7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors

FIMM Combined Examination FCE

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1 Introduction: The FIMM Combined Examination (FCE)

0.1 FCE Exam Facts, Registration Rules and How to Use This Guide

2 Chapter 1: Understanding Collective Investment Schemes in Malaysia

1.1 What a Collective Investment Scheme Is and How Malaysian CIS Are Classified 1.2 Investment-Linked Funds Are Not UTS; Industry Growth and History 1.3 Participants in the CIS Ecosystem: Unit Holders, Managers, Trustees, Distributors and Regulators

3 Chapter 2: Introduction to UTS and PRS

2.1 UTS and PRS as Investments: Mechanics, Unit Calculations and How They Compare 2.2 Types of Funds: By Asset Class, Fund Structure and Investment Objective 2.3 Methods of Investing and Dollar Cost Averaging 2.4 Benefits and Disadvantages of Investing in UTS and PRS 2.5 Understanding Risk and the Risks of Investing in Schemes 2.6 Shariah-Compliant Schemes, Their Risks and the Role of the Shariah Advisory Council

4 Chapter 3: Regulatory Framework

3.1 The Regulatory Framework: The SC, Other Regulators and FIMM's Dual Role 3.2 Legislation, SC Guidelines and FIMM Rules Governing UTS and PRS 3.3 Regulation of Scheme Providers and Oversight Functions 3.4 The Deed, the Prospectus or Disclosure Document, and the Product Highlights Sheet 3.5 Portfolio Constraints: Permitted Investments, Liquidity, Borrowing and Exposure Limits 3.6 Regulations for Other CIS: Real Estate Investment Trusts and Exchange-Traded Funds 3.7 Regulation and Duties of the Scheme Trustee 3.8 Regulation of Marketing and Distribution: Distributor Categories, Collection Points and Agency Structure 3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation

5 Chapter 4 (Part 1): Marketing and Distribution — Disclosure and Transactions

4.1 Servicing Investors and the Contents of the Prospectus and Disclosure Document 4.2 The Product Highlights Sheet, Advertising Standards and Account Maintenance 4.3 The Purchase Process and Suitability Assessment Before Personal Advice 4.4 Cooling-Off Rights, Repurchase of Units, Suspension and Switching 4.5 Financing the Purchase of UTS: Process, Safeguards and the Risk Disclosure Statement 4.6 EPF Transfers and Withdrawals for Investment in Approved Unit Trust Funds

6 Chapter 4 (Part 2): Marketing and Distribution — Distributions, Reporting and Service

4.7 Distributable Income, Distributions and NAV, "Buying" a Distribution and Taxation 4.8 Reporting to Investors: Confirmations, Statements, and Semi-Annual and Annual Reports 4.9 Marketing Principles, Delivering Quality Service and Handling Complaints 4.10 The Effect of Inflation, Taxation and Investment Costs on Returns 4.11 Investment Alternatives to UTS and PRS

7 Chapter 5: Code of Ethics

5.1 Compliance, Ethics and the Structure of the FIMM Code of Ethics 5.2 Core Principle 1: Honesty and Integrity 5.3 Core Principle 2: Professionalism 5.4 Core Principles 3 to 5 and Non-Compliance: Conflicts, Disclosure, Confidentiality and Misconduct

8 Chapter 6: Personal Financial Planning

6.1 Personal Financial Planning: Definition, Features, Five Areas and the Six Steps 6.2 Financial Planner Credentials, Skills, Remuneration, and How a Planner Differs from a Consultant 6.3 The Consultant's Role in Investment Planning and Advising Clients Through the Life Cycle

9 Chapter 7A: Features and Operations of UTS

7A.1 Structure of a UTS, the Trust Deed, the Parties and Modifying the Deed 7A.2 UTS Fees, Charges and Expenses, and the Management Expense Ratio 7A.3 Dealing in Units, Valuation, NAV Calculation and Unit Prices 7A.4 Forward and Historical Pricing, and the UTMC's Holding of Units 7A.5 Unit Splits, Distributions and Their Effect on NAV 7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors 7A.7 Operational Aspects of Shariah-Compliant UTS and PRS and the Shariah Contracts Between the Parties 7A.8 Borrowing to Invest in UTS and the Risks of Loan Financing

10 Chapter 7B (Part 1): The Pension Landscape and the PRS Framework

7B.1 The Malaysian Pension Landscape and the Adequacy of Retirement Savings 7B.2 The World Bank's Five-Pillar Pension Framework in the Malaysian Context 7B.3 Key Players: EPF, KWAP, LTAT, Employer-Sponsored Schemes and Annuities 7B.4 Why Malaysia Needs PRS: Ageing, Longevity Risk and the Benefits of PRS 7B.5 The PRS Framework and the Private Pension Administrator (PPA) 7B.6 PRS Structure, the Trust and Deed, Advantages over Other Products, Eligibility and Contributions

11 Chapter 7B (Part 2): PRS Operations

7B.7 The PRS Default Option and Tax Incentives for Members and Employers 7B.8 The PRS Account Structure (Sub-Accounts A and B) and Vesting 7B.9 PRS Withdrawals: Pre-Retirement, Retirement, Permanent Departure, Incapacity and Death 7B.10 Switching Between Funds and Transferring Between PRS Providers (Portability) 7B.11 Unclaimed Monies, Death of a Member and PRS Nomination 7B.12 PRS Funds: Number, Core and Non-Core Funds, Objectives, Risk Profiles, Asset Classes, Authorisation and Naming 7B.13 PRS Fees, Charges and Expenses 7B.14 PRS Unit Creation, Forward Pricing, Valuation, Distributions, Performance Measurement and Electronic Communication

7A.6 Measuring UTS Performance: Returns, Performance Tables, Risk Measures and Qualitative Factors

Key Takeaways Explain This Topic AI

Raw return measures the total return over a holding period but makes funds held for different periods hard to compare.

Compounded annual return converts a total return into a per-year rate; a 100% return over five years is about 14.9% a year, while over ten years it is about 7.2% a year.

Malaysian UTS performance tables generally exclude the investor's initial service charge but include the effect of management fees and other expenses.

Refinitiv Lipper and Morningstar assume distributions are reinvested, so an investor who takes distributions in cash will see different returns from the tables.

A top-quartile fund ranks in the top 25% of funds in its category over the measured period.

Last updated: October 2026

Why Measurement Matters

Investors expect UTS to beat relevant benchmarks: deposit rates, the FBM KLCI, competitor funds. Returns can be calculated in several legitimate ways, so comparisons are only valid if the same method is used.

Raw Return vs Compounded Annual Return

Raw return is the total return over a holding period. An investment bought at RM1.00 and sold at RM2.00 has a raw return of 100% , whether it took five years or ten. That makes comparisons across periods hard.

Compounded annual return converts the total into a per-year rate: Compounded annual return = ( Ending value Starting value ) 1 / n − 1 \text{Compounded annual return} = \left(\frac{\text{Ending value}}{\text{Starting value}}\right)^{1/n} - 1 Compounded annual return = ( Starting value Ending value ) 1/ n − 1

Total return Period Compounded annual return
100% 5 years 14.9% a year
100% 10 years 7.2% a year
55% 6 years 7.6% a year

It adds a standard time dimension and matches how benchmarks such as fixed deposit rates and index returns are quoted, so it compares "apples with apples".

Worked example: Fund M turned RM10,000 into RM16,105 over five years; Fund N turned RM10,000 into RM21,589 over ten years. Which did better per year?

Fund M: ( 16,105 ÷ 10,000 ) 1 / 5 − 1 ≈ 10.0 % (16{,}105 \div 10{,}000)^{1/5} - 1 \approx 10.0\% ( 16 , 105 ÷ 10 , 000 ) 1/5 − 1 ≈ 10.0% a year.

Fund N: ( 21,589 ÷ 10,000 ) 1 / 10 − 1 ≈ 8.0 % (21{,}589 \div 10{,}000)^{1/10} - 1 \approx 8.0\% ( 21 , 589 ÷ 10 , 000 ) 1/10 − 1 ≈ 8.0% a year.

Fund N has the bigger raw return (115.9% vs 61.1%), but Fund M compounded faster. Whether M is "better" still depends on risk taken and consistency, discussed below.

How UTS Performance Is Measured in Malaysia

Total return = the difference between what the investor puts in and gets back, plus income received during ownership.

The initial service charge affects only the investor who pays it and matters most over short periods. Performance tables generally exclude the investor's entry cost but include management fees and other expenses.

Refinitiv Lipper measures performance from NAV at the start and end of the period, adjusted for distributions and splits. Morningstar compares buying prices , also adjusted. Both exclude initial service charges, and the difference becomes insignificant over reasonable periods.

Both assume distributions are reinvested , consistent with share-index conventions. An investor who takes cash distributions will see a different return.

Both report total returns over periods , not annualised rates, which can make comparison with fixed income or EPF rates harder.

What Performance Tables Contain

Element Purpose and caution

Total return over periods Commonly 1, 3 and 6 months and 1, 3 and 5 years. Short periods show how the UTMC handled recent markets but may be irrelevant to a five-year investor

Rankings Rank 1 is the best performer in the category; the number of funds ranked gives context

Quartiles Each quartile is 25% of funds: top quartile is the best 25%. Someone must be bottom quartile, even with good absolute returns

Categories Funds grouped by objective (equity, money market, fixed income) so comparisons are fair
Fund size Larger and smaller funds may perform differently
Benchmarks FBM KLCI, interest rates, inflation; choosing one is hard for balanced funds

Risk measures Standard deviation of returns over the last three years: lower means less risky. FIMM's IMS 9 prescribes how return volatility is measured and disclosed

Weaknesses of Performance Tables

They are historical ; past performance is not a guide to the future.

Periods ending on the same date are dominated by recent returns : a great final three months can make a fund look strong over three years despite 33 poor months.

Returns may come from one or two big winners (high risk) or from large IPO allocations in a bull market.

The fund managers who built the record may have left.

Consistency and Qualitative Factors

Consistency matters more to long-term investors than one period's ranking. UTMCs may advertise their best period, so look for funds that beat benchmarks and peers across many periods and market conditions , especially in falling markets. Morningstar's star ratings reward consistent outperformance of peers.

Qualitative analysis looks at:

Factor Questions

UTMC credibility Who owns it? Are its managers qualified and credible?

Investment style High turnover chasing quick profits, or a structured growth or value process? Own research or brokers' advice?

Service Responsive to investors? Investing in administration and service systems?

Performance tables from research houses endorsed by FIMM are useful, but they are only one factor in choosing a fund.