Prospectus - Manulife Insurance Berhad

chapter2 RISK FACTORSpage172.1 General Risks of Investing in a Unit Trust FundPrior to making an investment in the Fund, investors should be aware that there are risksassociated with investments in unit trust funds. Below are some of the general risks whichinvestors should be aware of when investing in a unit trust fund:a) Market riskMarket risk arises due to economy-wide perils which may affect businesses including theissuers of the Shariah-compliant securities such as Shariah-compliant equities and sukukthat a unit trust fund may have invested in. As a result, there could be fluctuations inmarket values of these Shariah-compliant securities and investors are exposed to suchuncertainties.b) Management company riskThe performance of a unit trust fund depends on, amongst other things, the expertiseof the management company. Any error in the investment techniques and processesadopted by the management company may have an adverse impact on the unit trustfund’s performance which in turn may affect the investments of unit holders through,including but not limited to, the loss of their capital invested in the unit trust fund.c) Interest rate riskThe risk refers to how the changes in the interest rate environment affect the decision ofinvesting in Shariah-compliant securities (such as Shariah-compliant equities and sukuk) bya unit trust fund.regardless of whether they are Shariah-compliant or non Shariah-compliant, equities thatpay regular dividends are known to be sensitive to the movement of interest rate. Anunanticipated rise in interest rate may reduce their attractiveness, potentially causing anadverse impact to the unit trust fund that invests in them.Interest rate movement also affects fixed-income securities, including sukuk. Generally,there is an inverse relationship between interest rate and sukuk prices, where an increaseof interest rate may lower the prices of the sukuk. In addition, sukuk with longer maturityand lower profit rates are more sensitive to interest rate changes. However, if the perceivedquality of a particular sukuk changed, the price of that sukuk may vary regardless ofinterest rate changes. The interest rate risk will be mitigated via the management of theduration of the sukuk portfolio.Please note that movement in interest rate will have an impact on the management of theFund regardless of whether it is a conventional or Shariah-compliant fund. It does not inany way suggest that the Fund will invest in conventional financial instruments.Prospectus in respect of the Manulife Shariah - Dana Ekuiti