Unit Trust Malaysian Style

I wanted to put my MYR money in Malaysia into more productive use, but found that there were very few options available for investing in foreign markets (I guess they don’t think why anyone would need that since Malaysia is such a great investment – if you believe them).

Then I found that Maybank's (the leading bank in Malaysia) Unit Trust for KL Equities charges 5 sen commission for every unit. At the issue price of MYR1 that commission represents 5% which is comparable to rates in Singapore which range from 1% to 5%. But with current unit price of 40+sen, the 5 sen per unit commission rate represents more than 10% of the investment! I thought who would buy a fund if they lose 10% of their money up front?

So I decided to call the Bank. I told their sales rep (a Chinese lady) that that's ridiculous and probably explains why no one buys their fund and suggested that they re-look at the commission structure. She agreed but suggested I talk to her manager (a Malay man). The manager's response was really decisive (if nothing else, managers have to be decisive!): they cannot change the way they charge as 'the practice is the same as other funds in Malaysia. Moreover, funds market is under developed in Malaysia and they cannot follow international practices. In addition, when the unit price goes above MYR1 the commission is lower than 5%!'

With that response, I did not know what to say except ‘good-bye’. My thought: No wonder they are under developed!