By FINTAN TAN
WHEN external demand dries up, most governments of export-reliant countries aim to increase domestic demand by encouraging private consumption while ramping up public spending.
Besides fiscal measures, they have lowered key policy rates, which in turn triggered cuts in the commercial lending rates as well as the rates for savings. These cuts in interest rates worldwide have put the returns on savings in danger of turning negative, if it has not already.
In the euro-zone, the interest rate is now 1.5% after the European Central Bank cut its benchmark rate by 50 basis points on March 5.
On the same day, the Bank of England cut interest rates to 0.5%, the lowest since the bank’s founding in 1694. In the US, the federal funds rate is now zero, after the Federal Reserve cut the rates from 1% in mid-December last year.
Since November, Bank Negara has cut its key policy rate, the overnight policy rate, by 150 basis points to 2.0%. Following the cuts, the base lending rate, which is the benchmark commercial lending rate, also fell. It now averages 5.55%, according to bankinginfo.com.my.
The average rate on a conventional one-year fixed deposit (FD) account for most banks have fallen to 2.50% payable at maturity from 3.70% to 3.75% a year ago.
While the threat of crippling inflation has fallen by the wayside, there is still residual inflation. The consumer price index (CPI) increased in January by 3.9% to 111.7, compared to a year ago, due to increases in the prices of food and fuel.
The real interest rate is the rate after deducting tax and the rate of inflation. That means savers are getting a negative rate of return if one takes into account the inflation rate as measured by the CPI and compares it with the current one-year FD rate. In fact, for last year, it was minus 1.7%.
Some experts say that we just have to bite the bullet.
Fair enough, if one is young and have 25 to 35 years of employment and hopefully, saving and investment opportunities, in the future.
For savers, whether working or retired, the drop in the FD rates is not a good thing even though it is unavoidable. For those who have retired and are relying on their interest income, this will be especially hard.
If they have investments – which to the average Malaysian, are in the form of equities and property – they would have suffered losses. Inflation would have also eroded the value of government bonds, even if held to maturity. But government savings bonds, at least for the risk-averse, are still the safest.
That is why in January, the Government announced it would be issuing up to RM2bil in bonds aimed at people aged 56 and above as well as those who have retired on medical grounds.
Bon Simpanan Malaysia has a three-year tenure and offers a return of 5% per annum with flexibility for early redemption before maturity.
But as a reader pointed out in a letter to The Star in January, applicants are only allowed to subscribe up to RM50,000. He said that the Government should consider doubling the bond issuance to RM4bil and allow senior citizens to subscribe up to RM100,000. Even then, he worked out that the return will only be RM416 a month based on the RM100,000 principal sum.
The Government also announced that as part of the RM60bil stimulus package, it will issue up to RM5bil in saving bonds this year for people aged 21 and above with a maturity period of three years and an annual return of 5% to be paid quarterly.
In such a fluid environment, where recent economic indicators, whether domestic or external, have been bleak, any sort of opportunity to save for the future is welcomed, especially if it’s considered “safe”.
The situation for those who are working and contributing to the Employees Provident Fund (EPF) is just as dire. The EPF said last month that investment income for the third quarter of 2008 plunged 60.4% compared to the same period a year ago.
EPF contributors cannot expect a dividend payout similar to that for 2007, when the pension fund announced a 5.8% dividend, but it should not go below 2.5%, the minimum rate set by law.
For those who are relying merely on their EPF savings for their retirement, reports and studies have already shown that it is thoroughly inadequate.
When and if this blip in EPF dividend payouts is factored in, coupled with residual inflation, contributors may not be seeing much in terms of returns over the next few years, since economists have said that this will be a long drawn-out recession. Savers, prepare to batten down for the storm.
Source: The Star , 14 March 2009
Friday, March 13, 2009
Did Ka-shing diversify enough?
COMMENT By TAY HAN CHONG
Time to review our portfolios and consider the alternatives available.
ARE you richer than Li Ka-shing? I suspect not, but if you have not lost half of your wealth in 2008, then you are actually better off than he is!
All right, I am stretching the comparison to the point of breaking, but the truth is, Li did lose 50% of his wealth last year, leaving him with only US$16.2bil.
Naturally we all think that he has already got more than enough for a few lifetimes, even if he had lost more than 50%.
However, that is not the point here. No matter how much or little, it is always painful to lose money.
In comparison, many seemed to have done better than Li in this period.
While comparing with someone who has lost more money may give us a lot of comfort, there’ll always be someone else who has done better – such as those who kept their money in cash over the last two years.
But are such comparisons relevant and fair? While I can name many people who have made it big investing, I cannot name one person who has grown wealthy through savings in cash alone.
Few can claim to have done better than Li during the good times.
So how did many investors out there lose less money than Li (in percentage terms, of course)?
He lost a lot through his equity in Cheung Kong (Holdings) Ltd and Husky Energy Inc, his two largest holdings.
In a way, he has a concentrated portfolio. When your bets are right, a concentrated portfolio can yield great results. But it is a double-edged sword that cuts both ways.
Here are some examples.
· If one held 100% of one’s investments in US bank stocks only, 2008 would have seen a loss of at least 60%.
· If the investment portfolio was 50% invested in US banks and the other 50% in US Treasury, straight off, the 2008 performance would have been -25% (or more than twice as good, though still painfully negative).
· If the portfolio is equally invested in US banks, US Treasury and gold, then the 2008 performance would have been -16%, an even better performance (though still negative)!
What I have illustrated above is a simple application of diversification of investments.
When you have more asset classes that are not correlated strongly to one another, you will reap the benefits of diversification.
With diversification, it is almost always possible to achieve a superior portfolio compared to holding only one asset class.
A superior portfolio is one where for the same risks, you can get a higher expected return; or for the same expected returns, you could experience a lower risk.
The idea of diversification itself is not a new concept. Old wisdom has left us with the advice of not putting all your eggs in one basket.
Academia has presented numerous studies which show that asset allocation is one of the most important aspects in investments.
In the past, the process of diversification would have been only accessible to a select few through exclusive banking or investment services.
Today, many alternative investments are now accessible to the man on the street through indexes, tracker funds, unit trust funds and/or alternative depository products.
However, most Malaysian portfolios continue to be dominated by equities and depository products only.
Perhaps it is time to review our portfolios and consider alternatives available to us to make our portfolios less risky and more diversified.
As the famous investment guru John Bogle once said, “The best time to invest is today”.
So start reviewing your portfolio and introduce some diversification.
Perhaps in a couple of years we can beat Li in good times, even if it’s in percentage rather than absolute terms!
Source : The Star, 14 March 2009
Time to review our portfolios and consider the alternatives available.
ARE you richer than Li Ka-shing? I suspect not, but if you have not lost half of your wealth in 2008, then you are actually better off than he is!
All right, I am stretching the comparison to the point of breaking, but the truth is, Li did lose 50% of his wealth last year, leaving him with only US$16.2bil.
Naturally we all think that he has already got more than enough for a few lifetimes, even if he had lost more than 50%.
However, that is not the point here. No matter how much or little, it is always painful to lose money.
In comparison, many seemed to have done better than Li in this period.
While comparing with someone who has lost more money may give us a lot of comfort, there’ll always be someone else who has done better – such as those who kept their money in cash over the last two years.
But are such comparisons relevant and fair? While I can name many people who have made it big investing, I cannot name one person who has grown wealthy through savings in cash alone.
Few can claim to have done better than Li during the good times.
So how did many investors out there lose less money than Li (in percentage terms, of course)?
He lost a lot through his equity in Cheung Kong (Holdings) Ltd and Husky Energy Inc, his two largest holdings.
In a way, he has a concentrated portfolio. When your bets are right, a concentrated portfolio can yield great results. But it is a double-edged sword that cuts both ways.
Here are some examples.
· If one held 100% of one’s investments in US bank stocks only, 2008 would have seen a loss of at least 60%.
· If the investment portfolio was 50% invested in US banks and the other 50% in US Treasury, straight off, the 2008 performance would have been -25% (or more than twice as good, though still painfully negative).
· If the portfolio is equally invested in US banks, US Treasury and gold, then the 2008 performance would have been -16%, an even better performance (though still negative)!
What I have illustrated above is a simple application of diversification of investments.
When you have more asset classes that are not correlated strongly to one another, you will reap the benefits of diversification.
With diversification, it is almost always possible to achieve a superior portfolio compared to holding only one asset class.
A superior portfolio is one where for the same risks, you can get a higher expected return; or for the same expected returns, you could experience a lower risk.
The idea of diversification itself is not a new concept. Old wisdom has left us with the advice of not putting all your eggs in one basket.
Academia has presented numerous studies which show that asset allocation is one of the most important aspects in investments.
In the past, the process of diversification would have been only accessible to a select few through exclusive banking or investment services.
Today, many alternative investments are now accessible to the man on the street through indexes, tracker funds, unit trust funds and/or alternative depository products.
However, most Malaysian portfolios continue to be dominated by equities and depository products only.
Perhaps it is time to review our portfolios and consider alternatives available to us to make our portfolios less risky and more diversified.
As the famous investment guru John Bogle once said, “The best time to invest is today”.
So start reviewing your portfolio and introduce some diversification.
Perhaps in a couple of years we can beat Li in good times, even if it’s in percentage rather than absolute terms!
Source : The Star, 14 March 2009
Thursday, March 12, 2009
Unit trust industry stable with record sales of RM18bil
By LAALITHA HUNT
KUALA LUMPUR: There has not been any panic selling in the local unit trust industry as redemption rates are at an average of 2% of total fund size per month, said Federation of Malaysian Unit Trust Managers (FMUTM) president Tunku Yaacob Tunku Abdullah.
The local unit trust industry had continued to record net sales of nearly RM18bil in the first 10 months of 2008, he noted.
However, the total NAV (net asset value) of the unit trust industry as at end 2008 slid RM34bil or 20% from RM169bil in 2007.
“However, this decline was relatively less severe compared to the drop in commodity and stock-market indices,” Tunku Yaacob said after the Morningstar 2008 Fund Awards presentation here yesterday.
“Going forward, we expect redemption rates to be maintained and sales to improve this year.”
From 2001 to 2007, the Malaysian unit trust industry had enjoyed double digit growth in NAV, from RM43bil in 2001 to RM169bil in 2007.
Tunku Yaacob also said he did not see the Kuala Lumpur Composite Index dropping below 850 points.
US-based Morningstar Inc chief financial officer Scott Cooley said the long term prospects for unit trust funds were still bright despite the current downturn in comparison with other asset classes.
“US equities have lost more than 50% of their value since October 2007.
“Besides that, out of 10,691 US equities, 2,886 lost over 75% of their value last year. In comparison, out of 15,272 mutual funds, only one lost more than 75% of its value,” Cooley noted.
For the Morningstar 2008 Fund Awards, winning funds were determined based on their delivery of risk-adjusted returns over the past year and their consistency over the longer term.
Seven awards covering three categories, namely equity, fixed income and balanced fund, were given out, with Islamic funds dominating the awards.
ASM Investment Services Bhd was named the winner for its Islamic syariah equity fund, while MAAKL Mutual Bhd took the award for its ringgit bond fund under the fixed income category.
RHB Investment Management Sdn Bhd won the award for the balanced fund category for its RHB Mudharabah Fund.
Tunku Yaacob noted that Islamic funds had turned out to be more resilient and were shielded from some of the huge portfolio losses that conventional funds had encountered.
“This could be due to the fact that Islamic funds were not permitted to have any exposure to conventional banking and financial equities, which had taken a beating as a result of the current crisis,” he said.
Source : The Star 12 March 09
KUALA LUMPUR: There has not been any panic selling in the local unit trust industry as redemption rates are at an average of 2% of total fund size per month, said Federation of Malaysian Unit Trust Managers (FMUTM) president Tunku Yaacob Tunku Abdullah.
The local unit trust industry had continued to record net sales of nearly RM18bil in the first 10 months of 2008, he noted.
However, the total NAV (net asset value) of the unit trust industry as at end 2008 slid RM34bil or 20% from RM169bil in 2007.
“However, this decline was relatively less severe compared to the drop in commodity and stock-market indices,” Tunku Yaacob said after the Morningstar 2008 Fund Awards presentation here yesterday.
“Going forward, we expect redemption rates to be maintained and sales to improve this year.”
From 2001 to 2007, the Malaysian unit trust industry had enjoyed double digit growth in NAV, from RM43bil in 2001 to RM169bil in 2007.
Tunku Yaacob also said he did not see the Kuala Lumpur Composite Index dropping below 850 points.
US-based Morningstar Inc chief financial officer Scott Cooley said the long term prospects for unit trust funds were still bright despite the current downturn in comparison with other asset classes.
“US equities have lost more than 50% of their value since October 2007.
“Besides that, out of 10,691 US equities, 2,886 lost over 75% of their value last year. In comparison, out of 15,272 mutual funds, only one lost more than 75% of its value,” Cooley noted.
For the Morningstar 2008 Fund Awards, winning funds were determined based on their delivery of risk-adjusted returns over the past year and their consistency over the longer term.
Seven awards covering three categories, namely equity, fixed income and balanced fund, were given out, with Islamic funds dominating the awards.
ASM Investment Services Bhd was named the winner for its Islamic syariah equity fund, while MAAKL Mutual Bhd took the award for its ringgit bond fund under the fixed income category.
RHB Investment Management Sdn Bhd won the award for the balanced fund category for its RHB Mudharabah Fund.
Tunku Yaacob noted that Islamic funds had turned out to be more resilient and were shielded from some of the huge portfolio losses that conventional funds had encountered.
“This could be due to the fact that Islamic funds were not permitted to have any exposure to conventional banking and financial equities, which had taken a beating as a result of the current crisis,” he said.
Source : The Star 12 March 09
Thursday, February 26, 2009
Banks slash interest rates
More reasons to invest in Unit trust???
PETALING JAYA: Several banks have slashed interest rates imposed on loans and more are expected to join in the fray.
Four banks - RHB Banking Group, Public Bank Group, United Overseas Bank Bhd (UOB) and Malayan Banking Bhd (Maybank) - have cut their respective base lending rates (BLR) from 5.95% to 5.55%.
RHB Bank and Public Bank will also be reducing each of its Islamic bank’s base financing rate (BFR) by the same quantum.
This follows the move by Bank Negara Malaysia to bring down the Overnight Policy Rate (OPR) from 2.5% to 2% on Tuesday.
RHB Banking Group managing director Michael J. Barrett said customers will be able to pay less to service their existing loans with floating rates while individuals and businesses will enjoy lower borrowing costs.
“We want to be able to help borrowers during these challenging times and provide our customers with more financial support,” he said in a statement on Thursday.
Public Bank Group chairman Tan Sri Dr Teh Hong Piow said the bank’s new rates will take effect on Tuesday.
“The reduction of BLR and BFR is part of the group’s on-going commitment towards the creation of a more supportive monetary environment which will help to sustain economic growth in the country,” he said.
A UOB Bank spokesperson said the bank would reduce its BLR on March 6.
Maybank said on Wednesday that it would begin implementing its new rates on Monday.
It is learnt that other banks are currently taking initiatives to restructure their rates and will be announcing lower BLR soon.
The Association of Banks said in a statement that the downward revision of monthly loan repayment instalments was expected to be completed around the end of the first quarter of this year.
“Banks will be officially notifying their customers on the quantum of reduction of the loan repayment instalments and the effective date directly,” it said.
Source from The Star, Malaysia dated Thursday February 26, 2009
PETALING JAYA: Several banks have slashed interest rates imposed on loans and more are expected to join in the fray.
Four banks - RHB Banking Group, Public Bank Group, United Overseas Bank Bhd (UOB) and Malayan Banking Bhd (Maybank) - have cut their respective base lending rates (BLR) from 5.95% to 5.55%.
RHB Bank and Public Bank will also be reducing each of its Islamic bank’s base financing rate (BFR) by the same quantum.
This follows the move by Bank Negara Malaysia to bring down the Overnight Policy Rate (OPR) from 2.5% to 2% on Tuesday.
RHB Banking Group managing director Michael J. Barrett said customers will be able to pay less to service their existing loans with floating rates while individuals and businesses will enjoy lower borrowing costs.
“We want to be able to help borrowers during these challenging times and provide our customers with more financial support,” he said in a statement on Thursday.
Public Bank Group chairman Tan Sri Dr Teh Hong Piow said the bank’s new rates will take effect on Tuesday.
“The reduction of BLR and BFR is part of the group’s on-going commitment towards the creation of a more supportive monetary environment which will help to sustain economic growth in the country,” he said.
A UOB Bank spokesperson said the bank would reduce its BLR on March 6.
Maybank said on Wednesday that it would begin implementing its new rates on Monday.
It is learnt that other banks are currently taking initiatives to restructure their rates and will be announcing lower BLR soon.
The Association of Banks said in a statement that the downward revision of monthly loan repayment instalments was expected to be completed around the end of the first quarter of this year.
“Banks will be officially notifying their customers on the quantum of reduction of the loan repayment instalments and the effective date directly,” it said.
Source from The Star, Malaysia dated Thursday February 26, 2009
Tuesday, February 17, 2009
Public Mutual declares distributions
Public Bank’s wholly-owned subsidiary, Public Mutual declares distributions for four of its funds. The total gross distributions declared are for financial year ended 31 January 2009:
Fund
Gross Distribution / Unit
Public Index Fund 5.00 sen
Public Islamic Optimal Growth Fund 0.30 sen
Public Enhanced Bond Fund 2.00 sen
Public Money Market Fund 3.00 sen
Public Mutual’s Chairman Tan Sri Dato’ Sri Dr. Teh Hong Piow commented that despite challenging market conditions, Public Mutual is pleased to be able to declare distributions on these four funds.
Public Mutual is Malaysia’s largest private unit trust company with 67 funds under management. It has over 2,000,000 accountholders serviced by over 40,000 unit trust consultants. As at 31 December 2008, the total net asset value of the funds managed by the company was RM23.3 billion.
Fund
Gross Distribution / Unit
Public Index Fund 5.00 sen
Public Islamic Optimal Growth Fund 0.30 sen
Public Enhanced Bond Fund 2.00 sen
Public Money Market Fund 3.00 sen
Public Mutual’s Chairman Tan Sri Dato’ Sri Dr. Teh Hong Piow commented that despite challenging market conditions, Public Mutual is pleased to be able to declare distributions on these four funds.
Public Mutual is Malaysia’s largest private unit trust company with 67 funds under management. It has over 2,000,000 accountholders serviced by over 40,000 unit trust consultants. As at 31 December 2008, the total net asset value of the funds managed by the company was RM23.3 billion.
Unit Trust Price as at 15 February 2009
Public Savings Fund** 0.5038
Public Growth Fund** 0.3637
Public Index Fund 0.4896
Public Industry Fund** 0.4080
Public Aggressive Growth Fund** 0.5184
Public Regular Savings Fund 0.4309
Public Balanced Fund** 0.6207
Public Bond Fund 0.9513
Public Ittikal Fund** 0.6882
Public Smallcap Fund** 0.5795
Public Islamic Bond Fund 1.0049*
Public Equity Fund** 0.2123
Public Institutional Bond Fund 1.0070
Public Islamic Equity Fund 0.2509
Public Money Market Fund 0.9919
Public Focus Select Fund** 0.1599
Public Enhanced Bond Fund** 0.9435
Public Dividend Select Fund 0.2189
Public Islamic Opportunities Fund** 0.2228
Public Islamic Balanced Fund 0.2152
Public Far-east Select Fund** 0.1883
Public Select Bond Fund 1.0039
Public Islamic Dividend Fund 0.2443
Public Regional Sector Fund** 0.1666
Public Asia Ittikal Fund** 0.1888
Public Global Select Fund** 0.1573
Public Far-east Dividend Fund** 0.1725
Public Islamic Enhanced Bond Fund** 0.9666
Public Far-east Balanced Fund** 0.1715
Public Global Balanced Fund** 0.1790
Public Islamic Asia Dividend Fund** 0.1580
Public China Select Fund** 0.1314
Public Islamic Money Market Fund 1.0268
Public Far East Property & Resorts Fund** 0.1147
Public Islamic Select Bond Fund 1.0304
Public Islamic Asia Balanced Fund** 0.1783
Public South-east Asia Select Fund** 0.1441
Public Sector Select Fund 0.1721
Public Islamic Sector Select Fund 0.1745
Public China Ittikal Fund** 0.1438
Public Far-east Consumer Themes Fund** 0.1901
Public Islamic Select Treasures Fund 0.2062
Public China Titans Fund** 0.1807
Public Islamic Optimal Growth Fund 0.1908
Public Far-east Telco & Infrastructure Fund ** 0.2425
Public Capital Protected Select Portfolio Fund ** 1.0255
Public Islamic Select Enterprises Fund 0.2434
Public Islamic Income Fund 1.0138
Pb Balanced Fund** 0.7253
Pb Growth Fund** 0.6262
Pb Fixed Income Fund 1.0172
Pb Islamic Equity Fund 0.1797
Pb Islamic Bond Fund 1.0317
Pb Asia Equity Fund** 0.1869
Pb Islamic Asia Equity Fund** 0.1590
Pb Cash Management Fund 1.0223
Pb Cash Plus Fund 1.0014
Pb Asean Dividend Fund** 0.1512
Pb Islamic Cash Management Fund 1.0176
Pb Euro Pacific Equity Fund** 0.1339
Pb Islamic Asia Strategic Sector Fund** 0.1327
Pb China Pacific Equity Fund** 0.1212
Pb Asia Real Estate Income Fund** 0.1592
Pb Islamic Cash Plus Fund 1.0023
Pb China Asean Equity Fund** 0.2084
Pb Capital Protected Dragon Fund** 0.9786
Pb Capital Protected Resources Fund** 1.0066
Public Growth Fund** 0.3637
Public Index Fund 0.4896
Public Industry Fund** 0.4080
Public Aggressive Growth Fund** 0.5184
Public Regular Savings Fund 0.4309
Public Balanced Fund** 0.6207
Public Bond Fund 0.9513
Public Ittikal Fund** 0.6882
Public Smallcap Fund** 0.5795
Public Islamic Bond Fund 1.0049*
Public Equity Fund** 0.2123
Public Institutional Bond Fund 1.0070
Public Islamic Equity Fund 0.2509
Public Money Market Fund 0.9919
Public Focus Select Fund** 0.1599
Public Enhanced Bond Fund** 0.9435
Public Dividend Select Fund 0.2189
Public Islamic Opportunities Fund** 0.2228
Public Islamic Balanced Fund 0.2152
Public Far-east Select Fund** 0.1883
Public Select Bond Fund 1.0039
Public Islamic Dividend Fund 0.2443
Public Regional Sector Fund** 0.1666
Public Asia Ittikal Fund** 0.1888
Public Global Select Fund** 0.1573
Public Far-east Dividend Fund** 0.1725
Public Islamic Enhanced Bond Fund** 0.9666
Public Far-east Balanced Fund** 0.1715
Public Global Balanced Fund** 0.1790
Public Islamic Asia Dividend Fund** 0.1580
Public China Select Fund** 0.1314
Public Islamic Money Market Fund 1.0268
Public Far East Property & Resorts Fund** 0.1147
Public Islamic Select Bond Fund 1.0304
Public Islamic Asia Balanced Fund** 0.1783
Public South-east Asia Select Fund** 0.1441
Public Sector Select Fund 0.1721
Public Islamic Sector Select Fund 0.1745
Public China Ittikal Fund** 0.1438
Public Far-east Consumer Themes Fund** 0.1901
Public Islamic Select Treasures Fund 0.2062
Public China Titans Fund** 0.1807
Public Islamic Optimal Growth Fund 0.1908
Public Far-east Telco & Infrastructure Fund ** 0.2425
Public Capital Protected Select Portfolio Fund ** 1.0255
Public Islamic Select Enterprises Fund 0.2434
Public Islamic Income Fund 1.0138
Pb Balanced Fund** 0.7253
Pb Growth Fund** 0.6262
Pb Fixed Income Fund 1.0172
Pb Islamic Equity Fund 0.1797
Pb Islamic Bond Fund 1.0317
Pb Asia Equity Fund** 0.1869
Pb Islamic Asia Equity Fund** 0.1590
Pb Cash Management Fund 1.0223
Pb Cash Plus Fund 1.0014
Pb Asean Dividend Fund** 0.1512
Pb Islamic Cash Management Fund 1.0176
Pb Euro Pacific Equity Fund** 0.1339
Pb Islamic Asia Strategic Sector Fund** 0.1327
Pb China Pacific Equity Fund** 0.1212
Pb Asia Real Estate Income Fund** 0.1592
Pb Islamic Cash Plus Fund 1.0023
Pb China Asean Equity Fund** 0.2084
Pb Capital Protected Dragon Fund** 0.9786
Pb Capital Protected Resources Fund** 1.0066
Sunday, February 8, 2009
We all need to become millionaires
One must have cash reserves of about RM1mil to be able to maintain one’s current lifestyle 20 years after retirement
Ooi Kok Hwa: The key principle here is we need to have cash reserves of more than RM1mil to be able to maintain our current lifestyle 20 years after retirement.
WE need to become millionaires when we retire! A lot of people have misconceptions about being millionaires. To them, being a millionaire means they should own total assets – by adding up their total cash, house, Employees’ Provident Fund (EPF) contribution and car – that are worth RM1mil and above.
They believe that once they achieve one million cash, they should enjoy themselves by driving big luxury cars and staying in bungalows.
In reality, all of us need to become millionaires when we retire at age 55. Based on our computation, we need to own total cash, including all money in savings, fixed deposits and EPF, which have total value of more than RM1mil.
The key principle here is we need to have cash reserves of more than RM1mil to be able to maintain our current lifestyle 20 years after retirement from age 55 to age 75. This is on the assumption that we can live up to 75 (the average lifespan of Malaysians).
Based on our computation (see table), if you are now 35 years old and your current monthly expenses are RM3,000 per month, assuming you are only able to generate a return of 3% (the return from fixed deposits) on all of your savings and the RM3,000 will grow by the average historical inflation rate of 3.5% per annum, you would need RM1.6mil when you retire at age 55.
This amount will be enough to maintain your current lifestyle for the next 20 years after your retirement at 55.
However, if you need to spend RM5,000, RM7,000 or RM10,000 per month, then you need RM2.6mil, RM3.7mil and RM5.3mil respectively at your retirement age of 55.
In short, you need to become a millionaire when you retire even if you only maintain a simple lifestyle after your retirement. You will not be able to use this money to buy a big luxury car or a bungalow, as you really need the money for the next 20 years.
Thomas J. Stanley and William D. Danko have conducted research on the reasons why some Americans become wealthy. They discovered that a lot of them live well below their means.
Unfortunately, we notice that some Malaysians do not have enough money when they retire. Some of them may not be aware that they really need to accumulate that amount of money when they retire. Some may be aware, but they may have used up all their savings to support their children’s education. As a result, they need to find a job after retirement.
Some may have difficulties finding a job. A lot of companies may prefer to employ a young graduate rather than a retiree unless the latter is willing to accept a lower pay.
We also believe that a lot of investors are quite worried about having enough money for retirement. They are also concerned that their money may not be enough to protect them against inflation. Hence, besides controlling our expenses, we also need to know how to grow our money.
Looking at the table, different minimum achievable annual target returns can provide different required amounts for retirement.
For the current monthly expenses of RM3,000, if you are only able to generate a 3% return per annum, then you need to have RM1.6mil for retirement whereas you only need about RM900,000 if you are able to generate a return of 10%.
However, higher returns come with higher risks. We need to understand our risk tolerance level. We need to equip ourselves with adequate investing knowledge if we intend to generate higher returns.
source by By OOI KOK HWA
The Star, Wednesday January 28, 2009
Ooi Kok Hwa: The key principle here is we need to have cash reserves of more than RM1mil to be able to maintain our current lifestyle 20 years after retirement.
WE need to become millionaires when we retire! A lot of people have misconceptions about being millionaires. To them, being a millionaire means they should own total assets – by adding up their total cash, house, Employees’ Provident Fund (EPF) contribution and car – that are worth RM1mil and above.
They believe that once they achieve one million cash, they should enjoy themselves by driving big luxury cars and staying in bungalows.
In reality, all of us need to become millionaires when we retire at age 55. Based on our computation, we need to own total cash, including all money in savings, fixed deposits and EPF, which have total value of more than RM1mil.
The key principle here is we need to have cash reserves of more than RM1mil to be able to maintain our current lifestyle 20 years after retirement from age 55 to age 75. This is on the assumption that we can live up to 75 (the average lifespan of Malaysians).
Based on our computation (see table), if you are now 35 years old and your current monthly expenses are RM3,000 per month, assuming you are only able to generate a return of 3% (the return from fixed deposits) on all of your savings and the RM3,000 will grow by the average historical inflation rate of 3.5% per annum, you would need RM1.6mil when you retire at age 55.
This amount will be enough to maintain your current lifestyle for the next 20 years after your retirement at 55.
However, if you need to spend RM5,000, RM7,000 or RM10,000 per month, then you need RM2.6mil, RM3.7mil and RM5.3mil respectively at your retirement age of 55.
In short, you need to become a millionaire when you retire even if you only maintain a simple lifestyle after your retirement. You will not be able to use this money to buy a big luxury car or a bungalow, as you really need the money for the next 20 years.
Thomas J. Stanley and William D. Danko have conducted research on the reasons why some Americans become wealthy. They discovered that a lot of them live well below their means.
Unfortunately, we notice that some Malaysians do not have enough money when they retire. Some of them may not be aware that they really need to accumulate that amount of money when they retire. Some may be aware, but they may have used up all their savings to support their children’s education. As a result, they need to find a job after retirement.
Some may have difficulties finding a job. A lot of companies may prefer to employ a young graduate rather than a retiree unless the latter is willing to accept a lower pay.
We also believe that a lot of investors are quite worried about having enough money for retirement. They are also concerned that their money may not be enough to protect them against inflation. Hence, besides controlling our expenses, we also need to know how to grow our money.
Looking at the table, different minimum achievable annual target returns can provide different required amounts for retirement.
For the current monthly expenses of RM3,000, if you are only able to generate a 3% return per annum, then you need to have RM1.6mil for retirement whereas you only need about RM900,000 if you are able to generate a return of 10%.
However, higher returns come with higher risks. We need to understand our risk tolerance level. We need to equip ourselves with adequate investing knowledge if we intend to generate higher returns.
source by By OOI KOK HWA
The Star, Wednesday January 28, 2009
Sunday, January 18, 2009
Setting up a trust is one way of preventing loss of wealth
THE global economic downturn and financial turbulence has given rise to an overall climate of uncertainty. It is likely that many are having sleepless nights worrying about their hard-earned wealth vanishing into thin air or eroding or worst still, falling into the wrong hands.
One way to prevent that from happening, and it is getting more popular, is by setting up private trusts. Trusts are commonly used for family wealth preservation and estate planning.
OSK Trustees Bhd, one of the leading players in the trust business, has seen a 61% jump in revenue for private trusts last year from 2007.
A trust exists whenever a person known as the trustee, holds the legal ownership of a property, not for his own benefit, but for another person known as the beneficiary.
The trustee holds the legal title to the trust property, but the beneficiary enjoys most of the rights of an owner.
For example, where the trust property is shares of a company, it is the beneficiary who will ultimately receive and spend the dividends.
OSK Trustees chief operating officer and executive director Ong Eu Jin says many people are still not aware of the importance of having a trust.
“Some people tend to transfer one’s personal assets to family members or to “trusted persons” for safe keeping. This can be a problem if these “guardians of wealth” intend to misuse it or dispose of the assets as they wish since they are considered the legal owners, he adds.
A trust, on the other hand, does not give the beneficiaries of the trust full control as absolute control only comes with legal ownership, Ong says.
As they are not the legal owners, the beneficiaries cannot sell the assets, he adds. The trustee will manage the trust assets and distribute the income derived from the trust assets in accordance with the trust deed, which is the legal document creating the trust and containing the wishes of the creator of the trust.
As such, he notes that the beneficiaries will enjoy income from the trust assets but yet be unable to dispose of the assets.
A trust is also an important estate planning tool. Its two primary objectives in terms of estate planning are to unlock the frozen assets of one’s estate in the shortest possible time and without incurring unnecessary costs; and to ensure that the assets will be passed on to the persons of his choice, says Ong.
Ong, however, cautions that a trust is not a vehicle created with the outright purpose of putting a person’s assets out of the reach of his creditors.
After all, a trust is void if its objective is illegal, immoral or against public policy including to facilitate or encourage a breach of law or to cheat one’s creditors, he says.
According to him, an increasing number of people are now using life insurance to fund their trusts, hence providing a wider audience to enjoy the benefits of trusts.
The gloomy economic picture is also putting brakes on consumer spending as many of them are jittery and tend to keep their purses “tight”.
Great Vision Advisory Group head of tax and financial planning Chua Tia Guan says even during difficult times, people can still spend provided they have an emergency fund and a proper budget.
“Generally, from a prudent personal financial management perspective, a person should have at least three to six months’ emergency funds in case of any eventuality.
“This practice is particularly important during these uncertain times where pay cuts and retrenchments are highly possible. Those who do not have any emergency funds and proper budgets are advised to plan their spending cautiously,” he says.
He adds that it will be useful to draw up a personal budget, taking into account the expected cash inflow with possible reduction in income.
“Prioritising one’s expenses is equally important in personal budgeting so that unnecessary expenditure can be deferred or avoided totally.
“If a proper budget has been drawn up, then there is no reason for consumers not to spend even during difficult times,” Chua says.
He also advocates the dollar cost averaging method for people looking to invest in the current volatile market.
This method involves slowly picking up certain selected stocks over a period of time where the average cost of purchase is “low”.
“Having said that, do your homework first before investing. An investor should have the financial ability to hold the investment for at least two to three years before it yields result, provided you have the right pick,” he says.
Source : The Star Business, BY DALJIT DHESI, Saturday January 17, 2009
One way to prevent that from happening, and it is getting more popular, is by setting up private trusts. Trusts are commonly used for family wealth preservation and estate planning.
OSK Trustees Bhd, one of the leading players in the trust business, has seen a 61% jump in revenue for private trusts last year from 2007.
A trust exists whenever a person known as the trustee, holds the legal ownership of a property, not for his own benefit, but for another person known as the beneficiary.
The trustee holds the legal title to the trust property, but the beneficiary enjoys most of the rights of an owner.
For example, where the trust property is shares of a company, it is the beneficiary who will ultimately receive and spend the dividends.
OSK Trustees chief operating officer and executive director Ong Eu Jin says many people are still not aware of the importance of having a trust.
“Some people tend to transfer one’s personal assets to family members or to “trusted persons” for safe keeping. This can be a problem if these “guardians of wealth” intend to misuse it or dispose of the assets as they wish since they are considered the legal owners, he adds.
A trust, on the other hand, does not give the beneficiaries of the trust full control as absolute control only comes with legal ownership, Ong says.
As they are not the legal owners, the beneficiaries cannot sell the assets, he adds. The trustee will manage the trust assets and distribute the income derived from the trust assets in accordance with the trust deed, which is the legal document creating the trust and containing the wishes of the creator of the trust.
As such, he notes that the beneficiaries will enjoy income from the trust assets but yet be unable to dispose of the assets.
A trust is also an important estate planning tool. Its two primary objectives in terms of estate planning are to unlock the frozen assets of one’s estate in the shortest possible time and without incurring unnecessary costs; and to ensure that the assets will be passed on to the persons of his choice, says Ong.
Ong, however, cautions that a trust is not a vehicle created with the outright purpose of putting a person’s assets out of the reach of his creditors.
After all, a trust is void if its objective is illegal, immoral or against public policy including to facilitate or encourage a breach of law or to cheat one’s creditors, he says.
According to him, an increasing number of people are now using life insurance to fund their trusts, hence providing a wider audience to enjoy the benefits of trusts.
The gloomy economic picture is also putting brakes on consumer spending as many of them are jittery and tend to keep their purses “tight”.
Great Vision Advisory Group head of tax and financial planning Chua Tia Guan says even during difficult times, people can still spend provided they have an emergency fund and a proper budget.
“Generally, from a prudent personal financial management perspective, a person should have at least three to six months’ emergency funds in case of any eventuality.
“This practice is particularly important during these uncertain times where pay cuts and retrenchments are highly possible. Those who do not have any emergency funds and proper budgets are advised to plan their spending cautiously,” he says.
He adds that it will be useful to draw up a personal budget, taking into account the expected cash inflow with possible reduction in income.
“Prioritising one’s expenses is equally important in personal budgeting so that unnecessary expenditure can be deferred or avoided totally.
“If a proper budget has been drawn up, then there is no reason for consumers not to spend even during difficult times,” Chua says.
He also advocates the dollar cost averaging method for people looking to invest in the current volatile market.
This method involves slowly picking up certain selected stocks over a period of time where the average cost of purchase is “low”.
“Having said that, do your homework first before investing. An investor should have the financial ability to hold the investment for at least two to three years before it yields result, provided you have the right pick,” he says.
Source : The Star Business, BY DALJIT DHESI, Saturday January 17, 2009
Friday, January 9, 2009
Unit Trust Price as at 9 January 2009
Public Savings Fund**0.5117
Public Growth Fund**0.3789
Public Index Fund 0.5350
Public Industry Fund** 0.4207
Public Aggressive Growth Fund**0.5492
Public Regular Savings Fund 0.4344
Public Balanced Fund**0.6381
Public Bond Fund 0.9412
Public Ittikal Fund**0.7134
Public Smallcap Fund** 0.5880
Public Islamic Bond Fund0.9968
Public Equity Fund** 0.2217
Public Institutional Bond Fund 0.9995
Public Islamic Equity Fund 0.2502
Public Money Market Fund 1.0189
Public Focus Select Fund**0.1640
Public Enhanced Bond Fund**0.9517
Public Dividend Select Fund 0.2188
Public Islamic Opportunities Fund**0.2255
Public Islamic Balanced Fund 0.2140
Public Far-east Select Fund**0.1995
Public Select Bond Fund 1.0015
Public Islamic Dividend Fund 0.2427
Public Regional Sector Fund**0.1759
Public Asia Ittikal Fund** 0.1969
Public Global Select Fund**0.1642
Public Far-east Dividend Fund**0.1793
Public Islamic Enhanced Bond Fund**0.9568
Public Far-east Balanced Fund**0.1754
Public Global Balanced Fund**0.1820
Public Islamic Asia Dividend Fund**0.1641
Public China Select Fund**0.1326
Public Islamic Money Market Fund 1.0240
Public Far East Property & Resorts Fund**0.1259
Public Islamic Select Bond Fund 1.0221
Public Islamic Asia Balanced Fund**0.1836
Public South-east Asia Select Fund**0.1567
Public Sector Select Fund 0.1736
Public Islamic Sector Select Fund 0.1754
Public China Ittikal Fund**0.1429
Public Far-east Consumer Themes Fund**0.1962
Public Islamic Select Treasures Fund 0.2059
Public China Titans Fund**0.1838
Public Islamic Optimal Growth Fund 0.1929
Public Far-east Telco & Infrastructure Fund ** 0.2489
Public Capital Protected Select Portfolio Fund **1.0155
Public Islamic Select Enterprises Fund 0.2441
Public Islamic Income Fund 1.0089
PB Balanced Fund**0.7372PB Growth Fund**0.6404
PB Fixed Income Fund 1.0068
PB Islamic Equity Fund 0.1803
PB Islamic Bond Fund 1.0236
PB Asia Equity Fund**0.1955
PB Islamic Asia Equity Fund**0.1654
PB Cash Management Fund 1.0196
PB Cash Plus Fund 1.0008
PB Asean Dividend Fund**0.1646
PB Islamic Cash Management Fund 1.0151
PB Euro Pacific Equity Fund**0.1415
PB Islamic Asia Strategic Sector Fund**0.1389
PB China Pacific Equity Fund**0.1230
PB Asia Real Estate Income Fund**0.1691
PB Islamic Cash Plus Fund 1.0013
PB China Asean Equity Fund**0.2032
PB Capital Protected Dragon Fund**0.9766
PB Capital Protected Resources Fund**1.0022
Public Growth Fund**0.3789
Public Index Fund 0.5350
Public Industry Fund** 0.4207
Public Aggressive Growth Fund**0.5492
Public Regular Savings Fund 0.4344
Public Balanced Fund**0.6381
Public Bond Fund 0.9412
Public Ittikal Fund**0.7134
Public Smallcap Fund** 0.5880
Public Islamic Bond Fund0.9968
Public Equity Fund** 0.2217
Public Institutional Bond Fund 0.9995
Public Islamic Equity Fund 0.2502
Public Money Market Fund 1.0189
Public Focus Select Fund**0.1640
Public Enhanced Bond Fund**0.9517
Public Dividend Select Fund 0.2188
Public Islamic Opportunities Fund**0.2255
Public Islamic Balanced Fund 0.2140
Public Far-east Select Fund**0.1995
Public Select Bond Fund 1.0015
Public Islamic Dividend Fund 0.2427
Public Regional Sector Fund**0.1759
Public Asia Ittikal Fund** 0.1969
Public Global Select Fund**0.1642
Public Far-east Dividend Fund**0.1793
Public Islamic Enhanced Bond Fund**0.9568
Public Far-east Balanced Fund**0.1754
Public Global Balanced Fund**0.1820
Public Islamic Asia Dividend Fund**0.1641
Public China Select Fund**0.1326
Public Islamic Money Market Fund 1.0240
Public Far East Property & Resorts Fund**0.1259
Public Islamic Select Bond Fund 1.0221
Public Islamic Asia Balanced Fund**0.1836
Public South-east Asia Select Fund**0.1567
Public Sector Select Fund 0.1736
Public Islamic Sector Select Fund 0.1754
Public China Ittikal Fund**0.1429
Public Far-east Consumer Themes Fund**0.1962
Public Islamic Select Treasures Fund 0.2059
Public China Titans Fund**0.1838
Public Islamic Optimal Growth Fund 0.1929
Public Far-east Telco & Infrastructure Fund ** 0.2489
Public Capital Protected Select Portfolio Fund **1.0155
Public Islamic Select Enterprises Fund 0.2441
Public Islamic Income Fund 1.0089
PB Balanced Fund**0.7372PB Growth Fund**0.6404
PB Fixed Income Fund 1.0068
PB Islamic Equity Fund 0.1803
PB Islamic Bond Fund 1.0236
PB Asia Equity Fund**0.1955
PB Islamic Asia Equity Fund**0.1654
PB Cash Management Fund 1.0196
PB Cash Plus Fund 1.0008
PB Asean Dividend Fund**0.1646
PB Islamic Cash Management Fund 1.0151
PB Euro Pacific Equity Fund**0.1415
PB Islamic Asia Strategic Sector Fund**0.1389
PB China Pacific Equity Fund**0.1230
PB Asia Real Estate Income Fund**0.1691
PB Islamic Cash Plus Fund 1.0013
PB China Asean Equity Fund**0.2032
PB Capital Protected Dragon Fund**0.9766
PB Capital Protected Resources Fund**1.0022
Tuesday, January 6, 2009
Public Mutual declares distributions for 3 funds
KUALA LUMPUR: Public Mutual Bhd yesterday announced distributions for three of its funds, amounting to 7.5 sen for Public Savings Fund, 1.25 sen for Public Focus Select Fund and 1.75 sen for Public Islamic Enhanced Bond Fund for the financial year ended Dec 31, 2008. Public Savings is its maiden fund.
Unit trust still a good bet for the long term
KUALA LUMPUR: The past 12 months has seen the erosion of wealth in virtually every type of non-fixed income investment, and unit trust funds have not been spared.
Despite offering a modicum of security compared to traditional equities owing to its large pool of investors and its diverse portfolio of investments, trust funds have nonetheless declined alongside market indices, albeit at a slower rate.
According to data from the Securities Commission, the total net asset value (NAV) in Malaysia dropped by more than 20% to RM135.87 billion in November from RM170.1 billion in January.
There is, however, an anomaly within the figure, namely the decline in the NAV of Islamic-based funds. Unlike conventional funds’ NAV, which plunged 22% to RM119.77 billion in November from RM153.7 billion in January, Islamic funds declined only 2% to RM16.11 billion from RM16.4 billion.
A fund manager noted that this could be due to the fact that Islamic funds were not traded intensively and tended to lag behind the movement of conventional funds.
Case in point is the fact that the total NAV of Islamic funds only peaked in June with an NAV of RM17.98 billion, up 10% from January before starting its downwards slide. By that time, conventional funds’ NAV had already started to shed value since its peak in January.
On the whole, September’s figure also marked the first time that the total NAV failed to show positive year-on-year growth in at least four years. Subsequently, total NAV for September shrank 4% compared to the same month in 2007.
According to Eric Wong, Hong Kong head of research for global fund analyst Thomson Reuters Lipper, the last 12 months has seen unprecedented movements in the fund industry for both Malaysia and the region.
“The year-to-date (January to November) average loss of all funds registered for sale in Malaysia is the largest (-23.10%) since its average loss for the entire year in 1997(-43.30%),” Wong said in an email reply to The Edge Financial Daily.
He added that a similar trend had been occurring in other major regional markets such as Thailand, Hong Kong, Taiwan, Singapore and China.
The silver lining for Malaysian investors, however, is that the Malaysian fund industry has incurred significantly smaller losses then that of most other Asian countries. This finding is not surprising as the Kuala Lumpur Stock Exchange has outperformed other countries in the region.
Wong believed there were other considerations as well.
“This may probably be attributed to the capital control imposed by the Malaysian government, rendering foreign investors less interested to invest in Malaysian equities and bonds,” Wong said. “Their relative low participation reduces the volatility of Malaysian equities and bonds.
“This, coupled with the majority of funds that are registered for sale in Malaysia, are invested in Malaysian equities and bonds, limits the average loss of Malaysian funds in comparison to those in other Asian countries.”
Responding to reports that a majority of equity funds in Malaysia had increased their portfolio allocation to cash or other liquid securities in Malaysia as a precaution against a continued slump in the market, Wong said some funds made the switch to cash in the third quarter.
However, there was no evidence that a majority of equity funds were doing so, he added.
Time to buy and what to buy? With equities trading at historic lows, common wisdom suggests that now would be a good time to cherry pick for good stocks at cheap prices. By extension, this would mean that equity funds also would trade cheaply.
Nonetheless, Wong believed it was premature to conclude that equities were undervalued, saying it was likely that equities would continue their slide in 2009.
“The values of equities are basically determined by two components: interest rate and earnings growth. Low interest rates and expectation that central banks around the globe will continue to lower interest rates will continue to support equities,” he said.
“However, with reports showing the global economic environment is projected to deteriorate further in 2009, the downwards trend of corporate earnings growth is less likely to reverse in the coming quarters.
“Such a scenario means equities will still face significant downside risk on their valuation in 2009 and, hence, investors should not at this stage park their capital in equity funds.”
Wong added that the same was likely true for commodity funds, which were traditionally even more volatile than equity funds.
For investors who are concerned about preserving the value of their investments, Wong advised continued investment in bond-linked and money market funds, although yields had fallen to very low levels recently.
Should investors stay away from unit trusts?
No, said Robert Foo, financial planner and managing director of MyFP Services Sdn Bhd.
So long as investing for the long-term is concerned, investors shouldn’t concern themselves too much with the current state of the market, as markets will grow in the long term.
Unit trust funds, he added, were not “opportunistic investments” that would yield massive returns in the short-term. As a managed basket of investments, funds offer the benefit of professional management in exchange for more normalised returns on investments.
“When we talk to clients, we tell them that they have to look at it from a period of time of five years and above,” Foo said. “Our objective is to help our clients achieve their investment targets and this means rebalancing their portfolios depending on the condition of the market.”
Meanwhile, markets will rise and fall in the long-term, he said. What investors have to do is to rebalance their portfolios during both the peaks and the troughs. In that respect, it is essential for investors to establish investment goals that correspond with their tolerance for risk.
Foo said a disciplined approach would allow for greater returns in the long-term. His clients, he said, averaged between 7%-8% in returns although they had differing investment targets.
“When the market was way up, we also rebalanced our clients’ portfolios. We said, ‘Look, 60% return is absurd for a fund, so we need to rebalance,’ and we rebalanced our clients down,” he said.
As for asset classes of funds, Foo said the type of fund was not as important as the revenue model of the underlying investment and consistency in performance, although he said MyFP’s policy was to stay away from “theme-based funds” such as those localised in a specific region or commodity.
Foo also advised that investors refrain from going on a purchasing spree based on the “cheapness” of a stock or fund, as pricing was not a good indicator of the value of the share.
“At the end of the day, it’s not the price that determines the value of the stock — that kind of analysis is too simplistic. You have to look at the intrinsic value of the underlying equity to determine that,” Foo said.
Source : The Edge Daily
Despite offering a modicum of security compared to traditional equities owing to its large pool of investors and its diverse portfolio of investments, trust funds have nonetheless declined alongside market indices, albeit at a slower rate.
According to data from the Securities Commission, the total net asset value (NAV) in Malaysia dropped by more than 20% to RM135.87 billion in November from RM170.1 billion in January.
There is, however, an anomaly within the figure, namely the decline in the NAV of Islamic-based funds. Unlike conventional funds’ NAV, which plunged 22% to RM119.77 billion in November from RM153.7 billion in January, Islamic funds declined only 2% to RM16.11 billion from RM16.4 billion.
A fund manager noted that this could be due to the fact that Islamic funds were not traded intensively and tended to lag behind the movement of conventional funds.
Case in point is the fact that the total NAV of Islamic funds only peaked in June with an NAV of RM17.98 billion, up 10% from January before starting its downwards slide. By that time, conventional funds’ NAV had already started to shed value since its peak in January.
On the whole, September’s figure also marked the first time that the total NAV failed to show positive year-on-year growth in at least four years. Subsequently, total NAV for September shrank 4% compared to the same month in 2007.
According to Eric Wong, Hong Kong head of research for global fund analyst Thomson Reuters Lipper, the last 12 months has seen unprecedented movements in the fund industry for both Malaysia and the region.
“The year-to-date (January to November) average loss of all funds registered for sale in Malaysia is the largest (-23.10%) since its average loss for the entire year in 1997(-43.30%),” Wong said in an email reply to The Edge Financial Daily.
He added that a similar trend had been occurring in other major regional markets such as Thailand, Hong Kong, Taiwan, Singapore and China.
The silver lining for Malaysian investors, however, is that the Malaysian fund industry has incurred significantly smaller losses then that of most other Asian countries. This finding is not surprising as the Kuala Lumpur Stock Exchange has outperformed other countries in the region.
Wong believed there were other considerations as well.
“This may probably be attributed to the capital control imposed by the Malaysian government, rendering foreign investors less interested to invest in Malaysian equities and bonds,” Wong said. “Their relative low participation reduces the volatility of Malaysian equities and bonds.
“This, coupled with the majority of funds that are registered for sale in Malaysia, are invested in Malaysian equities and bonds, limits the average loss of Malaysian funds in comparison to those in other Asian countries.”
Responding to reports that a majority of equity funds in Malaysia had increased their portfolio allocation to cash or other liquid securities in Malaysia as a precaution against a continued slump in the market, Wong said some funds made the switch to cash in the third quarter.
However, there was no evidence that a majority of equity funds were doing so, he added.
Time to buy and what to buy? With equities trading at historic lows, common wisdom suggests that now would be a good time to cherry pick for good stocks at cheap prices. By extension, this would mean that equity funds also would trade cheaply.
Nonetheless, Wong believed it was premature to conclude that equities were undervalued, saying it was likely that equities would continue their slide in 2009.
“The values of equities are basically determined by two components: interest rate and earnings growth. Low interest rates and expectation that central banks around the globe will continue to lower interest rates will continue to support equities,” he said.
“However, with reports showing the global economic environment is projected to deteriorate further in 2009, the downwards trend of corporate earnings growth is less likely to reverse in the coming quarters.
“Such a scenario means equities will still face significant downside risk on their valuation in 2009 and, hence, investors should not at this stage park their capital in equity funds.”
Wong added that the same was likely true for commodity funds, which were traditionally even more volatile than equity funds.
For investors who are concerned about preserving the value of their investments, Wong advised continued investment in bond-linked and money market funds, although yields had fallen to very low levels recently.
Should investors stay away from unit trusts?
No, said Robert Foo, financial planner and managing director of MyFP Services Sdn Bhd.
So long as investing for the long-term is concerned, investors shouldn’t concern themselves too much with the current state of the market, as markets will grow in the long term.
Unit trust funds, he added, were not “opportunistic investments” that would yield massive returns in the short-term. As a managed basket of investments, funds offer the benefit of professional management in exchange for more normalised returns on investments.
“When we talk to clients, we tell them that they have to look at it from a period of time of five years and above,” Foo said. “Our objective is to help our clients achieve their investment targets and this means rebalancing their portfolios depending on the condition of the market.”
Meanwhile, markets will rise and fall in the long-term, he said. What investors have to do is to rebalance their portfolios during both the peaks and the troughs. In that respect, it is essential for investors to establish investment goals that correspond with their tolerance for risk.
Foo said a disciplined approach would allow for greater returns in the long-term. His clients, he said, averaged between 7%-8% in returns although they had differing investment targets.
“When the market was way up, we also rebalanced our clients’ portfolios. We said, ‘Look, 60% return is absurd for a fund, so we need to rebalance,’ and we rebalanced our clients down,” he said.
As for asset classes of funds, Foo said the type of fund was not as important as the revenue model of the underlying investment and consistency in performance, although he said MyFP’s policy was to stay away from “theme-based funds” such as those localised in a specific region or commodity.
Foo also advised that investors refrain from going on a purchasing spree based on the “cheapness” of a stock or fund, as pricing was not a good indicator of the value of the share.
“At the end of the day, it’s not the price that determines the value of the stock — that kind of analysis is too simplistic. You have to look at the intrinsic value of the underlying equity to determine that,” Foo said.
Source : The Edge Daily
Sunday, January 4, 2009
Best way to invest RM50,000 now
Have some cash to invest? Three experts were asked what would be the best way to invest RM50,000 and below are their responses.
Andy Tang
Executive Director
Head of Performance Development
Great Vision Advisory Group
First of all, we need to know what is the purpose of the savings? Is it for short-term use? Medium or long-term usage?
Our money should be allocated into three portions: liquidity, profit and security. Usually, money in the liquidity portion is meant for short-term use. The money allocated for the profit portion is mainly for investment, hedging for higher return (either to re-invest in business, the share market, etc.), whereas money allocated for security purpose is meant for long-term use such as retirement, long-term care, education and lifestyle.
For liquidity purposes, which is mainly for the short term, it usually involves savings accounts, current accounts, fixed deposits or short-term income funds.
Director Andy Tang
The ideal ratio of funds to be utilised is 20% for liquidity, 35% for profitability and 45% for security. Of course, the ratio is different from time to time and from one individual to another.
While making the allocation, it is a must to re-visit or review other essential planning such as a healthcare plan, family income protection plan, future income protection plan, critical illness coverage plan, debt cancellation, mortgage protection plan and mortgage review, life insurance and estate planning.
Before making any decision on the RM50,000, we need to identify the end in mind to avoid any disappointment.
First, we have to review and identify what other financial resources we have and only then proceed with the plan.
In conclusion, after checking and reviewing your personal cashflow, this is not only the RM50,000 that we should plan for but it could involve the ongoing securing of wealth from your yearly surplus in order to ensure wealth preservation and accumulation for the future. For a better picture of the entire planning, it is always advisable to look for the capable financial adviser.
Reginald Yoganathan Hunt
Senior Group Sales Manager
Great Eastern Life Assurance (Malaysia) Berhad
Investing RM50,000 over a period of six to 10 years. There are a number of financial instruments that yield higher than the fixed deposit and give a reasonable return of 7%–9% a year.
·Investment-linked single premium with a reputable life insurance company. Equity funds have shown to generate 8% to 10% return over a period of seven to 10 years but there is also the danger of a market crash where you may end up poorer. Bond funds give a lower return and are safer.
Reginald Yoganathan Hunt
·Real estate investment trusts (REITs) have recently sprung up and with quality buildings and high rental rates, a fair income can be assumed and reasonable returns could be expected.
·Unit trusts have been in the scene for quite some time. Most of them are life insurance or bank-backed organisations and they have also shown consistent returns.
·Structured products have recently come into the scene. Insurance companies and banks have moved into cash on low fixed deposit rates. As the experience is still in its infancy stage, we will have to wait to see if they perform well.
My recommendation would be to invest in investment-linked single premium product. Half of the RM50,000 can be invested in bonds and the other half in equities.
Robert Foo
Managing Director and Principal Consultant
MyFP Services Sdn Bhd
We should aim to get real returns of about 5% to 6% after deducting the inflation rate if our objective is to protect of our savings value from being eroded in times of high inflation.
Robert Foo
In the long term, however, we expect interest rates to moderate to about 2% to 3%, hence we would target to obtain about 7% to 8% in gross returns.
The financial instrument to achieve this would be unit trusts of different asset classes.
We would usually invest with about four to five different fund managers as well as varying asset classes as a form of risk diversification.
Despite the volatile market situation, it is possible to achieve notable returns in these investments provided we invest for the long term, generally more than five years.
It is also important to review our investment portfolio every six months and restructure according to the market’s performance.
Depending on one’s life stage, it would be necessary to plan for expenses as well as insurance before investing.
It is also crucial to have a timeframe in mind when investing.
For example, if we are planning for our retirement in 20 years’ time, we would target higher returns at the beginning by investing in riskier asset classes.
We would then gradually move to less riskier forms of asset classes as we near our retirement.
Source : The Star, 3 January 2009
Andy Tang
Executive Director
Head of Performance Development
Great Vision Advisory Group
First of all, we need to know what is the purpose of the savings? Is it for short-term use? Medium or long-term usage?
Our money should be allocated into three portions: liquidity, profit and security. Usually, money in the liquidity portion is meant for short-term use. The money allocated for the profit portion is mainly for investment, hedging for higher return (either to re-invest in business, the share market, etc.), whereas money allocated for security purpose is meant for long-term use such as retirement, long-term care, education and lifestyle.
For liquidity purposes, which is mainly for the short term, it usually involves savings accounts, current accounts, fixed deposits or short-term income funds.
Director Andy Tang
The ideal ratio of funds to be utilised is 20% for liquidity, 35% for profitability and 45% for security. Of course, the ratio is different from time to time and from one individual to another.
While making the allocation, it is a must to re-visit or review other essential planning such as a healthcare plan, family income protection plan, future income protection plan, critical illness coverage plan, debt cancellation, mortgage protection plan and mortgage review, life insurance and estate planning.
Before making any decision on the RM50,000, we need to identify the end in mind to avoid any disappointment.
First, we have to review and identify what other financial resources we have and only then proceed with the plan.
In conclusion, after checking and reviewing your personal cashflow, this is not only the RM50,000 that we should plan for but it could involve the ongoing securing of wealth from your yearly surplus in order to ensure wealth preservation and accumulation for the future. For a better picture of the entire planning, it is always advisable to look for the capable financial adviser.
Reginald Yoganathan Hunt
Senior Group Sales Manager
Great Eastern Life Assurance (Malaysia) Berhad
Investing RM50,000 over a period of six to 10 years. There are a number of financial instruments that yield higher than the fixed deposit and give a reasonable return of 7%–9% a year.
·Investment-linked single premium with a reputable life insurance company. Equity funds have shown to generate 8% to 10% return over a period of seven to 10 years but there is also the danger of a market crash where you may end up poorer. Bond funds give a lower return and are safer.
Reginald Yoganathan Hunt
·Real estate investment trusts (REITs) have recently sprung up and with quality buildings and high rental rates, a fair income can be assumed and reasonable returns could be expected.
·Unit trusts have been in the scene for quite some time. Most of them are life insurance or bank-backed organisations and they have also shown consistent returns.
·Structured products have recently come into the scene. Insurance companies and banks have moved into cash on low fixed deposit rates. As the experience is still in its infancy stage, we will have to wait to see if they perform well.
My recommendation would be to invest in investment-linked single premium product. Half of the RM50,000 can be invested in bonds and the other half in equities.
Robert Foo
Managing Director and Principal Consultant
MyFP Services Sdn Bhd
We should aim to get real returns of about 5% to 6% after deducting the inflation rate if our objective is to protect of our savings value from being eroded in times of high inflation.
Robert Foo
In the long term, however, we expect interest rates to moderate to about 2% to 3%, hence we would target to obtain about 7% to 8% in gross returns.
The financial instrument to achieve this would be unit trusts of different asset classes.
We would usually invest with about four to five different fund managers as well as varying asset classes as a form of risk diversification.
Despite the volatile market situation, it is possible to achieve notable returns in these investments provided we invest for the long term, generally more than five years.
It is also important to review our investment portfolio every six months and restructure according to the market’s performance.
Depending on one’s life stage, it would be necessary to plan for expenses as well as insurance before investing.
It is also crucial to have a timeframe in mind when investing.
For example, if we are planning for our retirement in 20 years’ time, we would target higher returns at the beginning by investing in riskier asset classes.
We would then gradually move to less riskier forms of asset classes as we near our retirement.
Source : The Star, 3 January 2009
Unit Trust Price as at 2 January 2009
Source : Public Mutual Berhad
Public Savings Fund **0.5724
Public Growth Fund **0.3671
Public Index Fund 0.5289
Public Industry Fund ** 0.4113
Public Aggressive Growth Fund **0.5365
Public Regular Savings Fund 0.4303
Public Balanced Fund **0.6250
Public Bond Fund 0.9399
Public Ittikal Fund **0.6968
Public Smallcap Fund ** 0.5768
Public Islamic Bond Fund 0.9920
Public Equity Fund ** 0.2143
Public Institutional Bond Fund 0.9999
Public Islamic Equity Fund 0.2481
Public Money Market Fund 1.0184
Public Focus Select Fund **0.1702
Public Enhanced Bond Fund **0.9481
Public Dividend Select Fund 0.2195
Public Islamic Opportunities Fund **0.2180
Public Islamic Balanced Fund 0.2134
Public Far-east Select Fund **0.1940
Public Select Bond Fund 1.0022
Public Islamic Dividend Fund 0.2406
Public Regional Sector Fund **0.1697
Public Asia Ittikal Fund ** 0.1892
Public Global Select Fund **0.1591
Public Far-east Dividend Fund **0.1729
Public Islamic Enhanced Bond Fund **0.9721
Public Far-east Balanced Fund **0.1723
Public Global Balanced Fund **0.1784
Public Islamic Asia Dividend Fund **0.1590
Public China Select Fund **0.1349
Public Islamic Money Market Fund 1.0236
Public Far East Property & Resorts Fund **0.1182
Public Islamic Select Bond Fund 1.0221
Public Islamic Asia Balanced Fund **0.1785
Public South-east Asia Select Fund **0.1497
Public Sector Select Fund 0.1729
Public Islamic Sector Select Fund 0.1748
Public China Ittikal Fund **0.1454
Public Far-east Consumer Themes Fund **0.1932
Public Islamic Select Treasures Fund 0.2043
Public China Titans Fund **0.1859
Public Islamic Optimal Growth Fund 0.1924
Public Far-east Telco & Infrastructure Fund **0.2448
Public Capital Protected Select Portfolio Fund **1.0125
Public Islamic Select Enterprises Fund 0.2442
Public Islamic Income Fund 1.0086
Pb Balanced Fund **0.7246
Pb Growth Fund **0.6278
Pb Fixed Income Fund 1.0107
Pb Islamic Equity Fund 0.1799
Pb Islamic Bond Fund 1.0240
Pb Asia Equity Fund **0.1904
Pb Islamic Asia Equity Fund **0.1605
Pb Cash Management Fund 1.0191
Pb Cash Plus Fund 1.0003
Pb Asean Dividend Fund **0.1573
Pb Islamic Cash Management Fund 1.0147
Pb Euro Pacific Equity Fund **0.1359
Pb Islamic Asia Strategic Sector Fund **0.1345
Pb China Pacific Equity Fund **0.1248
Pb Asia Real Estate Income Fund **0.1621
Pb Islamic Cash Plus Fund 1.0007
Pb China Asean Equity Fund **0.2076
Pb Capital Protected Dragon Fund **0.9763
Pb Capital Protected Resources Fund **1.0005
Public Savings Fund **0.5724
Public Growth Fund **0.3671
Public Index Fund 0.5289
Public Industry Fund ** 0.4113
Public Aggressive Growth Fund **0.5365
Public Regular Savings Fund 0.4303
Public Balanced Fund **0.6250
Public Bond Fund 0.9399
Public Ittikal Fund **0.6968
Public Smallcap Fund ** 0.5768
Public Islamic Bond Fund 0.9920
Public Equity Fund ** 0.2143
Public Institutional Bond Fund 0.9999
Public Islamic Equity Fund 0.2481
Public Money Market Fund 1.0184
Public Focus Select Fund **0.1702
Public Enhanced Bond Fund **0.9481
Public Dividend Select Fund 0.2195
Public Islamic Opportunities Fund **0.2180
Public Islamic Balanced Fund 0.2134
Public Far-east Select Fund **0.1940
Public Select Bond Fund 1.0022
Public Islamic Dividend Fund 0.2406
Public Regional Sector Fund **0.1697
Public Asia Ittikal Fund ** 0.1892
Public Global Select Fund **0.1591
Public Far-east Dividend Fund **0.1729
Public Islamic Enhanced Bond Fund **0.9721
Public Far-east Balanced Fund **0.1723
Public Global Balanced Fund **0.1784
Public Islamic Asia Dividend Fund **0.1590
Public China Select Fund **0.1349
Public Islamic Money Market Fund 1.0236
Public Far East Property & Resorts Fund **0.1182
Public Islamic Select Bond Fund 1.0221
Public Islamic Asia Balanced Fund **0.1785
Public South-east Asia Select Fund **0.1497
Public Sector Select Fund 0.1729
Public Islamic Sector Select Fund 0.1748
Public China Ittikal Fund **0.1454
Public Far-east Consumer Themes Fund **0.1932
Public Islamic Select Treasures Fund 0.2043
Public China Titans Fund **0.1859
Public Islamic Optimal Growth Fund 0.1924
Public Far-east Telco & Infrastructure Fund **0.2448
Public Capital Protected Select Portfolio Fund **1.0125
Public Islamic Select Enterprises Fund 0.2442
Public Islamic Income Fund 1.0086
Pb Balanced Fund **0.7246
Pb Growth Fund **0.6278
Pb Fixed Income Fund 1.0107
Pb Islamic Equity Fund 0.1799
Pb Islamic Bond Fund 1.0240
Pb Asia Equity Fund **0.1904
Pb Islamic Asia Equity Fund **0.1605
Pb Cash Management Fund 1.0191
Pb Cash Plus Fund 1.0003
Pb Asean Dividend Fund **0.1573
Pb Islamic Cash Management Fund 1.0147
Pb Euro Pacific Equity Fund **0.1359
Pb Islamic Asia Strategic Sector Fund **0.1345
Pb China Pacific Equity Fund **0.1248
Pb Asia Real Estate Income Fund **0.1621
Pb Islamic Cash Plus Fund 1.0007
Pb China Asean Equity Fund **0.2076
Pb Capital Protected Dragon Fund **0.9763
Pb Capital Protected Resources Fund **1.0005
Wednesday, December 31, 2008
When will our stock market recover?
THE world’s stock markets, including Malaysia’s, have recovered lately.
Some analysts have viewed this recovery as window dressing activities while others have called it bear market rallies.
And there are those who wonder whether we have seen the worst. They are eager to know whether the current stock market level has reflected all the negative news, like the sharp drop in consumer spending, higher unemployment rates or lower sales and lower profits for most of the listed companies in the coming corporate result announcements.
Every investor wants to know when will the market recover. Some investors may be excited about the current stock market level as a lot of good quality stocks have been hammered down to attractive levels, and are keen to start accumulating them.
However, if the stock market continues to dip for long periods, certain investors may run out of “bullets” to average down their purchasing prices. Then, they will start losing interest in the stock market as they do not have cash to purchase further and their earlier purchases also start to show losses.
We need to prepare ourselves for the market turnaround. However, we need to be patient and wait for the right time to invest. In this article, we will look into the past two major downcycles: the 1998 crash and 2000 crash versus the current 2008 crash.
From the table, it can be seen that the Kuala Lumpur Composite Index (KLCI) tumbled by almost 80% in a period of 18 months during the 1998 crash versus a drop of 45% in a period of 13 months during the 2000 crash.
The percentage drop and duration of the 2000 crash were much less severe and shorter compared to the 1998 crash. For the current 2008 crash, our KLCI has plunged by 47% to its lowest level of 801 points on Oct 28.
If investors believe that the current crash is quite similar to the 2000 crash, then we may have seen the worst as the current percentage drop of 47% is near the 2000 crash of 45%.
However, if the 2008 crash mirrors the 1998 crash, then we may have to wait until the KLCI touches about the 300-point level (assuming the same 79.4% drop in the 1998 crash) before we can see any real recovery.
Hence, we may have to wait for another nine months or until September 2009 (assuming the same duration of 18 months). We do not think the 2008 crash is similar to the 1998 crash.
Our current economic situation, like central bank reserves, the health of the banking sector as well as economic fundamentals, are much better compared to 1998. However, as mentioned earlier, we need to prepare ourselves for the worst. What to expect from here on?
Our market will try to absorb all the negative news. As long as the market continues to drop as a result of negative news, we know we have not seen the bottom yet. We have to wait for the day when the stock market refuses to come down even when it is loaded with massive negative news; that should be the right time to buy.
Unfortunately, based on our past observations, by then most investors may not have any more cash to purchase or they will still worry about the economic situation.
Investors need to understand that stock market cycles are always ahead of economic cycles.
Normally, when the stock market hits the bottom, the economic situation is uncertain or is still getting worse.
Source : The Star Business, By OOI KOK HWA
Ooi Kok Hwa is an investment adviser licensed by the Securities Commission and managing partner of MRR Consulting.
Some analysts have viewed this recovery as window dressing activities while others have called it bear market rallies.
And there are those who wonder whether we have seen the worst. They are eager to know whether the current stock market level has reflected all the negative news, like the sharp drop in consumer spending, higher unemployment rates or lower sales and lower profits for most of the listed companies in the coming corporate result announcements.
Every investor wants to know when will the market recover. Some investors may be excited about the current stock market level as a lot of good quality stocks have been hammered down to attractive levels, and are keen to start accumulating them.
However, if the stock market continues to dip for long periods, certain investors may run out of “bullets” to average down their purchasing prices. Then, they will start losing interest in the stock market as they do not have cash to purchase further and their earlier purchases also start to show losses.
We need to prepare ourselves for the market turnaround. However, we need to be patient and wait for the right time to invest. In this article, we will look into the past two major downcycles: the 1998 crash and 2000 crash versus the current 2008 crash.
From the table, it can be seen that the Kuala Lumpur Composite Index (KLCI) tumbled by almost 80% in a period of 18 months during the 1998 crash versus a drop of 45% in a period of 13 months during the 2000 crash.
The percentage drop and duration of the 2000 crash were much less severe and shorter compared to the 1998 crash. For the current 2008 crash, our KLCI has plunged by 47% to its lowest level of 801 points on Oct 28.
If investors believe that the current crash is quite similar to the 2000 crash, then we may have seen the worst as the current percentage drop of 47% is near the 2000 crash of 45%.
However, if the 2008 crash mirrors the 1998 crash, then we may have to wait until the KLCI touches about the 300-point level (assuming the same 79.4% drop in the 1998 crash) before we can see any real recovery.
Hence, we may have to wait for another nine months or until September 2009 (assuming the same duration of 18 months). We do not think the 2008 crash is similar to the 1998 crash.
Our current economic situation, like central bank reserves, the health of the banking sector as well as economic fundamentals, are much better compared to 1998. However, as mentioned earlier, we need to prepare ourselves for the worst. What to expect from here on?
Our market will try to absorb all the negative news. As long as the market continues to drop as a result of negative news, we know we have not seen the bottom yet. We have to wait for the day when the stock market refuses to come down even when it is loaded with massive negative news; that should be the right time to buy.
Unfortunately, based on our past observations, by then most investors may not have any more cash to purchase or they will still worry about the economic situation.
Investors need to understand that stock market cycles are always ahead of economic cycles.
Normally, when the stock market hits the bottom, the economic situation is uncertain or is still getting worse.
Source : The Star Business, By OOI KOK HWA
Ooi Kok Hwa is an investment adviser licensed by the Securities Commission and managing partner of MRR Consulting.
Friday, December 26, 2008
Unit Trust Price as of 26 December 2008
Public Savings Fund** 0.5630
Public Growth Fund** 0.3579
Public Index Fund 0.5144
Public Industry Fund** 0.4046
Public Aggressive Growth Fund** 0.5216
Public Regular Savings Fund 0.4191
Public Balanced Fund** 0.6147
Public Bond Fund 0.9356
Public Ittikal Fund** 0.6865
Public Smallcap Fund** 0.5771
Public Islamic Bond Fund 0.9881
Public Equity Fund** 0.2090
Public Institutional Bond Fund 1.0064
Public Islamic Equity Fund 0.2426
Public Money Market Fund 1.0176
Public Focus Select Fund** 0.1683
Public Enhanced Bond Fund** 0.9457
Public Dividend Select Fund 0.2151
Public Islamic Opportunities Fund** 0.2175
Public Islamic Balanced Fund 0.2104
Public Far-east Select Fund** 0.1874
Public Select Bond Fund 0.9985
Public Islamic Dividend Fund 0.2358
Public Regional Sector Fund** 0.1656
Public Asia Ittikal Fund** 0.1859
Public Global Select Fund** 0.1572
Public Far-east Dividend Fund** 0.1693
Public Islamic Enhanced Bond Fund** 0.9667
Public Far-east Balanced Fund** 0.1691
Public Global Balanced Fund** 0.1772
Public Islamic Asia Dividend Fund** 0.1557
Public China Select Fund** 0.1324
Public Islamic Money Market Fund 1.0228
Public Far East Property & Resorts Fund** 0.1170
Public Islamic Select Bond Fund 1.0197
Public Islamic Asia Balanced Fund** 0.1763
Public South-east Asia Select Fund** 0.1448
Public Sector Select Fund 0.1689
Public Islamic Sector Select Fund 0.1715
Public China Ittikal Fund** 0.1429
Public Far-east Consumer Themes Fund** 0.1892
Public Islamic Select Treasures Fund 0.2018
Public China Titans Fund** 0.1836
Public Islamic Optimal Growth Fund 0.1889
Public Far-east Telco & Infrastructure Fund ** 0.2391
Public Capital Protected Select Portfolio Fund ** 1.0107
Public Islamic Select Enterprises Fund 0.2420
Public Islamic Income Fund 1.0075
Pb Balanced Fund** 0.7168
Pb Growth Fund** 0.6185
Pb Fixed Income Fund 1.0031
Pb Islamic Equity Fund 0.1763
Pb Islamic Bond Fund 1.0196
Pb Asia Equity Fund** 0.1840
Pb Islamic Asia Equity Fund** 0.1571
Pb Cash Management Fund 1.0183
Pb Cash Plus Fund 1.0022
Pb Asean Dividend Fund** 0.1521
Pb Islamic Cash Management Fund 1.0139
Pb Euro Pacific Equity Fund** 0.1337
Pb Islamic Asia Strategic Sector Fund** 0.1315
Pb China Pacific Equity Fund** 0.1230
Pb Asia Real Estate Income Fund** 0.1604
Pb Islamic Cash Plus Fund 1.0026
Pb China Asean Equity Fund** 0.2016
Pb Capital Protected Dragon Fund** 0.9734
Pb Capital Protected Resources Fund** 0.9987
Public Growth Fund** 0.3579
Public Index Fund 0.5144
Public Industry Fund** 0.4046
Public Aggressive Growth Fund** 0.5216
Public Regular Savings Fund 0.4191
Public Balanced Fund** 0.6147
Public Bond Fund 0.9356
Public Ittikal Fund** 0.6865
Public Smallcap Fund** 0.5771
Public Islamic Bond Fund 0.9881
Public Equity Fund** 0.2090
Public Institutional Bond Fund 1.0064
Public Islamic Equity Fund 0.2426
Public Money Market Fund 1.0176
Public Focus Select Fund** 0.1683
Public Enhanced Bond Fund** 0.9457
Public Dividend Select Fund 0.2151
Public Islamic Opportunities Fund** 0.2175
Public Islamic Balanced Fund 0.2104
Public Far-east Select Fund** 0.1874
Public Select Bond Fund 0.9985
Public Islamic Dividend Fund 0.2358
Public Regional Sector Fund** 0.1656
Public Asia Ittikal Fund** 0.1859
Public Global Select Fund** 0.1572
Public Far-east Dividend Fund** 0.1693
Public Islamic Enhanced Bond Fund** 0.9667
Public Far-east Balanced Fund** 0.1691
Public Global Balanced Fund** 0.1772
Public Islamic Asia Dividend Fund** 0.1557
Public China Select Fund** 0.1324
Public Islamic Money Market Fund 1.0228
Public Far East Property & Resorts Fund** 0.1170
Public Islamic Select Bond Fund 1.0197
Public Islamic Asia Balanced Fund** 0.1763
Public South-east Asia Select Fund** 0.1448
Public Sector Select Fund 0.1689
Public Islamic Sector Select Fund 0.1715
Public China Ittikal Fund** 0.1429
Public Far-east Consumer Themes Fund** 0.1892
Public Islamic Select Treasures Fund 0.2018
Public China Titans Fund** 0.1836
Public Islamic Optimal Growth Fund 0.1889
Public Far-east Telco & Infrastructure Fund ** 0.2391
Public Capital Protected Select Portfolio Fund ** 1.0107
Public Islamic Select Enterprises Fund 0.2420
Public Islamic Income Fund 1.0075
Pb Balanced Fund** 0.7168
Pb Growth Fund** 0.6185
Pb Fixed Income Fund 1.0031
Pb Islamic Equity Fund 0.1763
Pb Islamic Bond Fund 1.0196
Pb Asia Equity Fund** 0.1840
Pb Islamic Asia Equity Fund** 0.1571
Pb Cash Management Fund 1.0183
Pb Cash Plus Fund 1.0022
Pb Asean Dividend Fund** 0.1521
Pb Islamic Cash Management Fund 1.0139
Pb Euro Pacific Equity Fund** 0.1337
Pb Islamic Asia Strategic Sector Fund** 0.1315
Pb China Pacific Equity Fund** 0.1230
Pb Asia Real Estate Income Fund** 0.1604
Pb Islamic Cash Plus Fund 1.0026
Pb China Asean Equity Fund** 0.2016
Pb Capital Protected Dragon Fund** 0.9734
Pb Capital Protected Resources Fund** 0.9987
Tuesday, December 23, 2008
Consumers to tighten belts: Survey
PETALING JAYA: Consumers are likely to cut down on discretionary spending and tighten their belts while retailers are bracing for the worst slowdown since the SARS epidemic in 2003, findings from OSK Research Sdn Bhd’s first Consumer Survey Investigation showed.
A team headed by OSK Research’s Eing Kar Mei found that consumers “are by and large pessimistic on the economic outlook” with 59% of 224 respondents over a period of four days believing that the country’s economic fundamentals would deteriorate further next year and another 40% believing that the economy would improve.
The survey found that 77% of respondents would be cutting down on spending with 90% of those earning RM7,000 and above saying that the current economic conditions would affect their lifestyles and spending habits versus 65% of those earning below RM7,000.
“This indicates that the affluent segment is generally more cautious on spending compared with the low-mid income earners whose marginal propensity to consume is higher,” Eing said, adding that luxury-brand retailers are at higher risk compared to non-luxury retailers.
The survey found that 55% of respondents would cut down on shopping, reduce fuel consumption (41%), taking on part-time work (39%), taking fewer holidays (37%) and down-trading to cheaper brands (23%).
Eing said consumers were also less likely to cut spending on inelastic items such as cigarettes, alcohol and lottery tickets.
She added that more than half of respondents have a formal savings plan, of which 44% have set aside 10% to 30% of total personal income for rainy days.
“We see the low-income segment being the worst hit during an economic downturn by virtue of their low savings rate while cutbacks on discretionary spending and downtrading are the likely outcomes among the mid-income segment,” Eing said.
She said for the more affluent, there would likely be major cutbacks on big-ticket items and higher savings.
Eing said of the 50 retailers and shopkeepers surveyed, 42% claimed sales had slowed significantly after the fuel and electricity tariff hikes while another 50% claimed that their businesses were only slightly affected.
“The majority of businesses have reported a drop in sales year-on-year. Some 52% and 21% of respondents revealed that their businesses have fallen 11% to 30% and 31% to 50% respectively,” she said.
Eing said lower fuel price would have a limited impact with a 10sen reduction in the pump price only releasing an additional 03% to 0.9% in disposable income depending on income level.
She said the Hari Raya festivities helped boost sales with 20% of the retailers posting consecutive month-on-month growth in the September to October period.
Eing said food retailers, as expected, showed the most tenacity with 75% in this group recording a less than 10% drop year-on-year followed by non-fashion retailers and fashion retailers.
“Although business conditions have generally improved on lower crude oil prices, retailers are generally still bearish on their business prospects going forward,” she said.
Eing said 87% of retailers said that their businesses would continue to be affected by the global economic meltdown with 58% of retailers believing that economic conditions in 2009 are headed for the worst.
By FINTAN NG, The Star 23th Dec 2008
A team headed by OSK Research’s Eing Kar Mei found that consumers “are by and large pessimistic on the economic outlook” with 59% of 224 respondents over a period of four days believing that the country’s economic fundamentals would deteriorate further next year and another 40% believing that the economy would improve.
The survey found that 77% of respondents would be cutting down on spending with 90% of those earning RM7,000 and above saying that the current economic conditions would affect their lifestyles and spending habits versus 65% of those earning below RM7,000.
“This indicates that the affluent segment is generally more cautious on spending compared with the low-mid income earners whose marginal propensity to consume is higher,” Eing said, adding that luxury-brand retailers are at higher risk compared to non-luxury retailers.
The survey found that 55% of respondents would cut down on shopping, reduce fuel consumption (41%), taking on part-time work (39%), taking fewer holidays (37%) and down-trading to cheaper brands (23%).
Eing said consumers were also less likely to cut spending on inelastic items such as cigarettes, alcohol and lottery tickets.
She added that more than half of respondents have a formal savings plan, of which 44% have set aside 10% to 30% of total personal income for rainy days.
“We see the low-income segment being the worst hit during an economic downturn by virtue of their low savings rate while cutbacks on discretionary spending and downtrading are the likely outcomes among the mid-income segment,” Eing said.
She said for the more affluent, there would likely be major cutbacks on big-ticket items and higher savings.
Eing said of the 50 retailers and shopkeepers surveyed, 42% claimed sales had slowed significantly after the fuel and electricity tariff hikes while another 50% claimed that their businesses were only slightly affected.
“The majority of businesses have reported a drop in sales year-on-year. Some 52% and 21% of respondents revealed that their businesses have fallen 11% to 30% and 31% to 50% respectively,” she said.
Eing said lower fuel price would have a limited impact with a 10sen reduction in the pump price only releasing an additional 03% to 0.9% in disposable income depending on income level.
She said the Hari Raya festivities helped boost sales with 20% of the retailers posting consecutive month-on-month growth in the September to October period.
Eing said food retailers, as expected, showed the most tenacity with 75% in this group recording a less than 10% drop year-on-year followed by non-fashion retailers and fashion retailers.
“Although business conditions have generally improved on lower crude oil prices, retailers are generally still bearish on their business prospects going forward,” she said.
Eing said 87% of retailers said that their businesses would continue to be affected by the global economic meltdown with 58% of retailers believing that economic conditions in 2009 are headed for the worst.
By FINTAN NG, The Star 23th Dec 2008
Friday, December 19, 2008
Methods to minimize the service charge
Saving at the upfront means you had successfully make the better first step compared to the others. Adding the compounding interest effect, the investment cost you save will snowball into a big chunk later. Here are five strategies:
- Construct your own balance portfolio instead of buying Balanced Funds
- Become a unit trust agent (required to pass an exam and maintain your account active with the minimum business brought in every year)
- buy new fund which offer lower service charges during offer period
- lock in the low service charges offer with auto debit standing instruction
- buy funds from the same companies which only charge low switching fees whenever you need to do switching or portfolio rebalancing. If you buy different funds from different fund house, you would have to redeem the unit and purchase again when you are switching from Fund House A to Fund House B.
Unit Trust Price as of 19 December 2008
Public Savings Fund** 0.5566
Public Growth Fund** 0.3578
Public Index Fund 0.5106
Public Industry Fund** 0.4064
Public Aggressive Growth Fund** 0.5223
Public Regular Savings Fund 0.4136
Public Balanced Fund** 0.6168
Public Bond Fund 0.9342
Public Ittikal Fund** 0.6881
Public Smallcap Fund** 0.5677
Public Islamic Bond Fund 0.9865
Public Equity Fund** 0.2088
Public Institutional Bond Fund 1.0044
Public Islamic Equity Fund 0.2405
Public Money Market Fund 1.0170
Public Focus Select Fund** 0.1654
Public Enhanced Bond Fund** 0.9393
Public Dividend Select Fund 0.2123
Public Islamic Opportunities Fund** 0.2160
Public Islamic Balanced Fund 0.2106
Public Far-east Select Fund** 0.1901
Public Select Bond Fund 0.9977
Public Islamic Dividend Fund 0.2345
Public Regional Sector Fund** 0.1672
Public Asia Ittikal Fund** 0.1895
Public Global Select Fund** 0.1605
Public Far-east Dividend Fund** 0.1734
Public Islamic Enhanced Bond Fund** 0.9633
Public Far-east Balanced Fund** 0.1719
Public Global Balanced Fund** 0.1791
Public Islamic Asia Dividend Fund** 0.1583
Public China Select Fund** 0.1394
Public Islamic Money Market Fund 1.0223
Public Far East Property & Resorts Fund** 0.1157
Public Islamic Select Bond Fund 1.0181
Public Islamic Asia Balanced Fund** 0.1791
Public South-east Asia Select Fund** 0.1476
Public Sector Select Fund 0.1666
Public Islamic Sector Select Fund 0.1696
Public China Ittikal Fund** 0.1480
Public Far-east Consumer Themes Fund** 0.1944
Public Islamic Select Treasures Fund 0.2001
Public China Titans Fund** 0.1909
Public Islamic Optimal Growth Fund 0.1879
Public Far-east Telco & Infrastructure Fund ** 0.2407
Public Capital Protected Select Portfolio Fund ** 1.0056
Public Islamic Select Enterprises Fund 0.2414
Public Islamic Income Fund 1.0068
Pb Balanced Fund** 0.7159
Pb Growth Fund** 0.6212
Pb Fixed Income Fund 1.0019
Pb Islamic Equity Fund 0.1753
Pb Islamic Bond Fund 1.0192
Pb Asia Equity Fund** 0.1869
Pb Islamic Asia Equity Fund** 0.1600
Pb Cash Management Fund 1.0178
Pb Cash Plus Fund 1.0016
Pb Asean Dividend Fund** 0.1545
Pb Islamic Cash Management Fund 1.0133
Pb Euro Pacific Equity Fund** 0.1379
Pb Islamic Asia Strategic Sector Fund** 0.1363
Pb China Pacific Equity Fund** 0.1297
Pb Asia Real Estate Income Fund** 0.1585
Pb Islamic Cash Plus Fund 1.0021
Pb China Asean Equity Fund** 0.2039
Pb Capital Protected Dragon Fund** 0.9722
Pb Capital Protected Resources Fund** 0.9991
Public Growth Fund** 0.3578
Public Index Fund 0.5106
Public Industry Fund** 0.4064
Public Aggressive Growth Fund** 0.5223
Public Regular Savings Fund 0.4136
Public Balanced Fund** 0.6168
Public Bond Fund 0.9342
Public Ittikal Fund** 0.6881
Public Smallcap Fund** 0.5677
Public Islamic Bond Fund 0.9865
Public Equity Fund** 0.2088
Public Institutional Bond Fund 1.0044
Public Islamic Equity Fund 0.2405
Public Money Market Fund 1.0170
Public Focus Select Fund** 0.1654
Public Enhanced Bond Fund** 0.9393
Public Dividend Select Fund 0.2123
Public Islamic Opportunities Fund** 0.2160
Public Islamic Balanced Fund 0.2106
Public Far-east Select Fund** 0.1901
Public Select Bond Fund 0.9977
Public Islamic Dividend Fund 0.2345
Public Regional Sector Fund** 0.1672
Public Asia Ittikal Fund** 0.1895
Public Global Select Fund** 0.1605
Public Far-east Dividend Fund** 0.1734
Public Islamic Enhanced Bond Fund** 0.9633
Public Far-east Balanced Fund** 0.1719
Public Global Balanced Fund** 0.1791
Public Islamic Asia Dividend Fund** 0.1583
Public China Select Fund** 0.1394
Public Islamic Money Market Fund 1.0223
Public Far East Property & Resorts Fund** 0.1157
Public Islamic Select Bond Fund 1.0181
Public Islamic Asia Balanced Fund** 0.1791
Public South-east Asia Select Fund** 0.1476
Public Sector Select Fund 0.1666
Public Islamic Sector Select Fund 0.1696
Public China Ittikal Fund** 0.1480
Public Far-east Consumer Themes Fund** 0.1944
Public Islamic Select Treasures Fund 0.2001
Public China Titans Fund** 0.1909
Public Islamic Optimal Growth Fund 0.1879
Public Far-east Telco & Infrastructure Fund ** 0.2407
Public Capital Protected Select Portfolio Fund ** 1.0056
Public Islamic Select Enterprises Fund 0.2414
Public Islamic Income Fund 1.0068
Pb Balanced Fund** 0.7159
Pb Growth Fund** 0.6212
Pb Fixed Income Fund 1.0019
Pb Islamic Equity Fund 0.1753
Pb Islamic Bond Fund 1.0192
Pb Asia Equity Fund** 0.1869
Pb Islamic Asia Equity Fund** 0.1600
Pb Cash Management Fund 1.0178
Pb Cash Plus Fund 1.0016
Pb Asean Dividend Fund** 0.1545
Pb Islamic Cash Management Fund 1.0133
Pb Euro Pacific Equity Fund** 0.1379
Pb Islamic Asia Strategic Sector Fund** 0.1363
Pb China Pacific Equity Fund** 0.1297
Pb Asia Real Estate Income Fund** 0.1585
Pb Islamic Cash Plus Fund 1.0021
Pb China Asean Equity Fund** 0.2039
Pb Capital Protected Dragon Fund** 0.9722
Pb Capital Protected Resources Fund** 0.9991
Saturday, December 13, 2008
EPF scheme to help members save more for retirement
KUALA LUMPUR: All Employees Provident Fund contributors will, from Feb 1, be able to withdraw part of their funds and channel them to approved investment programmes.
Under the new scheme, contributors, irrespective of age, will be able to withdraw from Account One what is in excess of a “required amount” of savings as determined by the EPF and invest the money in unit trusts.
Currently, contributors can only do so if they have in excess of RM50,000.
This is one among a range of changes that the EPF is implementing in stages to make it easier for contributors to exercise the option to augment their savings for their retirement.
Using the tagline “Beyond Savings”, the EPF also hopes the changes will ensure that contributors have enough money for retirement.
Other changes include:
· MORE flexible withdrawals for contributors at age 55;
· ALLOWING withdrawal of any amount irrespective of age for savings in excess of RM1mil;
· ALLOWING withdrawals from Account Two for critical illness insurance; and
· WITHDRAWALS for housing loan instalments.
For those who have reached 55, Azlan said that from Nov 1 they would have several options: withdraw everything they have, go for monthly withdrawals of at least RM250 for at least one year, or withdraw at least RM2,000 at any one time.
Currently, members aged 55 can only choose to withdraw the entire sum, withdraw only annual dividends, or take out monthly amounts but for at least five years.
Azlan said there would also be changes to the procedures for age 50 withdrawals.
From Jan 1, 2013, those who reach 50 would only be able to withdraw any amount from Account Two if their Account One has at least RM90,000, the required amount for that age.
On using EPF withdrawals to pay housing loan instalments, Azlan said that although the money would be banked straight into the contributors' accounts, it would be liasing with the banks to ensure that the loans are properly serviced.
“If they fail to pay their instalments for three months, the bank will inform us and we will stop payment to the contributors,” he said, adding that this scheme would start from Jan 1.
Azlan said that from Nov 1, those who had more than RM1mil in their savings could withdraw and invest the excess amount anytime. He said there were about 4,700 contributors who had more than RM1mil in their accounts.
By PAUL CHOO
paulchoo@thestar.com.my
Under the new scheme, contributors, irrespective of age, will be able to withdraw from Account One what is in excess of a “required amount” of savings as determined by the EPF and invest the money in unit trusts.
Currently, contributors can only do so if they have in excess of RM50,000.
This is one among a range of changes that the EPF is implementing in stages to make it easier for contributors to exercise the option to augment their savings for their retirement.
Using the tagline “Beyond Savings”, the EPF also hopes the changes will ensure that contributors have enough money for retirement.
Other changes include:
· MORE flexible withdrawals for contributors at age 55;
· ALLOWING withdrawal of any amount irrespective of age for savings in excess of RM1mil;
· ALLOWING withdrawals from Account Two for critical illness insurance; and
· WITHDRAWALS for housing loan instalments.
The amounts are based on the assumption that a person would need at least RM120,000 – or RM500 a month – from retirement at 55 to age 75.
He said a contributor could withdraw 20% of the amount in excess of the required amount for investments in unit trusts.
For those who have reached 55, Azlan said that from Nov 1 they would have several options: withdraw everything they have, go for monthly withdrawals of at least RM250 for at least one year, or withdraw at least RM2,000 at any one time.
Currently, members aged 55 can only choose to withdraw the entire sum, withdraw only annual dividends, or take out monthly amounts but for at least five years.
Azlan said there would also be changes to the procedures for age 50 withdrawals.
From Jan 1, 2013, those who reach 50 would only be able to withdraw any amount from Account Two if their Account One has at least RM90,000, the required amount for that age.
On using EPF withdrawals to pay housing loan instalments, Azlan said that although the money would be banked straight into the contributors' accounts, it would be liasing with the banks to ensure that the loans are properly serviced.
“If they fail to pay their instalments for three months, the bank will inform us and we will stop payment to the contributors,” he said, adding that this scheme would start from Jan 1.
Azlan said that from Nov 1, those who had more than RM1mil in their savings could withdraw and invest the excess amount anytime. He said there were about 4,700 contributors who had more than RM1mil in their accounts.
By PAUL CHOO
paulchoo@thestar.com.my
Unit Trust Price as of 13 December 2008
Public Savings Fund ** 0.5567
Public Growth Fund ** 0.3577
Public Index Fund 0.5051
Public Industry Fund ** 0.4056
Public Aggressive Growth Fund ** 0.5207
Public Regular Savings Fund 0.4109
Public Balanced Fund ** 0.6161
Public Bond Fund 0.9351
Public Ittikal Fund ** 0.6878
Public Smallcap Fund ** 0.5684
Public Islamic Bond Fund 0.9829*
Public Equity Fund ** 0.2091
Public Institutional Bond Fund 1.0020
Public Islamic Equity Fund 0.2383
Public Money Market Fund 1.0166
Public Focus Select Fund ** 0.1654
Public Enhanced Bond Fund ** 0.9373
Public Dividend Select Fund 0.2104
Public Islamic Opportunities Fund ** 0.2162
Public Islamic Balanced Fund 0.2087
Public Far-east Select Fund ** 0.1891
Public Select Bond Fund 0.9970
Public Islamic Dividend Fund 0.2314
Public Regional Sector Fund ** 0.1665
Public Asia Ittikal Fund ** 0.1904
Public Global Select Fund ** 0.1601
Public Far-east Dividend Fund ** 0.1745
Public Islamic Enhanced Bond Fund ** 0.9638
Public Far-east Balanced Fund ** 0.1727
Public Global Balanced Fund ** 0.1785
Public Islamic Asia Dividend Fund ** 0.1590
Public China Select Fund ** 0.1431
Public Islamic Money Market Fund 1.0219
Public Far East Property & Resorts Fund ** 0.1166
Public Islamic Select Bond Fund 1.0164
Public Islamic Asia Balanced Fund ** 0.1797
Public South-east Asia Select Fund ** 0.1453
Public Sector Select Fund 0.1654
Public Islamic Sector Select Fund 0.1689
Public China Ittikal Fund ** 0.1502
Public Far-east Consumer Themes Fund ** 0.1947
Public Islamic Select Treasures Fund 0.1990
Public China Titans Fund ** 0.1943
Public Islamic Optimal Growth Fund 0.1857
Public Far-east Telco & Infrastructure Fund ** 0.2394
Public Capital Protected Select Portfolio Fund ** 1.0029
Public Islamic Select Enterprises Fund 0.2404
Public Islamic Income Fund 1.0062
PB Balanced Fund ** 0.7085
PB Growth Fund ** 0.6121
PB Fixed Income Fund 1.0022
PB Islamic Equity Fund 0.1727
PB Islamic Bond Fund 1.0166
PB Asia Equity Fund ** 0.1862
PB Islamic Asia Equity Fund ** 0.1610
PB Cash Management Fund 1.0174
PB Cash Plus Fund 1.0012
PB Asean Dividend Fund ** 0.1524
PB Islamic Cash Management Fund 1.0129
Public Growth Fund ** 0.3577
Public Index Fund 0.5051
Public Industry Fund ** 0.4056
Public Aggressive Growth Fund ** 0.5207
Public Regular Savings Fund 0.4109
Public Balanced Fund ** 0.6161
Public Bond Fund 0.9351
Public Ittikal Fund ** 0.6878
Public Smallcap Fund ** 0.5684
Public Islamic Bond Fund 0.9829*
Public Equity Fund ** 0.2091
Public Institutional Bond Fund 1.0020
Public Islamic Equity Fund 0.2383
Public Money Market Fund 1.0166
Public Focus Select Fund ** 0.1654
Public Enhanced Bond Fund ** 0.9373
Public Dividend Select Fund 0.2104
Public Islamic Opportunities Fund ** 0.2162
Public Islamic Balanced Fund 0.2087
Public Far-east Select Fund ** 0.1891
Public Select Bond Fund 0.9970
Public Islamic Dividend Fund 0.2314
Public Regional Sector Fund ** 0.1665
Public Asia Ittikal Fund ** 0.1904
Public Global Select Fund ** 0.1601
Public Far-east Dividend Fund ** 0.1745
Public Islamic Enhanced Bond Fund ** 0.9638
Public Far-east Balanced Fund ** 0.1727
Public Global Balanced Fund ** 0.1785
Public Islamic Asia Dividend Fund ** 0.1590
Public China Select Fund ** 0.1431
Public Islamic Money Market Fund 1.0219
Public Far East Property & Resorts Fund ** 0.1166
Public Islamic Select Bond Fund 1.0164
Public Islamic Asia Balanced Fund ** 0.1797
Public South-east Asia Select Fund ** 0.1453
Public Sector Select Fund 0.1654
Public Islamic Sector Select Fund 0.1689
Public China Ittikal Fund ** 0.1502
Public Far-east Consumer Themes Fund ** 0.1947
Public Islamic Select Treasures Fund 0.1990
Public China Titans Fund ** 0.1943
Public Islamic Optimal Growth Fund 0.1857
Public Far-east Telco & Infrastructure Fund ** 0.2394
Public Capital Protected Select Portfolio Fund ** 1.0029
Public Islamic Select Enterprises Fund 0.2404
Public Islamic Income Fund 1.0062
PB Balanced Fund ** 0.7085
PB Growth Fund ** 0.6121
PB Fixed Income Fund 1.0022
PB Islamic Equity Fund 0.1727
PB Islamic Bond Fund 1.0166
PB Asia Equity Fund ** 0.1862
PB Islamic Asia Equity Fund ** 0.1610
PB Cash Management Fund 1.0174
PB Cash Plus Fund 1.0012
PB Asean Dividend Fund ** 0.1524
PB Islamic Cash Management Fund 1.0129
Sunday, December 7, 2008
Lower BLR bad news for some
GEORGE TOWN: While housebuyers welcome a lower base lending rate (BLR), senior citizens and welfare homes are concerned over their dipping income in the wake of higher living expenses.
Colleagues Lulu Goh and Carene Tang, who are in their 20s, said a lower BLR meant they could spend the extra cash for other purposes.
“It is good news for those with housing loans but I am quite cautious with my daily expenses now.
“I do not intend to keep my money in fixed deposits because the returns are very low,” Goh said.
Factory facility manager T. Pani said the anticipated reduction in BLR was good as it would help alleviate loan commitments but getting less returns from fixed deposits would discourage people from saving more.
“Those in the private sector put in their money as a long-term plan and the interest is their only income after retirement.
“The Government should not zoom in on the people to spend their money to stimulate economic growth. We have to be cautious with our expenses especially during this period of uncertainty,” he said.
Society of Active Generation of Elders (SAGE) president Chin Sek Ham said although the reduction in BLR was aimed at stimulating the country’s economy, the income of senior citizens dropped each time the BLR went down.
“The Government should come up with a formula to help senior citizens and welfare organisations who are affected by the current low rates in fixed deposits,” he said.
“With the minimum 3.5% per annum interest set for fixed deposits, a retiree will earn less than RM150 monthly if he saves about RM50,000 in the bank. As it is, we are stretching the ringgit because prices of goods are going up,” Chin said.
“Since we are in our sunset years, medical expenses are also increasing. Many of us rely on government hospitals but the queue is so long you could end up blind even before you are treated for cataract,” he said.
Chin said the low interest rate would also affect the operations of many non-governmental organisations like SAGE as public donations also dwindled.
An official of a welfare home here said the home’s monthly operational costs had increased from RM80,000 last year to RM100,000 this year and the low interest rate from fixed deposit could not help support the expenses.
“We have to buy our own sugar, cooking oil and rice supplies now because public donations are getting less. People are thinking twice before making donations,” he said.
By ZARINAH DAUD, The Star
Colleagues Lulu Goh and Carene Tang, who are in their 20s, said a lower BLR meant they could spend the extra cash for other purposes.
“It is good news for those with housing loans but I am quite cautious with my daily expenses now.
“I do not intend to keep my money in fixed deposits because the returns are very low,” Goh said.
Factory facility manager T. Pani said the anticipated reduction in BLR was good as it would help alleviate loan commitments but getting less returns from fixed deposits would discourage people from saving more.
“Those in the private sector put in their money as a long-term plan and the interest is their only income after retirement.
“The Government should not zoom in on the people to spend their money to stimulate economic growth. We have to be cautious with our expenses especially during this period of uncertainty,” he said.
Society of Active Generation of Elders (SAGE) president Chin Sek Ham said although the reduction in BLR was aimed at stimulating the country’s economy, the income of senior citizens dropped each time the BLR went down.
“The Government should come up with a formula to help senior citizens and welfare organisations who are affected by the current low rates in fixed deposits,” he said.
“With the minimum 3.5% per annum interest set for fixed deposits, a retiree will earn less than RM150 monthly if he saves about RM50,000 in the bank. As it is, we are stretching the ringgit because prices of goods are going up,” Chin said.
“Since we are in our sunset years, medical expenses are also increasing. Many of us rely on government hospitals but the queue is so long you could end up blind even before you are treated for cataract,” he said.
Chin said the low interest rate would also affect the operations of many non-governmental organisations like SAGE as public donations also dwindled.
An official of a welfare home here said the home’s monthly operational costs had increased from RM80,000 last year to RM100,000 this year and the low interest rate from fixed deposit could not help support the expenses.
“We have to buy our own sugar, cooking oil and rice supplies now because public donations are getting less. People are thinking twice before making donations,” he said.
By ZARINAH DAUD, The Star
Friday, December 5, 2008
How to utilize Lipperweb?
You can visit Lipper web to search for a fund rating.
Go to http://www.lipperweb.com/ . Click at fund screener.
Next, the following screen will appear. Select Malaysia from the radio button.
Then, you will see the best rating of unit trust in Malaysia.
You may explore other features as historical performance, narrow your search to specific fund or country.
Go to http://www.lipperweb.com/ . Click at fund screener.
Next, the following screen will appear. Select Malaysia from the radio button.
Then, you will see the best rating of unit trust in Malaysia.
You may explore other features as historical performance, narrow your search to specific fund or country.
Morningstar 2007 Fund Awards (Malaysia)
Winning 4 out of 6 awards at the Morningstar 2007 Fund Awards (Malaysia) ensures Public Mutual remains the most awarded unit trust fund manager in Malaysia with 120 accolades received since 1999.
1 Equity
Islamic Syariah Equity
Public Ittikal Fund
2 Equity
Malaysia Equity
Public Growth Fund
3 Fixed Income
Malaysian Ringgit Bond
Public Bond Fund
4 Balanced
Malaysian Ringgit Balanced
PB Balanced Fund
You are advised to read and understand the contents of the Master Prospectus of Public Series of Funds, Master Prospectus of Public Series of Shariah-Based Funds and Master Prospectus of PB Series of Funds dated 30 April 2008 before investing. These prospectuses have been registered with the Securities Commission who takes no responsibility for their contents, and neither should their registration be interpreted to mean that the Commission recommends the investment.
You should take note that there are fees and charges involved; and that the prices of units and distribution payable, if any, may go down as well as up. Past performance of a fund is not an indication of its future performance. Applications to purchase units must come in the form of a duly completed application form referred to in and accompanying the prospectuses. A copy of the Master Prospectus of Public Series of Funds and Master Prospectus of Public Series of Shariah-Based Funds can be obtained from your attending unit trust consultant or nearest Public Mutual branch; whilst a copy of Master Prospectus of PB Series of Funds can be obtained from your nearest Public Bank branch.
1 EquityIslamic Syariah Equity
Public Ittikal Fund
2 Equity
Malaysia Equity
Public Growth Fund
3 Fixed Income
Malaysian Ringgit Bond
Public Bond Fund
4 Balanced
Malaysian Ringgit Balanced
PB Balanced Fund
You are advised to read and understand the contents of the Master Prospectus of Public Series of Funds, Master Prospectus of Public Series of Shariah-Based Funds and Master Prospectus of PB Series of Funds dated 30 April 2008 before investing. These prospectuses have been registered with the Securities Commission who takes no responsibility for their contents, and neither should their registration be interpreted to mean that the Commission recommends the investment.
You should take note that there are fees and charges involved; and that the prices of units and distribution payable, if any, may go down as well as up. Past performance of a fund is not an indication of its future performance. Applications to purchase units must come in the form of a duly completed application form referred to in and accompanying the prospectuses. A copy of the Master Prospectus of Public Series of Funds and Master Prospectus of Public Series of Shariah-Based Funds can be obtained from your attending unit trust consultant or nearest Public Mutual branch; whilst a copy of Master Prospectus of PB Series of Funds can be obtained from your nearest Public Bank branch.
Unit Trust Price as of 5 December 2008
PUBLIC SAVINGS FUND** 0.5535
PUBLIC GROWTH FUND** 0.3460
PUBLIC INDEX FUND 0.5034
PUBLIC INDUSTRY FUND** 0.4013
PUBLIC AGGRESSIVE GROWTH FUND** 0.5034
PUBLIC REGULAR SAVINGS FUND 0.4068
PUBLIC BALANCED FUND** 0.6027
PUBLIC BOND FUND 0.9333
PUBLIC ITTIKAL FUND** 0.6709
PUBLIC SMALLCAP FUND** 0.5678
PUBLIC ISLAMIC BOND FUND 0.9808
PUBLIC EQUITY FUND** 0.2027
PUBLIC INSTITUTIONAL BOND FUND 1.0011
PUBLIC ISLAMIC EQUITY FUND 0.2371
PUBLIC MONEY MARKET FUND 1.0159
PUBLIC FOCUS SELECT FUND** 0.1638
PUBLIC ENHANCED BOND FUND** 0.9354
PUBLIC DIVIDEND SELECT FUND 0.2103
PUBLIC ISLAMIC OPPORTUNITIES FUND** 0.2171
PUBLIC ISLAMIC BALANCED FUND 0.2080
PUBLIC FAR-EAST SELECT FUND** 0.1802
PUBLIC SELECT BOND FUND 0.9955
PUBLIC ISLAMIC DIVIDEND FUND 0.2310
PUBLIC REGIONAL SECTOR FUND** 0.1568
PUBLIC ASIA ITTIKAL FUND** 0.1802
PUBLIC GLOBAL SELECT FUND** 0.1554
PUBLIC FAR-EAST DIVIDEND FUND** 0.1658
PUBLIC ISLAMIC ENHANCED BOND FUND** 0.9639
PUBLIC FAR-EAST BALANCED FUND** 0.1671
PUBLIC GLOBAL BALANCED FUND** 0.1749
PUBLIC ISLAMIC ASIA DIVIDEND FUND** 0.1519
PUBLIC CHINA SELECT FUND** 0.1309
PUBLIC ISLAMIC MONEY MARKET FUND 1.0212
PUBLIC FAR EAST PROPERTY & RESORTS FUND** 0.1100
PUBLIC ISLAMIC SELECT BOND FUND 1.0150
PUBLIC ISLAMIC ASIA BALANCED FUND** 0.1719
PUBLIC SOUTH-EAST ASIA SELECT FUND** 0.1389
PUBLIC SECTOR SELECT FUND 0.1634
PUBLIC ISLAMIC SECTOR SELECT FUND 0.1683
PUBLIC CHINA ITTIKAL FUND** 0.1403
PUBLIC FAR-EAST CONSUMER THEMES FUND** 0.1889
PUBLIC ISLAMIC SELECT TREASURES FUND 0.1982
PUBLIC CHINA TITANS FUND** 0.1848
PUBLIC ISLAMIC OPTIMAL GROWTH FUND 0.1853
PUBLIC FAR-EAST TELCO & INFRASTRUCTURE FUND ** 0.2310
PUBLIC CAPITAL PROTECTED SELECT PORTFOLIO FUND ** 1.0036
PUBLIC ISLAMIC SELECT ENTERPRISES FUND 0.2399
PUBLIC ISLAMIC INCOME FUND 1.0054
Source : PUBLIC MUTUAL BERHAD
**Price Of 2 preceding business days
PUBLIC GROWTH FUND** 0.3460
PUBLIC INDEX FUND 0.5034
PUBLIC INDUSTRY FUND** 0.4013
PUBLIC AGGRESSIVE GROWTH FUND** 0.5034
PUBLIC REGULAR SAVINGS FUND 0.4068
PUBLIC BALANCED FUND** 0.6027
PUBLIC BOND FUND 0.9333
PUBLIC ITTIKAL FUND** 0.6709
PUBLIC SMALLCAP FUND** 0.5678
PUBLIC ISLAMIC BOND FUND 0.9808
PUBLIC EQUITY FUND** 0.2027
PUBLIC INSTITUTIONAL BOND FUND 1.0011
PUBLIC ISLAMIC EQUITY FUND 0.2371
PUBLIC MONEY MARKET FUND 1.0159
PUBLIC FOCUS SELECT FUND** 0.1638
PUBLIC ENHANCED BOND FUND** 0.9354
PUBLIC DIVIDEND SELECT FUND 0.2103
PUBLIC ISLAMIC OPPORTUNITIES FUND** 0.2171
PUBLIC ISLAMIC BALANCED FUND 0.2080
PUBLIC FAR-EAST SELECT FUND** 0.1802
PUBLIC SELECT BOND FUND 0.9955
PUBLIC ISLAMIC DIVIDEND FUND 0.2310
PUBLIC REGIONAL SECTOR FUND** 0.1568
PUBLIC ASIA ITTIKAL FUND** 0.1802
PUBLIC GLOBAL SELECT FUND** 0.1554
PUBLIC FAR-EAST DIVIDEND FUND** 0.1658
PUBLIC ISLAMIC ENHANCED BOND FUND** 0.9639
PUBLIC FAR-EAST BALANCED FUND** 0.1671
PUBLIC GLOBAL BALANCED FUND** 0.1749
PUBLIC ISLAMIC ASIA DIVIDEND FUND** 0.1519
PUBLIC CHINA SELECT FUND** 0.1309
PUBLIC ISLAMIC MONEY MARKET FUND 1.0212
PUBLIC FAR EAST PROPERTY & RESORTS FUND** 0.1100
PUBLIC ISLAMIC SELECT BOND FUND 1.0150
PUBLIC ISLAMIC ASIA BALANCED FUND** 0.1719
PUBLIC SOUTH-EAST ASIA SELECT FUND** 0.1389
PUBLIC SECTOR SELECT FUND 0.1634
PUBLIC ISLAMIC SECTOR SELECT FUND 0.1683
PUBLIC CHINA ITTIKAL FUND** 0.1403
PUBLIC FAR-EAST CONSUMER THEMES FUND** 0.1889
PUBLIC ISLAMIC SELECT TREASURES FUND 0.1982
PUBLIC CHINA TITANS FUND** 0.1848
PUBLIC ISLAMIC OPTIMAL GROWTH FUND 0.1853
PUBLIC FAR-EAST TELCO & INFRASTRUCTURE FUND ** 0.2310
PUBLIC CAPITAL PROTECTED SELECT PORTFOLIO FUND ** 1.0036
PUBLIC ISLAMIC SELECT ENTERPRISES FUND 0.2399
PUBLIC ISLAMIC INCOME FUND 1.0054
Source : PUBLIC MUTUAL BERHAD
**Price Of 2 preceding business days
Fixed deposit interest cut - More reason to invest in Unit Trust!!
PETALING JAYA: Ten banks have reduced their fixed deposit (FD) rates following Bank Negara’s recent cut in the key interest rate.
More are expected to follow suit over the next few weeks, an official from the Association of Banks said.
The central bank had on Nov 24 lowered the key interest rate known as the overnight policy rate (OPR) by 25 basis points to 3.25% to further support economic activities.
> From Nov 25, the minimum rate set by Bank Negara for 12 months fixed deposit is 3.5% per annum. The minimum rate set for a one-month fixed deposit remains at 3% per annum.
> Several banks have not cut their base lending rate (BLR), which is calculated based on the OPR, but are expected to do so next week.
> Interest rates for consumer loans, which are pegged against the BLR, will be reduced accordingly.
> With the reduction in FD rates, some banks are planning to run promotions to attract depositors.
Source : The Star, 5th December 2008
More are expected to follow suit over the next few weeks, an official from the Association of Banks said.
The central bank had on Nov 24 lowered the key interest rate known as the overnight policy rate (OPR) by 25 basis points to 3.25% to further support economic activities.
> From Nov 25, the minimum rate set by Bank Negara for 12 months fixed deposit is 3.5% per annum. The minimum rate set for a one-month fixed deposit remains at 3% per annum.
> Several banks have not cut their base lending rate (BLR), which is calculated based on the OPR, but are expected to do so next week.
> Interest rates for consumer loans, which are pegged against the BLR, will be reduced accordingly.
> With the reduction in FD rates, some banks are planning to run promotions to attract depositors.
Source : The Star, 5th December 2008
Sunday, November 30, 2008
Should I invest in unit trust or property especially during the financial crisis?
Property is always the hedge against inflation as the property price is always increasing. But the of course there are cons/ disadvantage of investing in property.
First, property is not liquid. When especially you need cash immediately, you need to find agent or you have to look for interested buyer. This is not easy when the location and market value is not favorable. When you cannot sell the properties, you still owe the financial institution and pay interest in monthly basis. But when you invest in unit trust, you can sell back to the unit trust company and redeem your cash in the next few days. But, if the market is not favorable, you still can keep the unit and keep on top up to gain more units when the price is low.
Second disadvantage is that you need to fork out a large amount of money to purchase the property especially during the down payment. But, if you purchase unit trust, you can start off with as low as RM 1000.00 and RM 100.00 as subsequent top up.
Third, you need to do a lot of research on the property before you buy. Of course, location is the most important aspect, but you also have to consider the infrastructure and facilities such as schools, roads, mass transportation etc. Whereas when you buy unit trust, all you need to do is read the prospectus, research report at Lipper.com or Morningstar.com on the rating of the fund and past performance of the fund. Also, unit trust agent can give you consultation you on this based on your financial needs.
Fourth, when you invest in strata properties such as condominium or apartment, you need to set aside a certain amount every month to pay for sinking fund, maintenance fee, quit rent etc. And, as such, condominium does not appreciate as much as landed properties. But, if you were to purchase a landed property, it will cost more than RM 300,000 in Klang Valley area. Assuming that you are applying for loan at 8% for 30 years repayment, you required to fork out at least RM 1,000 a month. So, a lot of money involved in the process.
Fifth, the process of buying property is very tedious. You have to post your ads, get a real estate agent, find a legal adviser, etc. Compare to purchasing unit trust, you only need to prepare a payment cheque, your unit trust agent will do the rest for you. When you need to sell, you just need to fill in redemption form.
First, property is not liquid. When especially you need cash immediately, you need to find agent or you have to look for interested buyer. This is not easy when the location and market value is not favorable. When you cannot sell the properties, you still owe the financial institution and pay interest in monthly basis. But when you invest in unit trust, you can sell back to the unit trust company and redeem your cash in the next few days. But, if the market is not favorable, you still can keep the unit and keep on top up to gain more units when the price is low.
Second disadvantage is that you need to fork out a large amount of money to purchase the property especially during the down payment. But, if you purchase unit trust, you can start off with as low as RM 1000.00 and RM 100.00 as subsequent top up.
Third, you need to do a lot of research on the property before you buy. Of course, location is the most important aspect, but you also have to consider the infrastructure and facilities such as schools, roads, mass transportation etc. Whereas when you buy unit trust, all you need to do is read the prospectus, research report at Lipper.com or Morningstar.com on the rating of the fund and past performance of the fund. Also, unit trust agent can give you consultation you on this based on your financial needs.
Fourth, when you invest in strata properties such as condominium or apartment, you need to set aside a certain amount every month to pay for sinking fund, maintenance fee, quit rent etc. And, as such, condominium does not appreciate as much as landed properties. But, if you were to purchase a landed property, it will cost more than RM 300,000 in Klang Valley area. Assuming that you are applying for loan at 8% for 30 years repayment, you required to fork out at least RM 1,000 a month. So, a lot of money involved in the process.
Fifth, the process of buying property is very tedious. You have to post your ads, get a real estate agent, find a legal adviser, etc. Compare to purchasing unit trust, you only need to prepare a payment cheque, your unit trust agent will do the rest for you. When you need to sell, you just need to fill in redemption form.
Saturday, November 29, 2008
What if I had RM 10,000 in 2005 ?
For example, you had invested RM 10,000 in 2005 in unit trust
In year 1996, Annual returns for investment in unit trust (Public Ittikal) = 26.01%, minus service fee = 6.5%
Return = (10,000 X 26.01%) - (10000 X 6.5%) = RM1,951.00 per annum
Compare to investment in EPF (Employee Provident Fund),
Annual returns for investment in EPF (Employee Provident Fund) at 5%
Return = 10,000 X 5 % = RM 500.00 per annum
Difference = RM 1,951.00 – RM 500.00
= RM 1,451.00
This is only simple calculation, not taking into account the bonus units/dividends/free insurance when you invest in unit trust.
In year 1996, Annual returns for investment in unit trust (Public Ittikal) = 26.01%, minus service fee = 6.5%
Return = (10,000 X 26.01%) - (10000 X 6.5%) = RM1,951.00 per annum
Compare to investment in EPF (Employee Provident Fund),
Annual returns for investment in EPF (Employee Provident Fund) at 5%
Return = 10,000 X 5 % = RM 500.00 per annum
Difference = RM 1,951.00 – RM 500.00
= RM 1,451.00
This is only simple calculation, not taking into account the bonus units/dividends/free insurance when you invest in unit trust.
Dollar-Cost Averaging - Fight the Fluctuating Market
The Principle of Dollar-Cost Averaging involves a disciplined regular investment technique which may be applied to maximum effect in unit trust investing. This investing technique intended to reduce exposure to risk associated with making a lump sum purchase. All investor has to do is to invest a regular fixed sum of money with a selected unit trust fund over a period of time (daily, weekly, monthly, quarterly, etc.). This way, investor does not have to worry about market timing, or where shares prices or interest rates are headed. Regular investment will purchase fewer units when market is up and more units when market is down. It safeguards against the market losing value shortly after making investment and limit the downside of an immediate drop in asset value after a lump sum is invested.
Let us assume Investor ‘A’ decided to invest a monthly savings of RM400 with the fund over a period of 24 months. In the first 12 months, Investor A thus managed to accumulate 8,026.47 units at an average cost of RM0.5980 per unit at market uptrend whereas the average NAV per unit over the period was higher at RM0.6008. During the next 12 months, Investor A manage to accumulate a total of 9,270.36 units at an average cost of RM0.5178 per unit at market downtrend which is lower than the average NAV per unit over the period at RM0.5183. Units are bought at an actual cost which is lower than the average NAV per unit over the same period by regular investing the same amount of money in the fund irrespective of price fluctuations.
Friday, November 28, 2008
Volatility means opportunities
Source: Ang of Phillip Capital Management Sdn Bhd
Volatility means more opportunities to make money especially when we are able to buy at a low and sell at a high. Hypothetically, substantial profit can be made if we are able to buy at the bottom of the market and sell at the top.
Because of the big swing in our market, partly due to frequent flow of funds by international fund managers, such opportunities always occur if we wait patiently.
Looking at past patterns, this sounds easy. In reality, spotting the bottom and peak of a market is not easy as we see the market evolve day by day, from bullish optimistic phase to bearish pessimistic period. By the time we notice a correction has evolved into a bear market, it could be too late to sell.
Similarly in a bull market, the initial run-up is always misunderstood to be a bear trap. It’s always easier to speak from hindsight. Even if we do not know exactly where the bottom of the market is, it is definitely a bargain to buy when the market has fallen 20-30% from its peak with some stocks plunging by 40-50%.
Because we are not sure whether the market has reached the bottom at the point of purchase, we can always keep some cash for future averaging purposes, just in case the market falls further. If the market recovers after the first purchase, we are happy because we have made some money from the shares just bought. If the market goes down further, we are also happy since we can now buy cheaper. In this way, we can benefit from the down market as well as manage our sentiment.
Similarly, when the market recovers substantially, perhaps it is time to lock in some profit by selling some of our positions. If the market goes up further, we still have some shares in hand to sell.
Investment guru Warren Buffett makes his money by buying into investment-grade stocks at market bottom. His cheaper entry cost allows him to keep the shares for many years without selling. If he could have sold some of those shares bought at market bottom when they are high, he could have made more.
Volatility means more opportunities to make money especially when we are able to buy at a low and sell at a high. Hypothetically, substantial profit can be made if we are able to buy at the bottom of the market and sell at the top.
Because of the big swing in our market, partly due to frequent flow of funds by international fund managers, such opportunities always occur if we wait patiently.
Looking at past patterns, this sounds easy. In reality, spotting the bottom and peak of a market is not easy as we see the market evolve day by day, from bullish optimistic phase to bearish pessimistic period. By the time we notice a correction has evolved into a bear market, it could be too late to sell.
Similarly in a bull market, the initial run-up is always misunderstood to be a bear trap. It’s always easier to speak from hindsight. Even if we do not know exactly where the bottom of the market is, it is definitely a bargain to buy when the market has fallen 20-30% from its peak with some stocks plunging by 40-50%.
Because we are not sure whether the market has reached the bottom at the point of purchase, we can always keep some cash for future averaging purposes, just in case the market falls further. If the market recovers after the first purchase, we are happy because we have made some money from the shares just bought. If the market goes down further, we are also happy since we can now buy cheaper. In this way, we can benefit from the down market as well as manage our sentiment.
Similarly, when the market recovers substantially, perhaps it is time to lock in some profit by selling some of our positions. If the market goes up further, we still have some shares in hand to sell.
Investment guru Warren Buffett makes his money by buying into investment-grade stocks at market bottom. His cheaper entry cost allows him to keep the shares for many years without selling. If he could have sold some of those shares bought at market bottom when they are high, he could have made more.
Unit Trust Price as of 28th November 2008
Source : Public Mutual Bhd
Public Savings Fund** 0.5529
Public Growth Fund** 0.3411
Public Index Fund 0.5171
Public Industry Fund** 0.4098
Public Aggressive Growth Fund** 0.4979
Public Regular Savings Fund 0.4126
Public Balanced Fund** 0.5951
Public Bond Fund 0.9323
Public Ittikal Fund** 0.6660
Public Smallcap Fund** 0.5652
Public Islamic Bond Fund 0.9804
Public Equity Fund** 0.2004
Public Institutional Bond Fund 0.9992
Public Islamic Equity Fund 0.2418
Public Money Market Fund 1.0154
Public Focus Select Fund** 0.1635
Public Enhanced Bond Fund** 0.9371
Public Dividend Select Fund 0.2133
Public Islamic Opportunities Fund** 0.2178
Public Islamic Balanced Fund 0.2207
Public Far-east Select Fund** 0.1711
Public Select Bond Fund 0.9946
Public Islamic Dividend Fund 0.2343
Public Regional Sector Fund** 0.1484
Public Asia Ittikal Fund** 0.1805
Public Global Select Fund** 0.1552
Public Far-east Dividend Fund** 0.1686
Public Islamic Enhanced Bond Fund** 0.9673
Public Far-east Balanced Fund** 0.1644
Public Global Balanced Fund** 0.1759
Public Islamic Asia Dividend Fund** 0.1521
Public China Select Fund** 0.1277
Public Islamic Money Market Fund 1.0206
Public Far East Property & Resorts Fund** 0.1076
Public Islamic Select Bond Fund 1.0130
Public Islamic Asia Balanced Fund** 0.1724
Public South-east Asia Select Fund** 0.1419
Public Sector Select Fund 0.1660
Public Islamic Sector Select Fund 0.1702
Public China Ittikal Fund** 0.1373
Public Far-east Consumer Themes Fund** 0.1879
Public Islamic Select Treasures Fund 0.1997
Public China Titans Fund** 0.1817
Public Islamic Optimal Growth Fund 0.1888
Public Far-east Telco & Infrastructure Fund ** 0.2150
Public Capital Protected Select Portfolio Fund ** 1.0002
Public Islamic Select Enterprises Fund 0.2423
Public Islamic Income Fund 1.0042
Public Savings Fund** 0.5529
Public Growth Fund** 0.3411
Public Index Fund 0.5171
Public Industry Fund** 0.4098
Public Aggressive Growth Fund** 0.4979
Public Regular Savings Fund 0.4126
Public Balanced Fund** 0.5951
Public Bond Fund 0.9323
Public Ittikal Fund** 0.6660
Public Smallcap Fund** 0.5652
Public Islamic Bond Fund 0.9804
Public Equity Fund** 0.2004
Public Institutional Bond Fund 0.9992
Public Islamic Equity Fund 0.2418
Public Money Market Fund 1.0154
Public Focus Select Fund** 0.1635
Public Enhanced Bond Fund** 0.9371
Public Dividend Select Fund 0.2133
Public Islamic Opportunities Fund** 0.2178
Public Islamic Balanced Fund 0.2207
Public Far-east Select Fund** 0.1711
Public Select Bond Fund 0.9946
Public Islamic Dividend Fund 0.2343
Public Regional Sector Fund** 0.1484
Public Asia Ittikal Fund** 0.1805
Public Global Select Fund** 0.1552
Public Far-east Dividend Fund** 0.1686
Public Islamic Enhanced Bond Fund** 0.9673
Public Far-east Balanced Fund** 0.1644
Public Global Balanced Fund** 0.1759
Public Islamic Asia Dividend Fund** 0.1521
Public China Select Fund** 0.1277
Public Islamic Money Market Fund 1.0206
Public Far East Property & Resorts Fund** 0.1076
Public Islamic Select Bond Fund 1.0130
Public Islamic Asia Balanced Fund** 0.1724
Public South-east Asia Select Fund** 0.1419
Public Sector Select Fund 0.1660
Public Islamic Sector Select Fund 0.1702
Public China Ittikal Fund** 0.1373
Public Far-east Consumer Themes Fund** 0.1879
Public Islamic Select Treasures Fund 0.1997
Public China Titans Fund** 0.1817
Public Islamic Optimal Growth Fund 0.1888
Public Far-east Telco & Infrastructure Fund ** 0.2150
Public Capital Protected Select Portfolio Fund ** 1.0002
Public Islamic Select Enterprises Fund 0.2423
Public Islamic Income Fund 1.0042
Declaration of distribution
Source: Public Mutual
For the financial year ending 30 November 2008
Final Distributions to unitholders of Public Islamic Balanced Fund (“PIBF”) and Public Far-East Dividend Fund (“PFEDF”) respectively, who remain in the Register as at 30 November 2008.
Fund Gross Distribution:
PIBF 1.00 sen per unit
PFEDF 0.35 sen per unit
For the financial year ending 30 November 2008
Final Distributions to unitholders of Public Islamic Balanced Fund (“PIBF”) and Public Far-East Dividend Fund (“PFEDF”) respectively, who remain in the Register as at 30 November 2008.
Fund Gross Distribution:
PIBF 1.00 sen per unit
PFEDF 0.35 sen per unit
Thursday, November 27, 2008
Dollar cost averaging during recession
Dollar cost averaging is a technique designed to reduce market risk through the systematic purchase of securities at predetermined intervals and set amounts. Many successful investors already practice without realizing it. Many others could save themselves a lot of time, effort and money by beginning a plan. In this article, you will learn the three steps to beginning a dollar cost averaging plan, look at concrete examples of how it can lower an investor’s cost basis, and discover how it reduces risk.
Dollar Cost Averaging: What is It?
Instead of investing assets in a lump sum, the investor works his way into a position by slowly buying smaller amounts over a longer period of time. This spreads the cost basis out over several years, providing insulation against changes in market price.
Setting Up Your Own Dollar Cost Averaging Plan
In order to begin a dollar cost averaging plan, you must do three things:
Decide exactly how much money you can invest each month. Make certain that you are financially capable of keeping the amount consistent; otherwise the plan will not be as effective.
Select an investment (index funds are particularly appropriate, but we will get to that in a moment) that you want to hold for the long term, preferably five to ten years or longer.
At regular intervals (weekly, monthly or quarterly works best), invest that money into the security you’ve chosen. If your broker offers it, set up an automatic withdrawal plan so the process becomes automated.
Source : about.com
Dollar Cost Averaging: What is It?
Instead of investing assets in a lump sum, the investor works his way into a position by slowly buying smaller amounts over a longer period of time. This spreads the cost basis out over several years, providing insulation against changes in market price.
Setting Up Your Own Dollar Cost Averaging Plan
In order to begin a dollar cost averaging plan, you must do three things:
Decide exactly how much money you can invest each month. Make certain that you are financially capable of keeping the amount consistent; otherwise the plan will not be as effective.
Select an investment (index funds are particularly appropriate, but we will get to that in a moment) that you want to hold for the long term, preferably five to ten years or longer.
At regular intervals (weekly, monthly or quarterly works best), invest that money into the security you’ve chosen. If your broker offers it, set up an automatic withdrawal plan so the process becomes automated.
Source : about.com
Saturday, November 22, 2008
Unit Trust Price as at 22 November 2008
Source : PUBLIC MUTUAL BHD
Public Savings Fund** 0.5530
Public Growth Fund** 0.3388
Public Index Fund 0.5209
Public Industry Fund** 0.4276
Public Aggressive Growth Fund** 0.4926
Public Regular Savings Fund 0.4135
Public Balanced Fund** 0.5886
Public Bond Fund 0.9270
Public Ittikal Fund** 0.6603
Public Smallcap Fund** 0.5741
Public Islamic Bond Fund 0.9747*
Public Equity Fund** 0.1997
Public Institutional Bond Fund 0.9945
Public Islamic Equity Fund 0.2407
Public Money Market Fund 1.0147
Public Focus Select Fund** 0.1642
Public Enhanced Bond Fund** 0.9313
Public Dividend Select Fund 0.2133
Public Islamic Opportunities Fund** 0.2205
Public Islamic Balanced Fund 0.2233
Public Far-east Select Fund** 0.1652
Public Select Bond Fund 0.9908
Public Islamic Dividend Fund 0.2335
Public Regional Sector Fund** 0.1432
Public Asia Ittikal Fund** 0.1751
Public Global Select Fund** 0.1502
Public Far-east Dividend Fund** 0.1663
Public Islamic Enhanced Bond Fund** 0.9608
Public Far-east Balanced Fund** 0.1596
Public Global Balanced Fund** 0.1720
Public Islamic Asia Dividend Fund** 0.1475
Public China Select Fund** 0.1200
Public Islamic Money Market Fund 1.0201
Public Far East Property & Resorts Fund** 0.1049
Public Islamic Select Bond Fund 1.0102
Public Islamic Asia Balanced Fund** 0.1690
Public South-east Asia Select Fund** 0.1396
Public Sector Select Fund 0.1655
Public Islamic Sector Select Fund 0.1711
Public China Ittikal Fund** 0.1322
Public Far-east Consumer Themes Fund** 0.1825
Public Islamic Select Treasures Fund 0.2009
Public China Titans Fund** 0.1738
Public Islamic Optimal Growth Fund 0.1907
Public Far-east Telco & Infrastructure Fund ** 0.2071
Public Capital Protected Select Portfolio Fund ** 1.0017
Public Islamic Select Enterprises Fund 0.2419
Public Islamic Income Fund 1.0021
Pb Balanced Fund** 0.7208
Pb Growth Fund** 0.6400
Pb Fixed Income Fund 0.9929
Pb Islamic Equity Fund 0.1826
Pb Islamic Bond Fund 1.0151
Pb Asia Equity Fund** 0.1630
Pb Islamic Asia Equity Fund** 0.1477
Pb Cash Management Fund 1.0156
Pb Cash Plus Fund 1.0020
Pb Asean Dividend Fund** 0.1462
Pb Islamic Cash Management Fund 1.0112
Pb Euro Pacific Equity Fund** 0.1285
Pb Islamic Asia Strategic Sector Fund** 0.1275
Pb China Pacific Equity Fund** 0.1110
Pb Asia Real Estate Income Fund** 0.1471
Pb Islamic Cash Plus Fund 1.0028
Pb China Asean Equity Fund** 0.1686
Pb Capital Protected Dragon Fund** 0.9581
Pb Capital Protected Resources Fund** 0.9937
* Profit sharing based on the net income before tax
**Price Of 2 preceding business days
Public Savings Fund** 0.5530
Public Growth Fund** 0.3388
Public Index Fund 0.5209
Public Industry Fund** 0.4276
Public Aggressive Growth Fund** 0.4926
Public Regular Savings Fund 0.4135
Public Balanced Fund** 0.5886
Public Bond Fund 0.9270
Public Ittikal Fund** 0.6603
Public Smallcap Fund** 0.5741
Public Islamic Bond Fund 0.9747*
Public Equity Fund** 0.1997
Public Institutional Bond Fund 0.9945
Public Islamic Equity Fund 0.2407
Public Money Market Fund 1.0147
Public Focus Select Fund** 0.1642
Public Enhanced Bond Fund** 0.9313
Public Dividend Select Fund 0.2133
Public Islamic Opportunities Fund** 0.2205
Public Islamic Balanced Fund 0.2233
Public Far-east Select Fund** 0.1652
Public Select Bond Fund 0.9908
Public Islamic Dividend Fund 0.2335
Public Regional Sector Fund** 0.1432
Public Asia Ittikal Fund** 0.1751
Public Global Select Fund** 0.1502
Public Far-east Dividend Fund** 0.1663
Public Islamic Enhanced Bond Fund** 0.9608
Public Far-east Balanced Fund** 0.1596
Public Global Balanced Fund** 0.1720
Public Islamic Asia Dividend Fund** 0.1475
Public China Select Fund** 0.1200
Public Islamic Money Market Fund 1.0201
Public Far East Property & Resorts Fund** 0.1049
Public Islamic Select Bond Fund 1.0102
Public Islamic Asia Balanced Fund** 0.1690
Public South-east Asia Select Fund** 0.1396
Public Sector Select Fund 0.1655
Public Islamic Sector Select Fund 0.1711
Public China Ittikal Fund** 0.1322
Public Far-east Consumer Themes Fund** 0.1825
Public Islamic Select Treasures Fund 0.2009
Public China Titans Fund** 0.1738
Public Islamic Optimal Growth Fund 0.1907
Public Far-east Telco & Infrastructure Fund ** 0.2071
Public Capital Protected Select Portfolio Fund ** 1.0017
Public Islamic Select Enterprises Fund 0.2419
Public Islamic Income Fund 1.0021
Pb Balanced Fund** 0.7208
Pb Growth Fund** 0.6400
Pb Fixed Income Fund 0.9929
Pb Islamic Equity Fund 0.1826
Pb Islamic Bond Fund 1.0151
Pb Asia Equity Fund** 0.1630
Pb Islamic Asia Equity Fund** 0.1477
Pb Cash Management Fund 1.0156
Pb Cash Plus Fund 1.0020
Pb Asean Dividend Fund** 0.1462
Pb Islamic Cash Management Fund 1.0112
Pb Euro Pacific Equity Fund** 0.1285
Pb Islamic Asia Strategic Sector Fund** 0.1275
Pb China Pacific Equity Fund** 0.1110
Pb Asia Real Estate Income Fund** 0.1471
Pb Islamic Cash Plus Fund 1.0028
Pb China Asean Equity Fund** 0.1686
Pb Capital Protected Dragon Fund** 0.9581
Pb Capital Protected Resources Fund** 0.9937
* Profit sharing based on the net income before tax
**Price Of 2 preceding business days
Saturday, November 15, 2008
Unit trust industry to continue good showing
Source : The Edge Financial Daily, 21 January 2008
The Malaysian unit trust industry will continue its sterling performance this year as a result of ample liquidity in the banking system, according to unit trust companies.
HLG Unit Trust Bhd executive director and acting chief executive officer Teo Chang Seng told The Edge Financial Daily that the wealth management unit of banks had been entrusted with higher fees income from investment services.
"All banks are looking for suitable products to turn the deposit base into fees base asset under management while helping their customers to achieve their financial objectives," he said.
He said front load charges were lower now and it cost less for customers to invest in unit trust funds in view of more products that invested in the local bourse or overseas markets with different risk profiles and investment objectives.
On whether the time was right to launch more funds because of the current bullish local stock market, Teo said: "We have to recognise that the 2007 super bull is unlikely to repeat this year. The US is showing signs of slowing and has its own set of challenges.
"We prefer investments in diversified large-cap blue chip global ex-US, particularly investments which are more resilient in current conditions such as value investment."
Asked about product trends among the investing public, he said Malaysian investors had diversified their investments globally over the past two years after Bank Negara Malaysia relaxed restrictions on investing overseas.
"Investors are becoming more sophisticated. Past one-and-a-half years was a super bull year with investors focusing on return," he said.
Teo said investment risks must be evaluated on total risk and reward basis as the market may turn volatile, and investments in certain high beta markets had higher downside risk.
ING Funds Bhd chief executive officer Steve Ong said investors could make more accurate investment decisions with the introduction of the single pricing regime in July 2006, which had made front-end charges more transparent.
He said the current low interest rate environment and high liquidity had resulted in unit trust funds becoming alternative investment vehicles for the mass retail market in Malaysia.
"We still think the market offers (local investors) good investment for high dividend yield stocks although valuation has gone up," he said.
He said ING used the portfolio approach to identify a comprehensive range of asset classes that would provide investors with adequate portfolio diversification and more consistent returns.
Ong said product trends were driven by investment opportunities as the market cycle changed from time to time, and the critical component of a product strategy was re-marketing existing funds.
"Our strategy is to have at least 50% of our funds invested locally in view of exchange rate fluctuations," he said.
He said current local investment themes were plantation, oil and gas, and infrastructure while globally, the company was bullish on selected markets such as China.
"We are looking at picking up selected global growth thematics that are experiencing high growth of between 10% and 12% annually like the energy and biotechnology sectors," he said.
Meanwhile, Inter-Pacific Asset Management Sdn Bhd chief executive officer Paul Khoo believed that unit trust companies could sustain the growth rate for new investments in 2008, as demand for new innovative funds would remain robust with investors continuing to demand diversification.
He expected the upfront fee or service charges in Malaysia to moderate further from 5% to 6% currently, as most mutual funds in developed markets did not charge upfront fees.
He said lower fees would translate into higher investment value and generate more returns for investors when the fund was performing.
Khoo said external factors such as economic growth and inflation trends would drive launches of investment products this year, and expected more defensive funds such as income and value portfolios with the anticipated slower global growth and cost-push inflation.
"Alternative asset classes such as commodities and foreign currencies should be part of investors' portfolio for diversification. I would expect more diversification across various asset classes from the current holdings in cash, property, stocks and bonds," he said.
Asked about the funds' investment themes for 2008 and beyond, Khoo said industry and sector funds such as Asian consumer, Asian infrastructure and commodities would be very popular with demand for more goods and services from China and India.
However, he said Inter-Pacific did not have any immediate plan to launch a China-focused fund as Chinese companies were currently fairly rich in valuation.
The Malaysian unit trust industry will continue its sterling performance this year as a result of ample liquidity in the banking system, according to unit trust companies.
HLG Unit Trust Bhd executive director and acting chief executive officer Teo Chang Seng told The Edge Financial Daily that the wealth management unit of banks had been entrusted with higher fees income from investment services.
"All banks are looking for suitable products to turn the deposit base into fees base asset under management while helping their customers to achieve their financial objectives," he said.
He said front load charges were lower now and it cost less for customers to invest in unit trust funds in view of more products that invested in the local bourse or overseas markets with different risk profiles and investment objectives.
On whether the time was right to launch more funds because of the current bullish local stock market, Teo said: "We have to recognise that the 2007 super bull is unlikely to repeat this year. The US is showing signs of slowing and has its own set of challenges.
"We prefer investments in diversified large-cap blue chip global ex-US, particularly investments which are more resilient in current conditions such as value investment."
Asked about product trends among the investing public, he said Malaysian investors had diversified their investments globally over the past two years after Bank Negara Malaysia relaxed restrictions on investing overseas.
"Investors are becoming more sophisticated. Past one-and-a-half years was a super bull year with investors focusing on return," he said.
Teo said investment risks must be evaluated on total risk and reward basis as the market may turn volatile, and investments in certain high beta markets had higher downside risk.
ING Funds Bhd chief executive officer Steve Ong said investors could make more accurate investment decisions with the introduction of the single pricing regime in July 2006, which had made front-end charges more transparent.
He said the current low interest rate environment and high liquidity had resulted in unit trust funds becoming alternative investment vehicles for the mass retail market in Malaysia.
"We still think the market offers (local investors) good investment for high dividend yield stocks although valuation has gone up," he said.
He said ING used the portfolio approach to identify a comprehensive range of asset classes that would provide investors with adequate portfolio diversification and more consistent returns.
Ong said product trends were driven by investment opportunities as the market cycle changed from time to time, and the critical component of a product strategy was re-marketing existing funds.
"Our strategy is to have at least 50% of our funds invested locally in view of exchange rate fluctuations," he said.
He said current local investment themes were plantation, oil and gas, and infrastructure while globally, the company was bullish on selected markets such as China.
"We are looking at picking up selected global growth thematics that are experiencing high growth of between 10% and 12% annually like the energy and biotechnology sectors," he said.
Meanwhile, Inter-Pacific Asset Management Sdn Bhd chief executive officer Paul Khoo believed that unit trust companies could sustain the growth rate for new investments in 2008, as demand for new innovative funds would remain robust with investors continuing to demand diversification.
He expected the upfront fee or service charges in Malaysia to moderate further from 5% to 6% currently, as most mutual funds in developed markets did not charge upfront fees.
He said lower fees would translate into higher investment value and generate more returns for investors when the fund was performing.
Khoo said external factors such as economic growth and inflation trends would drive launches of investment products this year, and expected more defensive funds such as income and value portfolios with the anticipated slower global growth and cost-push inflation.
"Alternative asset classes such as commodities and foreign currencies should be part of investors' portfolio for diversification. I would expect more diversification across various asset classes from the current holdings in cash, property, stocks and bonds," he said.
Asked about the funds' investment themes for 2008 and beyond, Khoo said industry and sector funds such as Asian consumer, Asian infrastructure and commodities would be very popular with demand for more goods and services from China and India.
However, he said Inter-Pacific did not have any immediate plan to launch a China-focused fund as Chinese companies were currently fairly rich in valuation.
Relatively stable Unit trusts still holding back 40%-50% allocations
By The Star; LOONG TSE MIN and LAW KAI CHOW
PETALING JAYA: The global financial turmoil has not resulted in a mad rush to get out of the Malaysian unit trust sector, but investors have been pulling out of the stock market and putting their money elsewhere as funds posted mostly negative returns, fund managers said.
Areca Capital Sdn Bhd’s chief executive officer Danny Wong told StarBiz: “Contrary to what people believe, while the equity market has fallen some 20% year-to-date, there has not been panic selling in unit trusts.”
PETALING JAYA: The global financial turmoil has not resulted in a mad rush to get out of the Malaysian unit trust sector, but investors have been pulling out of the stock market and putting their money elsewhere as funds posted mostly negative returns, fund managers said.
Areca Capital Sdn Bhd’s chief executive officer Danny Wong told StarBiz: “Contrary to what people believe, while the equity market has fallen some 20% year-to-date, there has not been panic selling in unit trusts.”
The size of funds had remained quite stable, he added, observing that the funds had invested 50% to 60% of their allocations in the stock market. “This also means that there is 40% to 50% left to return to the (equity) market when things recover,” he said, acknowledging that there had been some selldown by equity-based unit trust funds in the first half of the year.
Wong said he has seen shifts in funds from equity funds to short-term fixed income funds unit as investors shunned long term bets. Investors have been “sidelining,” that is reducing exposure to capital markets by going into more liquid and conservative investments, he said.
At the same time, unit holders have also shifted away from bond funds which were longer term in favour of money market funds.
The take-up rate of new funds was about 50% slower than last year as investors were more cautious amid the current volatility, he noted. Ng advised investors to continue to invest in the stock market as it was oversold.
“We think the market will continue to slow down for the next 6 months and we may be at near bottom now,” he said. “Next year, the market will be at a better position and we could see the funds and equity market (coming in) to pick up momentum again.”
Meanwhile, fund research house Lipper’s latest Fund Market Insight in a report for August said funds registered for sale in Malaysia had made losses for the third consecutive month.
In August, Malaysian funds posted an average loss of 1.65% with commodity-linked funds sliding 5.58% and equity-based funds dropping 2.98%.
Remain Calm Through Market Turbulence
Source: Public Mutual Berhad
In the wake of the turbulence of stock markets in recent months, unit trust investors may be tempted to either sell or buy. However, investors are advised to remain calm and practise dollar cost averaging with their long-term goals in view.
When regional and global markets succumbed to panic selling in August 2007 and more recently in January 2008, the severity and sharpness of the correction was large enough to make unit trust investors ask themselves whether they should redeem now to stem further losses or buy more units at currently low prices. In fact, if they practise dollar cost averaging, they need not concern themselves with these timing issues. Dollar cost averaging enables investors to automatically buy more units when prices fall and fewer units when prices rise.
It is especially during times of market volatility that individual investors should remain focused on their long-term investment goals and keep their emotions from influencing their investment decisions. A disciplined and methodical approach to investing is the key to long-term investment success.
Unit trust investors are advised to buy and hold their investments for the medium to long term. The buy-and-hold principle is based on the notion that a good investment will generate reasonably attractive returns over the medium to long term. This also means that investors are able to distinguish between daily movements in the market and the underlying long-term value of their investments. Professional fund managers buy and hold for the medium to long term as they are prepared to wait patiently over several years for their investments to reach their intrinsic or fair values. For the unit trust investor, the 'buy-and-hold' strategy can also be applied by holding on to a well-selected unit trust fund over a period of at least three years.
There are some investors who believe they can achieve superior returns by timing the purchase and redemption of equity funds to profit from the stockmarket's short-term movements. These investors are tempted to engage in timing the market especially in an environment where equity markets are volatile. Such investors who wish to make quick gains in the stock market by switching from one fund into another fund will often be disappointed. Market timing strategies that are often recommended by 'investment experts' have seldom been successful. This is because stock markets are inherently volatile and are impossible to predict with numerous factors, both domestic and foreign, affecting daily and weekly fluctuations in stock prices.
Investors who wish to take a more active approach with their investments by timing the market will expose themselves to many risks. In order to profit from the market's short-term trends, the investor has to correctly predict the market's trend and its turning points.
Without the appropriate skills to discern signals and time the entries and exits, the market timer may not only miss opportunities, but also potentially suffer the blow of rapid losses. Also with a higher frequency of fund switching, investors will have to incur increased transaction costs.
Investors who are concerned about market volatility are advised to practise dollar cost averaging as this strategy enables investors to focus on the long-term investment goal and not worry about the prevailing level of the market. Dollar cost averaging is simply investing a fixed amount of money in a financial asset (such as a unit trust fund) on a regular basis (monthly, quarterly, biannual) regardless of the market cycle. By investing a fixed amount on a regular basis, investors will buy more units when the market is lower and fewer units when the market is higher. This strategy will produce a lower average cost of investment than the average market price over any given period.
In addition, investors are also advised to rebalance their portfolios regularly at least once a year to ensure that their portfolio allocation reflects their investment objectives and risk profile. Thus if, as a result of an uptrend in stock prices, an investor's equity exposure has exceeded a level consistent with his risk tolerance, he can trim a portion of the equity funds and switch into bond or money market funds to rebalance the asset allocation accordingly. Maintaining a target asset allocation reduces the risk that the portfolio becomes too concentrated in a single asset class.
In conclusion, unit trust investors should always focus on achieving their medium to long-term investment goals. The practice of dollar cost averaging and regular portfolio rebalancing are effective tools that help investors remain focused on the long term horizon and prevent them from over-reacting to short-term movements of the stockmarket.
In the wake of the turbulence of stock markets in recent months, unit trust investors may be tempted to either sell or buy. However, investors are advised to remain calm and practise dollar cost averaging with their long-term goals in view.
When regional and global markets succumbed to panic selling in August 2007 and more recently in January 2008, the severity and sharpness of the correction was large enough to make unit trust investors ask themselves whether they should redeem now to stem further losses or buy more units at currently low prices. In fact, if they practise dollar cost averaging, they need not concern themselves with these timing issues. Dollar cost averaging enables investors to automatically buy more units when prices fall and fewer units when prices rise.
It is especially during times of market volatility that individual investors should remain focused on their long-term investment goals and keep their emotions from influencing their investment decisions. A disciplined and methodical approach to investing is the key to long-term investment success.
Unit trust investors are advised to buy and hold their investments for the medium to long term. The buy-and-hold principle is based on the notion that a good investment will generate reasonably attractive returns over the medium to long term. This also means that investors are able to distinguish between daily movements in the market and the underlying long-term value of their investments. Professional fund managers buy and hold for the medium to long term as they are prepared to wait patiently over several years for their investments to reach their intrinsic or fair values. For the unit trust investor, the 'buy-and-hold' strategy can also be applied by holding on to a well-selected unit trust fund over a period of at least three years.
There are some investors who believe they can achieve superior returns by timing the purchase and redemption of equity funds to profit from the stockmarket's short-term movements. These investors are tempted to engage in timing the market especially in an environment where equity markets are volatile. Such investors who wish to make quick gains in the stock market by switching from one fund into another fund will often be disappointed. Market timing strategies that are often recommended by 'investment experts' have seldom been successful. This is because stock markets are inherently volatile and are impossible to predict with numerous factors, both domestic and foreign, affecting daily and weekly fluctuations in stock prices.
Investors who wish to take a more active approach with their investments by timing the market will expose themselves to many risks. In order to profit from the market's short-term trends, the investor has to correctly predict the market's trend and its turning points.
Without the appropriate skills to discern signals and time the entries and exits, the market timer may not only miss opportunities, but also potentially suffer the blow of rapid losses. Also with a higher frequency of fund switching, investors will have to incur increased transaction costs.
Investors who are concerned about market volatility are advised to practise dollar cost averaging as this strategy enables investors to focus on the long-term investment goal and not worry about the prevailing level of the market. Dollar cost averaging is simply investing a fixed amount of money in a financial asset (such as a unit trust fund) on a regular basis (monthly, quarterly, biannual) regardless of the market cycle. By investing a fixed amount on a regular basis, investors will buy more units when the market is lower and fewer units when the market is higher. This strategy will produce a lower average cost of investment than the average market price over any given period.
In addition, investors are also advised to rebalance their portfolios regularly at least once a year to ensure that their portfolio allocation reflects their investment objectives and risk profile. Thus if, as a result of an uptrend in stock prices, an investor's equity exposure has exceeded a level consistent with his risk tolerance, he can trim a portion of the equity funds and switch into bond or money market funds to rebalance the asset allocation accordingly. Maintaining a target asset allocation reduces the risk that the portfolio becomes too concentrated in a single asset class.
In conclusion, unit trust investors should always focus on achieving their medium to long-term investment goals. The practice of dollar cost averaging and regular portfolio rebalancing are effective tools that help investors remain focused on the long term horizon and prevent them from over-reacting to short-term movements of the stockmarket.
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