The Difference Between Unit Trust And Private Mandate

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Every investment requires a strategy. It doesn’t matter what kind of investment, buy gold to (gold is going up now), stock investment to (Stocks are going strong right now!), There must be no strategy. But before making an investment, you need to know your risk acceptance level. This is one strategy that many people overlook. Mouth is another word, reality is another word.

The mouth says “I am an aggressive investor” but when I lose 10% I want to attract investment.

– Putting 100% of the money on one investment only is also a risk.

– When you retire and want to make an investment, it is also a risk.

Unit Trust vs Private Mandate

Ok back to the title, the unit trust that people always say Unit Trust and Private Mandate is one thing that is almost the same thing but it is different. And this Private Mandate is nothing new in the investment industry. Investing in these two platforms requires a strategy because each has its own strengths and weaknesses. And this is the strategy that I want to explain here.

Unit Trust (UT)

Unit trusts or trust funds are a pool of investor money and form a fund. With this fund, the fund manager will invest in the relevant shares. These funds have a price per unit, or what people say NAV. The same NAV value is shared by all such investors. The same goes for return or income distribution. I share an example:

According to webmaster for Kereta Sewa Shah Alam, below is a snapshot of an example of a unit trust investment from the fund fact sheet. This unit trust is called Dana Sekian-Sekian (if it is Islamic, there is the word shariah or a little Islamic name). Unit trust funds come from people’s investment money. And the public will share in the profits on each profit of this fund. So the profit earned by each person is the same based on the unit value of the fund or what is called NAV which is RM0.625. The value of this NAV is always changing and if the invested company makes a profit, this NAV will go up. Fund Manager manages this fund and makes investments in the company as in the picture “TOP HOLDINGS” is listed as the 5 largest companies starting with Tenaga Nasional Berhad, Top Glove Corporation Berhad and so on. And these companies represent those unit trust funds.

Private Mandate

If the unit trust is a pool of investor money, the private mandate is also individual (private) money controlled by one or more fund managers. So the fund manager will tailor made or custom made investment profile for individuals discretionary. Discretionary means we leave 100% to the fund manager to manage. It is as if an individual has his own unit trust fund.

Private mandates in Malaysia are as follows:

1. Private Mandate Shares – Invest in shares or stocks

   – Global Share – International Shares US, europe etc.

   – Shares Blue Chip – Shares Blue chip Local (Malaysia)

   – Shares Dividend – Shares dividend Malaysia

2. Private mandate unit trust (UT)

3. Private mandate ETF

So for the purpose of comparison with Unit Trust in the title of this post, I focus on private mandate Shares – Blue Chip for example. For private mandate blue chip, it does not have a fund name because the investment is SPECIAL for the individual and the shares invested are also SPECIAL for the individual (PRIVATE). It is as if a fund was created for those investors-not for the public. The shares invested are also more or less the same as unit trusts, ie there is Top Glove, Dialog as an example. Please refer to the picture below. This is for local shares or stocks. If the private mandate is global, it leads to international stocks. Most of these global stocks are.

The fund manager also actively ‘manages’ these stocks such as sell to, cut loss to and so on for investors to get the maximum return. So the benefits of a private mandate are different for each individual because the nature of the private mandate is also that it focuses on that individual only (different entry timing, shares may be the same and may not be the same). However, for each share selected and invested, the investor cannot choose his or her own preferred stock because this private mandate is discretionary, especially for investors who use epf. Because of that, investors, especially cash investors, give me the option to mix (diversify) unit trusts and private mandates (comparison with UT’s private mandate). Which I can control myself the funds I want to buy, switch or sell.

Private Mandate DDNK

The private mandate of DDNK is a special skit, because people know that the private mandate is mostly from this private mandate. This private mandate is arguably the general name and the private mandate of DDNK is the product name. Private Mandate DDNK is included in the global private mandate category.

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