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.
Choosing The Right Funds
Before investing in any unit trust, investors are advised to evaluate and determine their own individual financial needs and goals. Once these financial goals are quantified, investors can then construct a practical investment portfolio to achieve these goals. The choice of fund would then depend on the following key aspects of the investment portfolio:
1) Investment objectives/Risk-return targets
What annualised returns do I need to achieve my financial goals? Can I tolerate the risk associated with these return targets?
2) Time horizon
What is my investment time horizon? Can I leave my money there without drawing from it over the next few years? Can I afford to invest or maintain my investment portfolio?
3) Asset allocation
What is the optimal asset mix for my investment portfolio to achieve my investment objectives?
1) Investment objectives/Risk-return targets
What annualised returns do I need to achieve my financial goals? Can I tolerate the risk associated with these return targets?
2) Time horizon
What is my investment time horizon? Can I leave my money there without drawing from it over the next few years? Can I afford to invest or maintain my investment portfolio?
3) Asset allocation
What is the optimal asset mix for my investment portfolio to achieve my investment objectives?
Understanding the Risk of Unit Trust Investments
The fundamental rule of risk applies, where higher risk is a directly correlated with higher returns and vice versa. Investors must first and foremost understand the risk of unit trust investment before investing to avoid future distress. Risks can be quantified in 2 major categories, general risks and investment risks.
General risks are risk largely influenced by the economic forces, such as management risk, liquidity risk, loan financing risk, compliance risk and inflation risk.
Investment risk, as its name denotes, are risks related to the management of the fund, for example, fund management risk, bond credit risk, interest rate risk, market risk, specific risk and so on.
Understanding the different risk level can help choose the fund that is compatible to your financial needs and risk appetite. Equity type funds have the highest risk among the 3 categories of funds, followed by balanced type funds and fixed income type funds.
General risks are risk largely influenced by the economic forces, such as management risk, liquidity risk, loan financing risk, compliance risk and inflation risk.
Investment risk, as its name denotes, are risks related to the management of the fund, for example, fund management risk, bond credit risk, interest rate risk, market risk, specific risk and so on.
Understanding the different risk level can help choose the fund that is compatible to your financial needs and risk appetite. Equity type funds have the highest risk among the 3 categories of funds, followed by balanced type funds and fixed income type funds.
Benefits of Investing in Unit Trust
Convenience
A simple, convenient and less time-consuming way of investing in securities.
Professional Management
Benefit from the expertise of professional investment managers who in turn are able to draw upon specialised research, market information and the expertise of a variety of third party investment analysts.
Diversification
Exposure to a diversified portfolio of securities, which results in a lower level of risk and volatility as compared to a single stock investment which contains a higher level of specific risk.
Liquidity
Investors are able to buy and sell units on any business day provided that pricing for the fund is available, retaining a relatively higher degree of flexibility and liquidity.
Next, I will discuss on the risk of investing in unit trust.
A simple, convenient and less time-consuming way of investing in securities.
Professional Management
Benefit from the expertise of professional investment managers who in turn are able to draw upon specialised research, market information and the expertise of a variety of third party investment analysts.
Diversification
Exposure to a diversified portfolio of securities, which results in a lower level of risk and volatility as compared to a single stock investment which contains a higher level of specific risk.
Liquidity
Investors are able to buy and sell units on any business day provided that pricing for the fund is available, retaining a relatively higher degree of flexibility and liquidity.
Next, I will discuss on the risk of investing in unit trust.
Unit Trust - An Introduction
Unit trust funds are investment schemes structured to allow investors with similar investment objectives to participation in the money, debt, equity and derivative markets. Professional investment managers, who channel their efforts towards achieving investment objectives ranging from regular income to capital growth, will manage funds collected from the schemes.
Unit trusts are excellent vehicles for individual and corporate financial planning due to their affordability, liquidity and relatively low rish nature.
Unit trusts are excellent vehicles for individual and corporate financial planning due to their affordability, liquidity and relatively low rish nature.
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