital protected funds that lock my monies in for a long period of time.

Really not worth it. I prefer to buy stocks that yield better dividend instead.