A Sinking Fund is merely a name given to a fund that is raised via the investment of money with the specific intention of raising capital to pay off a particular debt or liability upon its maturity date, or basically to acquire new or even replace an old asset. Repayment of debentures, preference shares or loans are just a few examples of the types of debts whereby a sinking fund could be created for. In most instances it can be seen as the company making provision for a future outlay.

In order to ensure total transparency and professionalism in the management of such funds, a trustee such as OSK Trustees Berhad is appointed to play the role of a ‘stakeholder’ with the main objective of safeguarding the interests of the parties involved. More often than not, these funds are usually placed in an interest bearing account by the fund managers. This therefore allows interest to be generated and thus giving the investors the assurance that the funds will be available at maturity.