Performance of Unit Trusts in An Emerging Market: A Case Study of Malaysia

Abstract

‘This study examines the performance, risk diversification and systematic risk of 34 unit trusts in Malaysia in the period January 1991 ~ June 1997. The results show that they, generally, performed better than the market. But, the risk-return characteristics of the different categories of funds are not consistent with the objectives of the funds. Generally, growth funds outperformed income funds which, in turn, outperformed balanced funds. Similarly, growth funds have higher systematic risk while bal- anced funds have higher systematic risk while balanced funds have the lowest systematic risk. Major- ity of the funds are reasonably well diversified, with balanced funds the most diversified and growth funds the least diversified.