New Unit Trust Funds for Retirement Savings
The Star Online October 10, 2006 KUALA LUMPUR: The Securities Commission (SC) will collaborate with the unit trust industry to introduce a new category of unit trust funds (UTFs) that will fulfil the needs of investors who wish to save for retirement purposes. “The introduction of the funds is part of SC initiatives to accelerate growth and enhance investor protection in the unit trust industry,” the SC said in a statement. It said the new UTFs would have lower investment costs and a more conservative investment strategy. “The UTFs will allow individuals, outside the scope of a formal saving scheme, to invest in a savings vehicle with features consistent with retirement objectives and lower entry costs,” it said. The SC said a single-pricing regime would also be introduced at the beginning of the second quarter 2007 to ensure full transparency and disclosure of upfront costs. “Unlike the current dual-pricing regime where prices are quoted inclusive of charges, under the single-pricing arrangements, prices will reflect the net asset value of a unit and all charges will be separately disclosed,” it said. The SC said the enhanced transparency of prices and charges would allow investors to compare the costs of investing in unit trusts associated with different channels of distribution and should lead to a more competitive environment. It said it would introduce a disclosure-based regulation (DBR) for product approval next year. “The DBR approach will reduce time to market due to less regulatory review on products to be launched,” it said. Meanwhile, to improve the delivery of unit trust products to investors in a convenient and cost-effective manner, the SC said a distribution channel would be introduced. “This includes enhancing the role of players such as financial planners and broadening the use of technology to improve the cost-effective access of investors to unit trust products,” it said. The SC said it was exploring appropriate bilateral and multilateral mutual recognition regimes in the region to facilitate the sale of Malaysian unit trust products and the expansion of Malaysian intermediaries into other markets. In addition, to strengthen investor protection and promote industry self-regulation, the SC said the Federation of Malaysian Unit Trust Managers would also be formally structured as an industry self-regulatory organisation (SRO). “The SRO will take the responsibility to ensure high industry standards for sales conduct and business practices and will be subjected to oversight by the SC,” it said. – Bernama