How to Choose the Right Unit Trust Fund — and Avoid My Costly Mistakes

How to Choose the Right Unit Trust Fund — and Avoid My Costly Mistakes

Investing in unit trust funds is one of the most common ways to grow wealth.

But when talking about unit trust funds in Malaysia, most people — including myself — have had bad experiences and suffered losses.

I want to share the painful lessons I learned from my own mistakes and how they shaped the way I now select funds more wisely.
Then, I’ll guide you through a practical checklist to help you start investing with confidence.

My Costly Mistakes in Fund Investing

When I was working as a wealth manager in an international bank, I did a lot of analysis and research to select what I thought were the “best performing” funds for my portfolio.

My mindset was simple:

“Choose the best-performing funds in each category, buy and hold them.”

But this was my first big mistake.

• The funds did well when the market was rising…
• But when the market corrected (which it always eventually does), the funds also dropped — even the “best” ones.

So I realised:

It’s not enough to only choose the best-performing fund.
I must also limit my losses when markets turn down.

Trying Short-Term Trading

I then studied technical analysis and tried short-term trading strategies.

I thought:

“If I can detect when the market is turning down, I’ll sell early, then re-enter when the market turns bullish again.”

It worked for a while.
But as my portfolio grew and I got busier, frequent switching consumed a lot of energy and wasn’t sustainable.

So I limited this method only to my high-net-worth portfolio — and that became my second big mistake.

Overconfidence and No Risk Management

I was overconfident, thinking that with deep fund research and active switching, I wouldn’t lose money.
I ignored asset allocation and took excessive risk with large sums.

Then the market crisis hit during the property downturn in China in 2022.
I assumed it was just a short-term correction, so I increased my allocation in equity funds.

But the market kept falling.

Eventually, my portfolio lost about –40% in value during the worst drop.
Because these were high-net-worth portfolios, the losses were very large.

This experience taught me a hard but powerful truth:

Nobody can predict the market direction consistently.
Even with technical strategies, mistakes will happen.

I learned the importance of:

• Diversification
• Asset allocation
• Risk management
• Regular review and rebalancing

I also realised that choosing funds purely by past performance is not enough.

Four Key Areas to Evaluate a Fund

1. Parent Company
   A well-known, stable, reputable asset management company.
   Its culture, resources, and stability will directly affect fund operations.

2. Fund Manager Team
   Experienced and stable managers with a consistent track record.
   Their decisions and risk controls drive the fund’s performance.

3. Investment Process
   A clear, systematic approach to research, stock selection, and risk controls.
   This ensures long-term consistency and proper risk management.

4. Past Performance
   Consistent 3–5 year returns above the category average with reasonable risk.
   (Remember: past performance does not guarantee future performance, but it is still a useful quantitative measure when screening funds.)

Final Words

You don’t need to be a financial expert to start investing.
Just like buying a car, you don’t have to know how to build one — you just need to know what matters: brand reputation, safety, fuel efficiency…

For funds, those key factors are the parent company, fund managers, investment process, and performance.

Remember:
Investing is not about who grows the fastest, but who lasts the longest.

I hope by reading my story, you can avoid the same costly mistakes I made.
Start small, stay consistent, review regularly, and use proper diversification and risk management.

If you do this over the long term (at least 5+ years), you’ll greatly increase your chances of reaching financial freedom with high certainty.

If you still have doubts or want a second opinion before starting, feel free to schedule a consultation with me — it’s complimentary, and I promise your financial interest will always be my first priority as an independent financial advisor.

Disclaimer:
This article is based on my personal experience and reflections. It is shared for educational and informational purposes only and does not constitute financial advice. Please do your own research or consult a licensed financial advisor before making any investment decisions.