E-MAGAZINE BQS606

INVESTMENT
MARKET

UNIT TRUST VS PROPERTY

1ASSIGNMENT

PROGRAMME : ( )B A C H E L O R O F Q U A N T I T Y S U R V E Y I N G H O N S

SUBJECT : CONSTRUCTION ECONOMIC III

CODE : 6 0 6B Q S

SEMESTER : 05

GROUP : AP2245F

:P R E P A R E D F O R .D R F A R I D A H M U H A M M A D H A L I L

:GROUP MEMBERS

IZZATUL AFNA BINTI AB WAHAB 2019415856
ANIS AISYAH BINTI MOHD ROSLY 2019268434
HANIS SYAHIRAH BINTI HAIRUL FAZLIN 2019218532
DYG NUR AFIFAH BINTI ABG MOHAMMAD 2019268486
NUR AMIRAH NASUHA BINTI MOHD AZAM 2019268414

TABLE OF
CONTENTS

1.0 Introduction

2.0 Definition

3.0 Discussion & Findings

3.1 Security of capital

3.2 Security of income in

relation to purchasing power

3.3 Management expense

3.4 Liquidity

3.5 Yield

3.6 Risk

3.7 Duration

4.0 Comparison 23
5.0 Conclusion

References

TABLE OF CONTENT PAGE 2

INTRODUCTION

Investment is defined as the commitment of current financial resources to
increase its value over time. This investment is an outflow of some capital
including time, effort, money, or an asset with the hope that a larger reward
in the future than what was originally put in (Hayes, 2021). It involves
purchasing assets to retain them for a lengthy period, and the person who
invests is called an investor. In Market Business News, the investor is an
individual, corporation, or other organisation that invests money in order to
make a profit. However, investment is not as beautiful as mentioned. Every
investment involves some certain level of risk, and higher-yielding
investments often carry greater risk. There is no such thing as getting a
fabulous return with absolutely no risks (Justin & Kumar, 2017). Even though
the main goal of investment is about the ‘growth of income’, they tend to go
up and down over time, depending on the market. In at worst case, they may
lose value over time. Therefore, to maximise the profit while reducing risk,
the investor should not only have wide self-knowledge about investment
fundamentals but also have a good sense in judging investment values.

Another way is the investor should have proper financial planning to avoid
any circumstances such as saving money. Having a saving is the best way
because it has no risks. From an economic perspective, investment and saving
are two different things. Saving is known as the act of putting away money
for future needs and uses while investment is putting money to grow (Jain,
2021). In Malaysia, there are more than six types of investment; investment
in securities, investment in savings, investment in real estate, investment in
collectible, investment in gold, investment in Malaysian trust funds, and more.
These types of investments are chosen according to specific standards and
criteria to achieve the objective of the fund. The investment also can be
referred to as any mechanism to generate future income such as unit trust
fund and property.

I N T R O D U C TI IN OT R NO D U C TPI OANG PEA G2E 2

DEFINITION



UNIT TRUST

Generally, a unit trust funds can be defined as a collective investment scheme set up
under a trust deed. It is instrument which allow investors who have the same investment
objectives to pool their money into a fund and most importantly that is managed
professionally. The funds are pooled to purchase huge quantities of securities, leading to
greater market position for all investors. The unit trust fund's pooled funds are invested
into a portfolio of assets such as equities, bonds, short-term money market instruments,
and other assets (Ripain & Ahmad, 2018). The unit trust is typically a three-way
relationship between; investor who known as unit holder, invests in the fund by buying
units; trustee who uses due care in protecting the investors’ rights and interests; and
manager who Is responsible for setting and implementing the investment strategy to
invest into authorised investments and portfolios. Investment decisions are made by
professional fund managers appointed by the trustees. Most of investors invest in unit
trust to save and grow their money at the same time. Different trust funds have
different investment objectives. Some invest for growth, some for income, some invest
only in Malaysia, some in Asia, and some in the global market.

PROPERTY

In Longman Business Dictionary, the property market is defined as the buying, selling, and
renting of land or buildings. An investment property, often known as a real estate
property, is purchased to generate a return on investment through rental income or
eventual sales of the property. It consists of land and improvements, which include
buildings, fixtures, roads, structures, and utility systems and the property rights confer
ownership of land, improvements, and natural resources such as minerals, plants, animals,
water, and so on. An individual investor, a group of investors, or a corporation may own
the property. (Chen, 2021). Other than that, the term of investment property is also used
to describe other assets that have future appreciation such as art, securities, or other
collectibles. This property is generally a great investment option because it has no fixed
maturity date, hence it can be sold anytime. According to Caldwell (2020), it can
generate continuous passive income and be a good long-term investment if its value rises
over time since the building can last for decades. On that account, this property
investment surely can be used as part of the overall strategy to begin building wealth.
There are several main types of real estate which are; residential, commercial, industrial,
and raw land. Each type has a unique purpose and utility. In order to understand the
property market and the behaviour of prices and yields under changing economic
conditions, it is important to understand the nature and characteristics of property
investment.

DEFINITION PAGE 3

PROPERTY SECURITY OF
CAPITAL
Property investment is capital extensive and
can only be a safe investment if the investors

have a long-term investment perspectives UNIT TRUST VS PROPERTY
and sufficient funds to finance the properties
in the long run. Unit trust is regulated by the Security Commission
and is managed by managerial companies supervised
Without adequate funds, investors may need by Bank Negara. The capital used for unit trust is
to sign up for loans to finance the property. categorised as equity funds which consists of capital
This will add up the liability of the investor as gain and dividend income. When the fund sells its
he may need to find another source of funds investments and that have appreciated in value, the
to pay for the property loan until he can get investors are expected to have capital gain.
a good financial return.
On the other hand, dividend income may be
generated from the shares of the holdings. Unit
trust is not principal or capital-guaranteed which
indicates that investors may experience loss of an
amount of money in certain situations. In unit trust,
the investment is liquid as units may be easily sold
or purchased.

What are capital-protected unit trust funds, and how
do they work?

It also the investments that, if kept until their
maturity date, which can range from 18 months
to 5 years, guarantee to return 100% of your
money invested.

They are closed-ended unitized funds that do not
offer investors a return but only pledge to
protect the capital invested at maturity.

Since it is a small proportion of the initial capital
is invested in challenging assets such as stocks,
options, or other derivatives that derive their
value from underlying assets such as equities,
bonds, commodities, indices, currencies, and
others, they allow investors the opportunity to
invest in the potential upside from the
investments.

SECURTY OF CAPITAL PAGE 4

SECURITY OF INCOME IN
RELATION TO PURCHASING

POWER

UNIT TRUST VS PROPERTY

UNIT TRUST PROPERTY

There are 3 ways of investing in unit trust which The generation of capital gain comes from the
are through : difference between selling and purchasing price as
stated in the Sale and Purchase Agreement (SPA).
EPF savings The net capital gain is obtained after the deduction
EPF member can be registered if they are eligible of transactions costs like legal fees, agent
for the investment. Their eligibility and quantum of commissions, stamp duty and property gain
investment allowed however may vary. taxation in Malaysia.

Regular savings Next, property investment can generate operating
Regular savings method is a good way for monthly income too in which net operating income comes
saving in a long period of time. This is a great, from the difference between rental income and
disciplined, and practical way to save money for a running expenses. So the amount of net capital
future need. The sum accumulated at the end of gain and net operating income has to be deducted
the period will increase if equal and regular with financing charges to get a final financial
payments are made over time. Total expense return that determines whether it is a positive or a
average is the term for this method. By the end of negative investment.
this period, the redemption (of selling) price of the
units held will be the sum of all the contributions
and also returns that earned from total
contributions from the first purchase.
Nevertheless, the investment is affected by
fluctuations in the unit price.

Lump sum investment
Lump sum investment can be collected over a
period of time after the accumulation and
compounding of investment capital as income in
unit trust is highly influenced by the amount of
units purchased for the investment. Unit trust
funds are appealing because of the compounding
effect that have over time.

SECURITY OF INCOME IN RELATION TO PURCHASING POWER PAGE 4

MANAGEMENT EXPENSE

UNIT TRUST VS PROPERTY

UNIT TRUST PROPERTY

A group of companies may use There are several types of management expenses which
'management charges' to move profits or are :-
losses from one group member to the
another for corporation tax purposes. Such Expenses for Property Management by a Letting
arrangements normally create a taxable Agent.
supply. Unit trust management fees are Most leasing agents will provide their customers with a
payable by the fund and are applicable to choice of property management services, each of which
all funds. The management fee helps to will be priced differently depending on what is included.
cover the costs of operating the fund as In most circumstances, the letting agent will charge the
well as the fund managers’ expertise in landlord a fixed fee or a percentage of the rent, and for
managing the fund. a fully managed service, they would charge between 10-
15% of the rent in monthly instalments.
Annual management expenses include
expense for portfolio management, trustee Fixed Fee Property Management.
and custody fees, audit fees, This style of property management fee is most
administrative costs and other services commonly used for vacant residential properties or land
properly incurred in the administration of sites which don’t have a regular rental income. This
the fund.These costs are paid out of the makes it a lot easier for the property management
fund’s assets. The management fee usually company to charge a fixed monthly fee to the owner.
ranges from 0.5% to 2%.The NAV per unit
announced by the fund management Property Management Fees for Guaranteed Rent.
companies are net of management fees . Typically, the property management business will sign a
rental agreement with the landlord in which they agree
The price of a Unit Trust is the Net Asset to pay the landlord a fixed rent amount in exchange for
Value (NAV) per unit. The management the right to sublet the landlord's property and charge a
expenses is calculated by the fund manager higher rate. The difference between the two prices will
after the end of every business day and be kept by the property management firm as their
will be made known to the public by T+2 charge.
i.e. 2 business days after the business day
in question. Property Management Fees based on Revenue Share.
Commercial units or completely serviced flats are the
most popular uses for this property management
service. Typically, the landlord will sign a contract with
the management company allowing them to turn the
property into a revenue-generating business.

UNIT TRUST LIQUIDITY

Liquidity refers to the ability to meet UNIT TRUST VS PROPERTY
short-term operating needs with cash or
cash equivalents. To put it another way, PROPERTY
liquidity refers to the amount of liquid
assets available to pay bills and debts when Property has the lowest liquidity because it requires
they fall due. Cash is, without a doubt, the more capital to purchase than stocks or precious
most liquid asset. Unit trusts are typically metals, real estate is one of the most illiquid assets. It
open-ended investments that can be also takes longer to sell a house, both in terms of
bought and sold on a daily basis by finding a buyer and completing the sale. Property
investors (unless otherwise stated). An assets are also restricted to their existing location
investor can sell all or part of his units at (immobile) and are subject to market fluctuations.
the next trading day's unit purchase price. Buyers frequently expect a discount in exchange for a
Because the Units Trust has a high level of faster transaction. Liquidity in real estate is also
liquidity, you can usually enter or withdraw determined by the type of property.
your investment on any business day. When
you choose to buy or sell a unit trust, you Residential property has higher liquidity than
will take the next available price at the end commercial property in general because it takes less
of the trading day. due diligence and has lower transaction fees, and it is
more resistant to national or regional economic
Because there is no secondary market for fluctuations: people always need a place to live.
funds that are not listed, liquidity in unit Apartment units are easier to sell than entire
trusts is also a risk. As a result, you'll be commercial apartment buildings since large and
able to redeem your units only on the expensive property is generally less liquid. Offices sell
fund's trading days. For funds that are faster than office buildings, while high-street stores
listed and traded on a securities exchange, sell faster than shopping malls. Due diligence involves
the secondary market may be illiquid. This time, resources, and money, thus shopping malls and
could have an impact on the pricing at huge hotels are the most difficult to sell.
which you buy and sell.

LIQUIDITY PAGE7

YIELD

UNIT TRUST VS PROPERTY

UNIT TRUST PROPERTY

The term "yield" refers to the rate of return on an Property investment is is one that has been
investment, which is calculated as the income purchased with the objective of making a profit on
earned divided by the amount invested. Unit trust is the investment (purchase), either through rent
the good instruments for medium to long term (revenue), resale the property for the future, or
financial plans. Investment managers or fund both. In addition, the investor's aim and objectives
managers with a thorough understanding of market in investment in property is to get high yield , high
dynamics manage unit trusts. They understand retained value of the property and so on.
which high-yield solutions are available, how to
estimate performance based on previous There are two major ways to profit from buy-to-
experience, and how to complete day-to-day rent properties. Rent: The most obvious source of
operations and transactions. Basically, they do all of income from a rental property is rent. Over time,
the hard work and are always looking for new ways rental payments provide a consistent stream of
to get the most productive yield. revenue. Capital: While rent is (hopefully) flowing in,
the right property will also be enjoying capital
There are some costs to the investor of unit trusts appreciation. This means that when the value of the
that will affect the total returns. The company of property rises, so does the worth of original
unit trust are allowed to charge three types of fees investment.
such as initial service charge, repurchase fee, and
management fee. The unit trust fund earns income Rental yield is important to property investors
from its varied investment in the form of dividends. especially for people who invest to rent. Rental yield
interest income and capital gains. These three types measures the annual returns generated from a
of income are then distributed to the unit holders in rental property in the form of a percentage. This
the proportion to the units they hold in the form of formula is useful during an investor’s decision-
dividends or bonus unit. making process as it can be used to evaluate
potential income of the investment. Generally, a
In addition, if more units holders of the investment rental yield at least 4% is considered good in
in the unit trust, the percentage of the yield would Malaysia because there is no definite good rental
increase. Example if invest RM10000 so receive RM yield percentage since the property market is prone
500 plus the return of the original investment RM to year-to-year fluctuation.
10000. So Yield is 5%.
Example if pay RM200,000 for a house. rent house
for RM10,000 annually. Rental yield would be the
rental figure (RM10,000), divided by the total cost
(RM200,000), then multiplied by 100 to make a
percentage. So rental yield is 5%.

YIELD PAGE 6

RISK

The process of understanding and measuring risk is essential to the investment process.
An understanding of nature will increase the awareness of the investment problems

UNIT TRUST PROPERTY

In investment, there are no ideal risk Investing is widely seen as a business that is
definitions or metrics. Investors should be wise filled with some level of risks. In PropertyGuru
to consider risk in terms of the likelihood that (2018), the property has traditionally been a
a certain investment (or portfolio of assets) popular investment option for many Malaysians.
would fail to reach the expected return, as well It is because property investment is a safe
as the magnitude by which that objective may investment which categorised as the most
be missed. They may attempt to design profitable low-risk investment.
portfolios that not only have a reduced
probability of loss but also a lower maximum It is claimed as such a low-risk investment
possible (Simpson, 2021). because most of the property should be
prepared for any physical risk related to
Unit trust is typically known for having lower natural disasters such as floods, landslides,
risks among investors. This is due to their earthquakes, storms, or any damages related
diverse portfolio holdings. Diversification to nature. When owning the property, it is a
refers to the mixing of various investments must to have insured the property to avoid any
within a portfolio. In unit trusts, money that unexpected losses. If anything happens to the
the investor invests in a single unit trust will property, the insurance will largely repay for it.
across over several different shares
automatically. For example, if one investment Other than that, property investment is a
in the unit trust is going down, there are still tangible asset that exists in reality and has
savings in another shares. The diversification physical proof of the investment. For example,
significantly reduces the chance of a single in rental property investment, if the owner is
asset doing poorly. On the other hand, if one having difficulty finding renters and is
investment performs excellently, it will only experiencing frequent vacancies. The owner
benefit from that single investment. Therefore, can reduce the rent or attempt a new strategy,
by investing in many unit trusts, the money will such as Airbnb, instead of the conventional
be distributed across a greater range of one. If the worst happens, the owner may
shares, as well as lowering the risk of the always sell their investment property and
investments even more. purchase another in a different location.
Instead of just losing all of the money invested
This does not, however, imply that it is a risk- in purchasing a rental property, fixing it,
free investment. Before investing in the funds, maintaining it, and managing it, the owner
it is important to properly investigate the risks always has other choices. Therefore, because
involved and verify that they are appropriately of this feature, this property investment is
matched with our risk profile. In that case, unit low-risk investment
trust has proven to be a popular investment
option for both new and experienced investors
that create money by investing in a diverse
range of assets.

RISK PAGE 8

UNIT TRUST DURATION

Investors in unit trusts are often those who PROPERTY
have money to invest but do not have the time
or interest to manage their own portfolios of The sensitivity of the price of a bond or other
direct investments or shares. Rather, people debt instrument to changes in interest rates is
choose to invest their money into a reliable, measured by duration. Because many forms of
trustworthy investment vehicle that meets duration measurements are also computed in
their needs. Unit trusts give investors years, the length of a bond is frequently
convenient access to a variety of investments confused with its term or time to maturity.
that consumers may not have otherwise.
In general, the longer a bond's maturity, the
Unit trusts provide an appropriate opportunity lower its price will be as interest rates increase
for investors to obtain access to investments (and the greater the interest rate risk). For
that, in the long run, should yield returns example, if interest rates increased by 1%, a
superior than cash savings and fixed deposit bond or bond fund with a five-year average
investments as investors attempt to maximise maturity would lose about 5% of its value.
returns on their financial resources.
While, in property investment is best done as a
In fact, the cost of these potentially larger long-term strategy. Furthermore, the investors
returns is the risk that comes with the recommended a duration of at least five years,
investment. Most unit trust program gives less but preferably seven to ten years.
certainty of investment returns in the short
term than fixed deposit options. Unit trust Purchasing an investment property requires
investments, on the other hand, generate substantial upfront, ongoing, and exit fees. To
superior returns at acceptable risk levels over make huge profits, the value of an investment
the medium to long terms for example, 3 years property must increase over and above the
to 20 years. expense of these charges, as well as the costs
of holding onto the property after taxes.

The optimal long-term investing plans requires
tolerance as the value of the investment
property rises. If consumers are looking for
financial return from their own property
investment, time is also crucial. When it comes
to investment properties, investors may have to
put up with years of low or even negative
growth from time to time.

DURATION PAGE 9

COMPARISON

UNIT TRUST VS PROPERTY

A magazine is a publication, usually a periodical Security of capital journal. Some professional or trade publications
publication, which is printed or electronically
are also peer-reviewed, an example being the
published (sometimes referred to as an online
Journal of Accountancy. Academic or professional
magazine). Magazines are generally published on
publications that are not peer-reviewed are
a regular schedule and contain a variety of
generally professional magazines.
content.

That a publication calls itself a journal does not
They are generally financed by advertising, by a Security of income in make it a journal in the technical sense; The Wall
purchase price, by prepaid subscriptions, or a relation to purchasing Street Journal is actually a newspaper.
combination of the three.
power A magazine is a publication, usually a periodical
At its root, the word "magazine" refers to a
publication, which is printed or electronically
collection or storage location. In the case of
published (sometimes referred to as an online
written publication, it is a collection of written
magazine).
articles.
Management Magazines are generally published on a regular
This explains why magazine publications share expense schedule and contain a variety of content. They ar
the word root with gunpowder magazines,

artillery magazines, firearms magazines, and, in
Compared with unit trust, the property does not
French, retail stores such as department stores.
use unit holders and fund managers. When the

value of the property rises, so does the worth of
Fund managers with a thorough understanding of Liquidity original investment. The yield of the investment
market dynamics manage unit trusts. The
is also increasing.
managers do all of the hard work and are always

looking for new ways to get the most productive
Property investment is categorised as the most
yield. If more units holders of the investment in
profitable low-risk investment due to the tangible
the unit trust, the percentage of the yield would
assets as well as protect and insured the
increase. Yield property to avoid any physical risk.


Unit trust is comparatively low risk investment
Property investment is best done as a long-term
because of its nature which is collective and
strategy. It is recommended to do investment
diverse range of assets.
with duration of at least five years, but

preferably 7 to 10 years.
Unit trust investments generate superior returns

at acceptable risk levels over the medium to long

terms for example, 3 years to 20 years.

Risk












Duration







COMPARISON PAGE 10

CONCLUSION

Unit trust funds, often known as mutual funds, are a type of collective investment scheme that
pools money from investors, invests it for a defined goal, and is managed by a professional
fund manager (Ripain & Ahmad, 2018). There are 3 ways of investing in unit trust which are
through EPF savings, regular savings or lump sum investment. Unit trusts are managed by
investment managers or fund managers who have a good understanding of market dynamics.
They know what high-yield solutions are available, how to estimate performance based on past
performance, and how to accomplish day-to-day operations and transactions. Unit trust funds
are beneficial to investors who lack the advanced expertise and time to invest their money on
their own. It is also useful if an investor generates superior returns at acceptable risk levels
over the medium to long terms . As a result, the investor should be aware of unit trusts, how
they work, and how to select the best funds depending on the risks involved, duration, yield,
liquidity, security of capital and security of income in relation to purchasing power. Other than
that unit trust is typically known for having lower risks among investors. This is due to their
diverse portfolio holdings. However, this does not indicate that it is a risk-free investment. It
has proven to be a popular investment option for both new and experienced investors that
create money by investing in a diverse range of assets. The principal or capital of a unit trust
is not guaranteed, which means that investors may lose money in certain circumstances.

An investment property, often known as a real estate property, is purchased with the intention
of generating a profit through rental income or potential property sales. It is concluded that
Malaysia still an excellent place for investment due to lower property prices compared to
Singapore, Thailand and Hong Kong. Property investment can only be considered safe if the
investors have long-term investment goals and adequate finances to finance the properties
over time. Investors who lack sufficient finances may be forced to take out loans to finance the
property so the liability of investors is increased. In addition, the investor's aim and objectives
in investment in property is to get high yield , high retained value of the property and so on.
Property investment is low-risk investment because most of the property should be prepared
for any physical risk related to natural disasters. Investment has its own risks depending on
how the investor manages to get a profit and yield. The investor also must accept all risks in
investing because not all promise a return in profit. losses will inevitably occur if not handled
properly and choose the wrong way of investing. in the investment the money available cannot
be simply sufficient for the necessities because the risk for the loss remains. Lastly, unit trust
and property have their own benefits depending on the investor requirement and knowledge in
either preference to choose unit trust or property in their investment.

CONCLUSION PAGE 11

REFERENCES

Caldwell, M. (2020, March 24). Should I invest in real estate? The Balance. Retrieved
November 7, 2021, from https://www.thebalance.com/is-real-estate-a-good-investment-
2386365.

Chen, J. (2021, May 19). What is an investment property? Investopedia. Retrieved November
7, 2021, from https://www.investopedia.com/terms/i/investment-property.asp.

George Kachmazov (11 february 2016) .Real estate liquidity: what it is and how to estimate
it. Retrieved November 13, 2021, Real estate liquidity: what it is and how to estimate it –
Tranio.Com

Hayes, A. (2021, October 22). Definition and types of investments. Investopedia. Retrieved
October 31, 2021, from https://www.investopedia.com/terms/i/investment.asp.

Investment Fund, The Capital Market Authority. (May, 2019). Retrieved October 31, 2021,
from https://cma.org.sa/en

Jain, M. (2021, September 28). Difference Between Savings and Investment. The Money
Club. Retrieved October 31, 2021, from https://moneyclubber.com/blog/difference-between-
savings-and-investment/.

Justin J. Kumar, I. A. R. (2017, April 24). Warning signs an investment's too good to be
true. Kiplinger. Retrieved October 31, 2021, from
https://www.kiplinger.com/article/investing/t048-c032-s014-is-that-investment-too-good-to-
be-true.html.

Nilson & Company (2014) Beware of Calculating Unit Trust “ yields”. Retrieved November
13, 2021 https://www.nilsonco.com/investoru123456789/incometrustunits_calculatingyields/

Peter Gianoli (2016, May 30). How long should you hold an property investment. Smart
Property Investment. Retrieved November 7, 2021, from
https://www.smartpropertyinvestment.com.au/buying/15325-how-long-should-you-hold-an-
investment-property.

Reena Kaur Bhatt ( 01 Jun 2020) Malaysia’s Top 7 High-Rise Properties with the Highest
Rental Yield in 2019. Retrieved November 13, 2021,
https://www.iproperty.com.my/guides/high-rental-yield-property-malaysia/

REFERENCE PAGE 12

REFERENCES

Ripain, N., & Ahmad, N. W. (2018). An overview of unit trust funds in Malaysia. Reports on
Economics and Finance, 4(3), 117-123.
Simpson, S. D. (2021, November 11). Low-risk vs. high-risk investments: What's the
difference? Investopedia. Retrieved November 12, 2021, from
https://www.investopedia.com/financial-edge/0512/low-vs.-high-risk-investments-for-
beginners.aspx.
Unit Trust - InvestSmart (2014, June). Retrieved November 6, 2021, from
https://www.investsmartsc.my/unit-trust/.
What is an investor? Market Business News. (2020, September 13). Retrieved October 31,
2021, from https://marketbusinessnews.com/financial-glossary/investor/.

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