Benchmarks are adopted to measure the performance of unit trust funds. For instance, an equity fund that focuses on Malaysian equities can adopt the Kuala Lumpur Composite Index (KLCI) or FTSE Bursa Malaysia 100 index while Shariah based equity fund typically adopts the Kuala Lumpur Shariah Index (KLSI). Bond funds may utilize fixed deposit rate as the benchmark. In the case of a balanced fund, it is a norm to use composite benchmark, for example 50% of the composite is calculated based on the percentage change of the KLCI while another 50% of the composite is calculated based on fixed deposit rate.
The Management Expense Ratio (MER) is a useful way to assess the preceding year’s costs of holding units in a Unit Trust Fund and compare the costs of investing in a fund with the cost of other similar investments, and its formula is as follows:
Fees refer to the total of all the fees incurred in a financial year and deducted directly from the fund (including annual management fee, the annual trustee fee, the auditor’s fee and other professional fees).
Recovered Expenses refer to the expenses recovered from and/or charged to the fund (including cost of printing, stationery and postage).
