Finding Value

The concept of valuing a unit trust fund is fundamentally different from valuing a company.  One fundamental difference is that the prevaling market price of shares are based upon the demand and supply of the shares whereas for unit trust fund, the demand (new investments) or redemption (withdrawal) does not affect the Net Asset Value (NAV) of the unit trust fund.  The NAV is valued based on the value of the underlying net assets adjusted for accrued management and trustee fee, the underlying assets being value of the companies held in the unit trust portfolio.

Thus whether a particular fund represent good value is based on the shares held in the portfolio.  It is the primary function  of the Fund Managers/Investment Managers to undertake necessary analysis and manage the portfolio by including stocks that will appreciate in value in accordance with the  funds investment objective.  Remember, the value of the unit trust will appreciate or depreciate based on the market value of the underlying shares on a daily basis. 

Fixed Deposit

Keeping one's savings in fixed term deposit may probably be the safest on an investment risk-return continuum, but it, nevertheless, carries with it the risk of negative return when the rate of inflation is higher than the rate of interest received from the fixed deposit, leading to a loss in purchasing power per dollar principal to the saver: otherwise know as the inflation or purhasing power risk.  Direct investments in the share market will subject the investor to the specific risk of falling share prices without reprieve offered by the benefit of portfolio diversification or fund management expertise available under collective unit trust investment schemes.  

Asset Allocation

Asset allocation is to reduce your risk by diversifying into different classes of assets.  Its akin to not putting all your eggs in one basket.  As your investment returns are dependent on your risk, it is hoped that with diversification you will spread your risk and get to match your  targeted returns.   To reduce the risk its best to hold different major classes of asset such as cash, bond, stock and real estate including foreign asset holdings.   However the difficult part is in deciding what ratio to hold in each class of asset.  There is no simple formula that can find the right asset allocation for every individual but it does need to take note of your risk profile and time horizon.
 Chart from http://www.goodfinancialcents.com/