Lost Money in a Unit Trust? 5 Questions to Ask Before You Sell, Switch or Hold
The envelope arrives. Or the app pings. You open your unit trust statement, and the number is smaller than the money you put in.
Not a little smaller. Maybe 15% smaller. Maybe 30%. Maybe it has been "recovering soon" for three years, and your agent keeps saying the same thing.
The short answer If you've lost money in a unit trust, don't sell in panic and don't hold out of hope. First, check whether the fund lost because the whole market fell or because the fund itself is weak. Then check what it costs you each year, when you need the money, what a switch would really cost, and whether it was sold to you properly. Those five answers tell you whether to hold, switch or sell. |
That's the whole article in one box. The rest of this page gives you the tools to answer each question properly: the break-even maths, a fee check, a simple decision chart, and real cases where investors got it right and wrong.
A quick note for readers in America: what Malaysia, Singapore, Hong Kong and the UK call a "unit trust" is very close to what you call a mutual fund. Everything below works for both.
In this article
A Real Case: RM100,000 of Retirement Money, Down to RM81,000
In September 2026, Malaysia's Financial Markets Ombudsman Service (FMOS) shared a case that will feel painfully familiar.
A corporate professional moved RM100,000 of his EPF retirement savings into two unit trust funds. A global market downturn hit. His portfolio fell to about RM81,000.
He complained that he had been badly advised and poorly diversified.
The ombudsman's ruling is worth reading slowly. The fund management company was not held responsible for the market loss itself. Markets go down; that is the risk every unit trust carries.
But the agent admitted he never told the investor about his cooling-off right, the legal window in which a first-time buyer can change his mind and get his money back. The adjudicator treated that as a breach of duty, and the investor received partial compensation.
Two lessons sit inside that one story. First, a loss alone doesn't mean anyone did anything wrong. Second, the way a fund was sold to you can matter as much as how it performed. We'll come back to both.
Why This Decision Feels So Hard (It's Not Just You)
Here's something worth knowing before you decide anything: your brain is wired to make the wrong move here.
In a famous study published in the Journal of Finance in 1998, economist Terrance Odean examined the trading records of 10,000 brokerage accounts. He found investors were about 50% more likely to sell a winning investment than a losing one.
People hold their losers because selling makes the loss feel "real." They wait to break even. Researchers call this the disposition effect.
The opposite mistake is just as common: one bad statement, a sleepless night, and you sell everything at the bottom. I wrote about that trap in Why Smart, Hard-Working People Sell at the Very Bottom.
Both mistakes have the same root. They let the price you paid make the decision. But the market doesn't know or care what you paid. The only question that matters now is this:
Where should the money you have left live from today onwards?
The five questions below are built to answer exactly that.
First, Know What "Getting Back to Even" Really Takes
Before we start, look at this table. It explains why "I'll just wait until I break even" is often a much longer wait than people expect.
If your fund is down | It needs to rise this much to get back to even |
|---|---|
10% | 11.1% |
20% | 25.0% |
30% | 42.9% |
40% | 66.7% |
50% | 100.0% |
60% | 150.0% |
A fund down 40% doesn't need to rise 40%. It needs to rise about 67%. And if the fund is also charging you 1.5% to 2% a year in fees, it has to climb even further just to stand still.
This doesn't mean you should sell. Broad, healthy markets have recovered from deep falls again and again. It means "waiting to break even" is not a plan. It is a hope with a price tag. If you want the full recovery maths, read How Long Does It Take to Recover From a 50% Stock Market Loss?
Now, the five questions.
Question No. 1: Did the Market Fall, or Did the Fund Fail?
This is the most important question, and almost nobody asks it.
A unit trust can lose money for two very different reasons:
The market fell. The fund invests in, say, Asian shares. Asian shares dropped 20%. The fund dropped 21%. The fund did its job; the market had a bad year.
The fund failed. The market it invests in went up, or fell only a little, but your fund fell much more. That is a fund problem, and time alone may not fix it.
The first kind of loss is normal. The second kind is a warning sign.
How to check in 10 minutes
Find your fund's latest fund fact sheet (sometimes called a fund factsheet or monthly report) on the fund manager's website. Most fund managers publish one every month. Look for two lines: the fund's return and its benchmark return, over 1, 3 and 5 years.
Period | Your fund | Its benchmark | What it tells you |
|---|---|---|---|
1 year | -18% | -16% | Market fell; fund roughly kept pace |
3 years | -4% | +9% | Fund is lagging badly |
5 years | +6% | +31% | Long-term underperformance: red flag |
Illustrative numbers, not a real fund.
In this example, the 1-year loss looks like "just the market." But the 3-year and 5-year lines tell the real story. This fund has trailed its own benchmark for years. Waiting for the market to recover may still leave you far behind.
You're not unlucky. Most active funds trail their benchmark
S&P Dow Jones Indices publishes the SPIVA Scorecard, which tracks how actively managed funds do against their benchmarks after fees. The Asia ex-Japan report for the five years to December 2025 found:
68.3% of Malaysia large-cap equity funds trailed the S&P Malaysia BMI.
93.3% of Malaysia-based global equity funds trailed the S&P Global BMI.
83.0% of Thailand large-cap funds trailed their benchmark.
It's the same story elsewhere. In SPIVA's Europe report to mid-2026, 95% of global equity funds sold in British pounds lagged their benchmark over 10 years.
So if your fund has trailed its benchmark for three to five years, you're not imagining it. You're in the majority. And it's a strong reason to look hard at Question No. 2.
When a fund is truly broken: the Woodford story
Sometimes the problem is much bigger than underperformance.
Neil Woodford was one of the UK's most famous fund managers. At its peak in May 2017, his Woodford Equity Income Fund held about £10.7 billion of ordinary people's savings.
Then performance slipped. Investors began pulling money out. The fund held too many hard-to-sell investments, and on 3 June 2019 it suspended withdrawals, trapping about £3.7 billion belonging to roughly 300,000 investors.
The fund was wound up. Years later, the UK regulator, the Financial Conduct Authority, found failings by the firm that was supposed to oversee the fund. A compensation scheme of up to about £230 million was approved, paying back roughly 77% of the losses the regulator had estimated for that failing. The first payments arrived in 2024, almost five years after the fund froze.
The warning signs were there before the freeze: years of lagging returns, heavy money flowing out, and holdings that were hard to sell. If you see those three together in your own fund, don't wait for a recovery that may not come.
What to take from Question No. 1 If your fund fell about as much as its benchmark, the market is the cause, and selling in a panic usually locks in the worst moment. If your fund has lagged its benchmark for 3 to 5 years, the fund is the cause, and holding "until it comes back" may never pay off. |
Question No. 2: What Is This Fund Costing Me Every Year?
Fees are the one part of investing you can control. And with many unit trusts, they're the quiet reason the fund keeps lagging.
A typical unit trust can charge you in up to four ways:
Sales charge (also called an initial service charge or upfront fee), taken when you buy. It can be several percent of what you invest, depending on where you buy. FIMM, Malaysia's unit trust industry body, uses a 5% sales charge in its own worked example.
Annual management fee, taken from the fund every year, whether it makes money or not.
Trustee fee and other running costs, also taken every year.
Switching or exit fees, charged by some funds when you move or redeem.
Look for the total expense ratio (TER) on your fund's fact sheet or Product Highlights Sheet. That is roughly what the fund costs you per year, before the sales charge.
Why 1.6% a year matters more than it sounds
Here's a simple example. Two investors each put $100,000 into the stock market (the same maths works in ringgit, pounds or Singapore dollars). Both earn 7% a year before costs for 20 years.
Investor A pays 1.8% a year in total fund costs.
Investor B pays 0.2% a year, the kind of cost charged by many broad index funds.
After... | Investor A (1.8% a year) | Investor B (0.2% a year) |
|---|---|---|
5 years | $128,848 | $138,949 |
10 years | $166,019 | $193,069 |
15 years | $213,912 | $268,268 |
20 years | $275,623 | $372,756 |
Illustrative example, 7% yearly return before fees, no withdrawals.
The same market, the same 20 years. Investor A ends up about $97,000 poorer, purely from fees. Add a 5% sales charge at the start, and the gap grows to about $111,000.
This is not a made-up worry. Morningstar's 2026 US fund fee study found investors in actively managed funds paid an asset-weighted average of 0.57% a year, against 0.09% for traditional index funds. Many unit trusts sold through agents and banks in Asia charge more than that. And Morningstar's research found that over the decade to 2025, low-cost passive funds beat almost 80% of active funds.
I've written a full breakdown of this in The "Tiny" 1% Fee That Can Quietly Steal a Quarter of Your Retirement, and for Malaysian readers, Unit Trust vs ETF in Malaysia: The Fees Your Agent Never Showed You.
Bought your fund at a bank counter? Then also read A Warning to Anyone Who Bought a Fund From Their Bank.
What to take from Question No. 2 A fund that charges 1.5% to 2% a year must beat its market by that much every single year just to keep up with a cheap index fund. Most don't. If your fund is expensive AND lagging its benchmark, you have two strikes against it. |
Question No. 3: When Do I Need This Money, and for What?
Forget the loss for a moment. Ask: what is this money for, and when will I need it?
The answer can change everything.
If you need the money within about 3 years
Money you will need soon (a child's university fees, a house deposit, the first years of retirement spending) generally shouldn't sit in an equity fund at all. Not because of the loss you've already taken, but because of the losses that could still come before you need to spend it.
In that case, moving that portion to something steadier can make sense, even at a loss. The goal isn't to win back the loss. It's to make sure a second fall can't hurt your plans.
If you won't need the money for 10 years or more
Then a market fall is, painful as it is, mostly noise. What matters is whether you're in a sensible, low-cost, well-diversified investment, and whether you stay in it.
Leaving the market after a fall is expensive. J.P. Morgan Asset Management's research shows that if you had missed just the 10 best days in the US stock market over the past two decades, your portfolio would have ended up roughly half the size. Many of those best days came within two weeks of the worst days, exactly when frightened investors had just sold.
Morningstar's annual Mind the Gap study shows the same thing from another angle. Over the 10 years to the end of 2025, US funds returned 9.9% a year on average. But the average dollar invested in them earned only 8.7%. The 1.2-percentage-point gap came from investors buying and selling at the wrong times. More on that in The Hidden Gap That Left Ordinary Investors Behind the Market.
If you're in your 50s or 60s
Your timeline is probably longer than you think. A 60-year-old today may need some of their money for 25 years or more. That's why it's rarely right to move everything to cash after a loss. A sensible split between money for the next few years and money for the long run usually works better. I explain the numbers in Is It Too Late to Invest at 60? and, for Malaysian readers, Turning 55? What to Do With Your EPF Money.
What to take from Question No. 3 Your timeline decides your risk, not your loss. Money needed soon should be moved somewhere safer. Money for 10+ years should stay invested, ideally somewhere cheaper and broader if your current fund fails Questions No. 1 and No. 2. |
Question No. 4: If I Switch, Where Exactly Is the Money Going, and What Will the Move Cost?
"Switch" sounds like a clean fix. Often it's the right move. But it can also be the most expensive mistake on this page.
The hidden costs of switching
Before you move, ask the fund house or your agent these questions in writing:
Is there a switching fee or exit fee?
If I switch to another fund within the same fund house, will I pay a new sales charge? Malaysia's standard pre-investment form for unit trusts notes that switching within the same management company often avoids a fresh sales charge, while redeeming and buying a different company's fund usually means paying it again.
How many days will my money be out of the market during the move?
If this was bought with EPF money: under the EPF Members Investment Scheme, if you're below 55, money from units you redeem generally goes back to your EPF account, not your bank account. You then reinvest from EPF. Through EPF's i-Invest platform, the sales charge is capped at 0.5% per purchase, against up to 3% through agents. Check the current rules with EPF before you act.
The biggest trap: switching into last year's winner
Your agent may suggest moving you into "this year's top fund." This is the switch that hurts most investors.
S&P Dow Jones Indices also tracks whether top funds stay on top. In its Europe Persistence Scorecard (year-end 2025), 80 UK equity funds ranked in the top quarter of their group at the end of 2021. Four years later, only three of them were still there.
Last year's star is usually just next year's average fund, with the same fees.
The better switch: same risk, lower cost, wider spread
If your fund fails Questions No. 1 and No. 2, the switch worth considering is usually not to another expensive fund with a good recent record. It's to a broad, low-cost, diversified fund that matches your timeline. For many long-term investors, that means a global or S&P 500 index fund or ETF.
Here's the key idea: switching into a similar kind of investment doesn't "lock in" your loss. Your money stays invested in the market. If the market recovers, the new fund recovers with it, probably keeping more of the gain because it charges less.
If you want to learn how to do that from outside America, start with How Anyone, in Any Country, Can Own a Piece of America's 500 Biggest Companies and Lump Sum or Monthly? How to Put Money Back Into the Market After a Big Loss.
A word on tax
In Malaysia and Singapore, individuals generally don't pay capital gains tax on unit trusts, so selling at a loss gives you no tax benefit. Don't let tax drive the decision there.
In the UK, a loss made when you sell can usually be set against capital gains, but you must report it to HMRC within four years of the end of the tax year to use it. In the US, capital losses on mutual funds can offset gains, plus up to $3,000 a year of ordinary income ($1,500 if married filing separately), with the rest carried forward. Ask a tax adviser before acting on this.
What to take from Question No. 4 A good switch moves your money to something cheaper, broader and matched to your timeline. A bad switch moves it to last year's hot fund and pays a second sales charge for the privilege. |
Question No. 5: Was This Fund Sold to Me Properly?
A loss in a falling market is not misconduct. But a fund that was the wrong product for you, sold without the right warnings, may be.
Ask yourself honestly:
Were you told this fund could lose money, and roughly how much?
Did anyone ask about your age, income, timeline and how much risk you could take?
Were you told about the cooling-off right? In Malaysia, first-time investors with a unit trust company generally have six business days after buying to change their mind and get a refund.
Were the sales charge and yearly fees explained before you signed?
Did you sign a Product Highlights Sheet, or take a recorded verification call?
What the ombudsman cases teach us
The FMOS cases published in 2026 show the line clearly.
In the RM100,000 EPF case at the top of this article, the investor got partial compensation, not because the market fell, but because he was never told about his cooling-off right.
In another case, a 71-year-old retired engineer put RM650,000 into a six-month structured product advertised with an 8% return, and lost over RM159,000. He believed his capital was safe. His claim was dismissed, because the signed Product Highlights Sheet and a recorded verification call both said the product was not capital-protected, and he had confirmed he understood.
And in a third case, an investor in a share-linked structured product panicked after bad news, asked to cash out early, and locked in a loss of RM33,500 on a RM50,000 investment. The price later recovered. He claimed the bank had pressured him, but the complaint was rejected: the bank had given him the updates he asked for and simply carried out his own instruction.
That third case is the whole of Question No. 3 in one painful story.
Where to complain
Always complain to the company first, in writing. If you're not satisfied:
Malaysia: the Financial Markets Ombudsman Service (FMOS) is free and handles eligible disputes over unit trusts up to RM250,000. You can refer your case within six months of the company's final decision, or if the company hasn't replied within 60 days.
Singapore: the Financial Industry Disputes Resolution Centre (FIDReC).
UK: the Financial Ombudsman Service.
US: FINRA's dispute resolution and the SEC's investor complaint service.
Keep every document: application forms, fact sheets, messages from your agent. And remember, filing a complaint doesn't mean you must keep the fund while you wait. Ask the ombudsman whether moving your money affects your claim.
The "Fresh Money Test": One Question That Cuts Through the Fog
If the five questions feel like a lot, here's a shortcut I come back to again and again.
Imagine your unit trust was sold yesterday, and its current value landed in your bank account as cash. Would you use that cash today to buy this exact fund, at these fees, for this goal?
"Yes, without hesitation." Then hold. The loss is the market's doing, and you're in the right place.
"No, but I still want to be invested." Then switch: to something cheaper, broader and suited to your timeline.
"No, I need this money soon." Then sell that portion and move it somewhere steady.
The test works because it removes the one number that keeps fooling you: the price you paid.
Your Sell, Switch or Hold Decision Chart
Here's everything above in one picture. Start at the top and follow your honest answers.
Three Ways This Plays Out
These are illustrative examples, not real people.
The investor who should hold
A 45-year-old has a global equity fund down 17% in a year when the global market fell 15%. The fund charges 0.6% a year and has kept pace with its benchmark over five years. She won't touch the money for 20 years.
Every question points the same way. She holds, keeps adding monthly, and stops opening the app every day.
The investor who should switch
A 52-year-old has a regional equity unit trust bought through an agent with a 5% sales charge. It is down 22%, while its benchmark is down 8%. Over five years it trails its benchmark by 20 percentage points, and it charges 1.85% a year. He's saving for retirement in 13 years.
The problem is the fund, not the market. He moves to a low-cost, broadly diversified index fund, after checking exit fees, and stays invested.
The investor who should sell part
A 61-year-old has 80% of her savings in two equity unit trusts, now down 25%. She plans to start drawing an income in 18 months.
She doesn't need to sell everything. She moves about three years of planned spending into a steady, cash-like fund, and keeps the rest invested for the decades ahead, in a cheaper fund. Read Will You Run Out of Money Before You Run Out of Life? for how retirees plan the income part.
5 Mistakes to Avoid After a Unit Trust Loss
Selling everything in one emotional evening. Make no decision for at least 48 hours after a scary statement. Can't Sleep After a Big Stock Loss? has a calm-down checklist.
Holding only because you "can't take the loss." The loss has already happened. Selling doesn't create it. Holding doesn't erase it.
Switching into the agent's new favourite fund and paying a second sales charge.
Topping up a failing fund to "average down." Adding money makes sense only if the fund passes Questions No. 1 and No. 2.
Keeping it secret. If the money is shared with a spouse, talk it through. How to Tell Your Spouse You Lost Money can help.
What to Do Tonight: A 7-Step Checklist
Write down your fund's name, current value, what you paid in, and when you'll need the money.
Download the latest fund fact sheet and Product Highlights Sheet.
Compare the fund's 1, 3 and 5-year returns with its benchmark (Question No. 1).
Find the yearly cost (TER) and any switching or exit fee (Questions No. 2 and No. 4).
Split your money into "needed within 3 years" and "long-term" (Question No. 3).
Check your paperwork: were risks, fees and the cooling-off right explained? (Question No. 5).
Apply the Fresh Money Test, then follow the decision chart. Wait 48 hours. Then act.
Frequently Asked Questions
Should I sell my unit trust at a loss?
Only if the fund is the problem, or you need the money soon. If your fund fell about as much as its benchmark and you have 10+ years, selling usually locks in the worst moment. If it has trailed its benchmark for 3 to 5 years and charges high fees, switching to a cheaper, diversified fund is often wiser than waiting.
How long does it take for a unit trust to recover?
There is no fixed time. A diversified fund tracking a broad market tends to recover when that market does, sometimes within a year or two, sometimes longer. A fund that keeps trailing its benchmark may never fully catch up. Remember: a 40% loss needs about a 67% gain to get back to even.
Is switching unit trust funds a good idea?
It can be, if you move to a cheaper, broader fund that suits your timeline. It's usually a bad idea if you're chasing last year's top performer or paying a fresh sales charge. Always ask about switching fees, new sales charges and how long your money will be out of the market.
Can I get compensation for losing money in a unit trust?
Not for normal market losses. But if the fund was mis-sold, for example the risks, fees or your cooling-off right weren't explained, you may have a case. Complain to the company in writing first. In Malaysia you can then go to FMOS for free; in Singapore, FIDReC; in the UK, the Financial Ombudsman Service.
What is the cooling-off period for unit trusts in Malaysia?
First-time investors with a unit trust management company generally have six business days after buying to change their mind and receive a refund. It applies to new investors with that company, not to later top-ups. Ask your agent to confirm in writing whether it applies to you.
Why do unit trusts lose money even when the market goes up?
Two common reasons: the fund manager picked investments that did worse than the market, and the fund's yearly fees pull its return down. SPIVA data shows most active funds trail their benchmark over five years after fees. Compare your fund with its benchmark on the fact sheet to see which is happening.
Should I put more money into a unit trust that is losing?
Only if it passes the first two questions: it's falling because the market fell, not because the fund is weak, and its fees are reasonable. Adding money to a fund that has trailed its benchmark for years at high cost usually means sending good money after bad.
About the Author
Stephen Loke has been a student of the market for more than 15 years. He is also an agritourism entrepreneur whose farm has been featured in Bloomberg News and Asahi Shimbun.
This article is general education, not personal financial advice. I'm not a licensed financial adviser, and nothing here is a recommendation to buy or sell any specific fund. Please consider your own situation, and speak to a licensed adviser if you need personal advice.
The Loss Is Behind You. The Decision Is in Front of You.
You can't change what your unit trust did last year. Nobody can. But you can decide, calmly and with clear eyes, where your money goes from here.
Ask the five questions. Run the Fresh Money Test. Follow the chart. That is how ordinary investors stop letting one bad fund decide the rest of their financial life.
If you'd like to understand why so many people end up in this position, and the simple, low-cost way out, my free report explains it in plain language.
In "Why You Lost Money in the Stock Market (And Why It Wasn't Your Fault)", you'll discover:
The hidden ways fees, agents and timing quietly drain ordinary investors
Why most people who lose money were never shown the simple alternative
The calm, low-cost approach that lets you invest without watching the market every day
It's 38 pages, free, and you can read it tonight.
Sources
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Odean, T. (1998). "Are Investors Reluctant to Realize Their Losses?" Journal of Finance, 53(5), 1775–1798. https://faculty.haas.berkeley.edu/odean/papers/disposition/disposition.html
S&P Dow Jones Indices, SPIVA Asia Ex-Japan Scorecard, Year-End 2025. https://www.spglobal.com/spdji/en/documents/spiva/spiva-asia-ex-japan-year-end-2025.pdf
S&P Dow Jones Indices, SPIVA Europe Scorecard, Mid-Year 2026. https://www.spglobal.com/spdji/en/documents/spiva/spiva-europe-mid-year-2026.pdf
S&P Dow Jones Indices, Europe Persistence Scorecard, Year-End 2025 (May 2026), as reported by The Evidence-Based Investor. https://www.evidenceinvestor.com/post/uk-fund-persistence
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Interactive Investor, "Trapped Woodford investors agree compensation deal." https://ii.co.uk/analysis-commentary/trapped-woodford-investors-agree-compensation-deal-ii530201
Investment Week, "Woodford investors set for first Link settlement payment" (28 March 2024). https://investmentweek.co.uk/news/4191040/woodford-investors-set-link-settlement-payment-acd-makes-distribution
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FIMM, worked example of sales charge calculation. https://www.fimm.com.my/wp-content/uploads/2022/05/ims_6.pdf
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Federation of Investment Managers Malaysia (FIMM), Pre-Investment Form (via Maybank Asset Management). https://maybank-am.com/documents/d/islamic/fimm-pre-investment-form-english-version
FIMM, Financial Glossary: Cooling-off Right. https://www.fimm.com.my/?p=2779
New Straits Times, "EPF releases revised list of 189 funds approved for investment by members" (April 2024). https://www.nst.com.my/amp/business/corporate/2024/04/1033331/epf-releases-revised-list-189-funds-approved-investment-members
The Edge Malaysia, "Industry players welcome EPF's i-Invest." https://theedgemarkets.com/article/news-industry-players-welcome-epfs-iinvest
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