Potential risks.

There is no sure profit in unit trust investing or any other investing.

There are risks involved and by being aware we can begin to find ways to manage these risks rather than avoid them. Some of these risks are:-

• Market risk. Unit trust managers buys stocks and shares. The prices of stocks can fluctuate in response to the activities of individual companies, and general market or economic conditions. Such fluctuations in the values of stocks and shares will cause the Net Asset Value of the Fund to fall as well as rise. You stand to lose money when the share market falls.
• Interest rate risk. Generally, bond (fund) prices move in the opposite direction of interest rates. If interest rate rises, bond prices falls. This will lower the value of your investment.
• Credit risk. A fund could lose money if the issuer or guarantor of a fixed income securities is unable or unwilling to make timely principal and/or interest payments.
• Investment manager risk. Poor investment management will result in the loss of capital invested. Changes in a fund’s management may also affect whether a fund achieves its objective. The fund management company may replace a fund manager or the fund manager may resign. This change may be significant since the manager controls the fund’s investments.For example, an equity fund that has realized modest gains under one manager may become more volatile if the fund’s new manager seeks more robust growth.
• Country risk. The prices of securities are also affected by the political and economic conditions of the country. With the recent popularity of global funds, investors should take note that global funds may be affected by risks specific to the country which it invests. Such risks include changes in a country’s economic fundamentals, social and political stability and foreign investment policies etc. These may have an adverse impact on the prices of securities of listed companies.
• Currency risk or foreign exchange risk.This is a risk associated with investments denominated in foreign currencies. When the foreign currencies fluctuate in an unfavorable movement against Ringgit Malaysia, the investments will face currency losses.
• Syariah non-compliance risk. The Syariah-approved securities invested by the fund may be reclassified by the Syariah Advisory Council of the Securities Commission as syariah non-approved securities. The fund's performance may be affected as the fund has then to dispose all such investments that have been reclassified.