Wednesday 30 January 2013

Absolute Return, A New Approach In Unit Trust Investing

In my previous article Unit Trust Fair 2013, A Smashing Success, I mentioned about the Absolute Return strategy currently adopted by fund houses; Kenanga Investors Berhad and Hwang Investment Management Berhad.

Although I believe other fund houses are also adopting a similar strategy, for Kenanga and Hwang to promote this out in the open clearly shows their confidence and success in applying this strategy.

What is Absolute Return Strategy?

Instead of boring everyone with my writing, I would like to share a video recording about Absolute Return strategy presented by David Ng, CIO of Hwang Investment Management Berhad during his seminar session at Unit Trust Fair 2013.

Click to watch...


Although I might sound naive too many, having my investment with a fund house that practices Absolute Return strategy certainly brings some form of comfort for myself. Furthermore, knowing that my money is well managed gives me the freedom to pursue other interests instead of worrying about what or when to invest.

Cheers and Happy Investing!


If you like this article, give me some love by:

1. Sharing this article on your Facebook!


3. Subscribe to me. See the "FOLLOW ME TO FINANCIAL FREEDOM" section located at the top left? Just key in your email and click Submit.

4. Visit my blog for other articles on investment at http://invest-made-easy.blogspot.com/



Friday 25 January 2013

AMB Dividend Trust Fund or AMB Value Trust Fund....Decisions Decisions!

vs

Tomorrow is the much awaited Phillip Capital Annual Investment Fair! One of the key reason I'm heading over to the fair tomorrow is to take advantage of the 0.5% sales charge fee and increase my units on existing invested funds. Secondly, I'm also thinking about purchasing a new fund from Amanah Mutual Berhad (AMB). 

Initially I've set my mind on purchasing AMB Dividend Trust Fund (AMBDTF) who is ranked 2nd in the Equity Malaysia Category for 5 Year Performance. When I wrote the article on Lipper Award two days ago, I found out that AMB Value Trust Fund (AMBVTF) was the Lipper Award winner for Best Equity Malaysia Fund under the 5 Year category. 

So which fund should I invest in?

In this article, I intend to do a comparison between both funds and decide which fund is the best. Before that, let me share some background information about the fund house itself:

Background about Amanah Mutual Berhad (AMB)
Amanah Mutual Berhad (AMB) is a unit trust management company regulated by the Securities Commission of Malaysia (SC). AMB is a wholly-owned subsidiary of Amanah Saham Nasional Berhad (ASNB), and Permodalan Nasional Berhad (PNB) is the ultimate holding company. The corporate structure for AMB is a shown below:
It does make me wonder why people invest into Amanah Saham Nasional Berhad (ASNB) when there is a much better option to purchase from Amanah Mutual Berhad. Point to ponder especially when you consider that both ASNB and AMB have the same nature of investment.

Why choose between AMBDTF and AMBVTF?
AMBDTF is the best performing Equity Malaysia Fund for 2012 while AMBVTF is the Lipper Award Winner for Best Equity Malaysia fund under the 5 Years Category. In fact both funds are the best performing fund under AMB's Family of Funds, just see below:

General Comparison Between AMBDTF and AMBVTF

Details
AMB Dividend Trust Fund (AMBDTF)
AMB Value Trust Fund (AMBVTF)
Type of Fund
Income and Growth Fund
Capital Growth Fund
External Investment Manager
HwangDBS Investment Management Berhad
UOB-OSK Asset Management Sdn Bhd

Investment Philosophy
AMBDTF will invest in a well-diversified equity portfolio, and which will focus on high (and potentially high) dividend yielding equities in Malaysia and other eligible market. May also invest in fixed income securities as a tactical defensive measure depending on market conditions

Investment of AMBVTF will invest into securities which are trading below their intrinsic values. The Fund is structured to provide investors with capital growth in the medium to long term.
Benefits for Investors
Diversified Portfolio
AMBDTF is a fund that provides investors the opportunity to invest in a well-diversified Malaysian and Asian ex-Japan equity portfolio with exposures ranging from 70% to 99.8%.
Tactical Defensive Measure
The portfolio is an actively managed defensive Fund that allows 30% of its NAV to be invested in fixed income securities as a tactical defensive measure depending on market conditions.
Provides investors with an alternative approach when investing in equity markets. Value Investments do not necessarily behave in a similar fashion when compared to growth oriented investments.
This is generally due to the fact that value funds are normally associated with neglected or “out-of-favour stocks” while growth funds are focused on stocks with the above average growth.

Specific Benefits*
Eligible Unit Holders of AMBDTF will be given free Group Personal Accident (GPA) coverage. Unit Holders holding a minimum amount of 4,000 Units and above will automatically be covered under the GPA insurance for accidental death and Total Permanent Disability (TPD). The sum insured would be RM0.25 for every Unit held subject to a minimum investment of 4,000 Units and maximum coverage of RM200,000.

Eligible Unit Holders holding Class A-MYR Units of AMBVTF will be given free Group Personal Accident (GPA) insurance coverage. Unit Holders holding a minimum of 2,000 Units and above will automatically be covered under the GPA insurance coverage. The sum covered would be RM0.50 for every Unit held subject to a minimum investment of 2,000 Units and maximum coverage of RM200,000.
Initial investment
RM500
RM500
Subsequent investments
RM100
RM100
EPF Approved Fund
YES
YES


*Insurance protection is one of the reason why I am considering  investing long term in either one of this fund. 
*Another observation here is that AMBVTF offer better insurance coverage due to the sum covered is RM0.50 for every unit owned as compared to AMBDTF which cover RM0.25 for every unit owned. However both are subjected to a maximum coverage of RM200,000 only.

Asset Allocation for AMBDTF and AMBVTF
Nature of Asset Allocation for AMBDTF (as stated in Prospectus)
Asset Allocation for AMBDTF
Actual Asset Holdings for AMBDTF as of 31 Dec 2012

Nature of Asset Allocation for AMBVTF (as stated in Prospectus)
Asset Allocation for AMBVTF
Actual Asset Holdings for AMBVTF as of 31 Dec 2012
Blue blue blue chip sticks all the wayyyyy
Performance Comparison between AMBDTF and AMBVTF
a) Cumulative Total Returns (1 Year, 3 Years and 5 Years)

PERIOD
(as of 31 Dec 2012)
AMBDTF
AMBVTF
1 Year
22.79%
14.39%
3 Years
57.15%
47.27%
5 Years
85.59%
71.00%

*source from AMB Fund Factsheet

Cumulative Total Return Better Performer : AMBDTF

b) Average Total Return Per Annum (1 Year, 3 Years and 5 Years)

PERIOD
(as of 24 Jan 2013)
AMBDTF
AMBVTF
1 Year
19.23%
10.76%
3 Years
15.19%
11.71%
5 Years
13.56%
12.00%
*source from AMB

Average Total Return Per Annum Better Performer : AMBDTF

c) Year to Year % Actual Returns (from 2008 - 2012)

YEAR
AMBDTF
AMBVTF
2012
22.73%
14.28%
2011
7.52%
2.66%
2010
18.92%
25.08%
2009
38.66%
38.37%
2008
-14.86%
-16.04%
Year to Year % Actual Returns Better Performer : NONE

Summary of Performance
In terms of performance, both funds are fairly close. In my opinion, AMBDTF has a slight edge over AMBVTF for the following reasons:
  • Better performance in terms of cumulative total returns and average total returns.
  • Lower losses during 2008 economic recession as indicated in the year to year % actual returns table. This is vital as it indicate how well the fund manager manages the fund during a downturn.
While AMBDTF is a better performer then AMBVTF, do remember that past performance of a fund does not reflect future performance. I tend to use past results as an indicator on how well a fund manager manages a fund especially when times are bad. 

Overall Summary
Referring to the earlier part of this article, one of the reason I love both funds is because of the insurance protection offered. AMBVTF has a better coverage value per amount invested as compared to AMBDTF. However for long term investors, the maximum coverage of RM200,000 is easily achievable. 

Meanwhile in terms of fund performance, has the AMBDTF edge albeit just a little compared to AMBVTF. Both funds are capable of producing double digit returns annualized. 

Finally the question of which fund should I choose to invest in? 

That's for me to know and for you to decide for yourself (smiley face). I've already shown you the facts and  figures plus.....since I already own a few other pure equity malaysia funds in my portfolio, I might consider something different....if you know what I mean!

Cheers and happy investing!

PS : If you're confused with some of the terms used, I would suggest that you read the following:
If you like what you've just read, please I beg you to:
1. Share this article on your Facebook!
2. Like my Facebook Page
3. Subscribe to me. See the "FOLLOW ME TO FINANCIAL FREEDOM" section located at the top left? Just key in your email and click Submit.

4. Visit my blog for other articles on investment at http://invest-made-easy.blogspot.com/

Thursday 24 January 2013

Lipper Fund Award, Seems Like Every Unit Trust Fund Has One!

How many of us have come across "Lipper Fund Award" when approached by Unit Trust Agents? Like my Facebook page if you have! Be it Public Mutual Agents, MAAKL Agents, CIMB Wealth Advisors or any other fund agents, the term Lipper Award will surface whenever the conversation is about investing in unit trust. In fact, I'm sure you've also come across "Lipper Fund Awards" in various Unit Trust websites such as CIMB's "We're the best" banner:

The new leader in Unit Trust Invesment!
Or seeing AMB proudly boasting their Best Equity Malaysia Fund Award!
AMB...best Equity Malaysia Fund!
Not forgetting good old Public Mutual:
10 awards in 2010 and only 6 awards in 2012...hhmmm
Similar to the Oscars and Grammys, Lipper Awards are given in recognition of outstanding performance by a unit trust fund or a unit trust company. The problem is that almost every single unit trust company has a Lipper Award to boast about. Some have 10 awards...hint hint. The term Lipper Award has been abused used so often that I find it difficult to differentiate the different types of award. This brings me to today's post about dissecting the meaning of Lipper Award and to differentiate the different awards given out. 
Many award winners can be purchase from eUnittrust!

Facts About Lipper Fund Awards

  • The Lipper Fund Awards is held to honor the best funds and fund houses.
  • It is held once every year, normally between Jan - April of each year. The 2013 Lipper Fund Awards for Malaysia will be held on the 25th February 2013.
  • Since there are about 600+ funds in circulation with different nature of investment and risk profile, the Lipper Award has to cater these differences by offering 35 different award categories (expecting more categories in the future such as best PRS fund). Now you know why there are so many different types of Lipper Awards.
  • Award winners are selected based on the criteria available HERE. Generally to select a winner for a particular category,the effective returns of a fund over a certain period is taken into consideration. The highest effective returns among the competing funds will be judged as winner.* 

*I'm generalizing the criteria for selecting an award winner. Detailed explanation can be found in the link above.

Winners for 2012 Lipper Fund Awards
Apart from providing the list of award winners for 2012, I have also added:
1. A personal rating on how important that particular award is in helping you to decide the best fund to invest in for long term. 
2. The winning fund latest performance based on annualized returns. That way, you can see that not all funds will produce positive returns and/or produce higher then EPF's 5.5% average annual returns.

Category : GROUP (by Fund House)
Classification
Importance factor when considering to invest long term
(LOW, MEDIUM & HIGH)
2012 Winner
Current Performance of Fund Winner based on Annualized Returns
(as of 24th Jan 2012 unless stated)
Bond
LOW
Am Investment
N/A
Equity
LOW
Pacific Mutual
N/A
Mixed Assets
LOW
MAAKL
N/A
Overall
LOW
CIMB
N/A
Category : 3 YEAR (by Fund)
Bond Malaysian Ringgit
MEDIUM
AmDynamic Bond
+8.61%
Equity Asia Pacific
MEDIUM
Public Asia Ittikal
+3.17% *
Equity Asia Pacific Ex Japan
MEDIUM
CIMB Islamic Equity
-1.84% **
Equity Global
MEDIUM
Pacific Dana Dividen
+3.51% *
Equity Malaysia
MEDIUM
CIMB Principal Equity
+11.98%
Equity Malaysia Small & Mid Caps
MEDIUM
Public Focus Select
+14.32%
Mixed Asset MYR Bal - Global
MEDIUM
PB Asia Real Estate Income
+11.28% (as of 31 Oct 2012)
Mixed Asset MYR Bal - Malaysia
MEDIUM
Hwang Select Balanced
+12.43%
Mixed Asset MYR Conservative
MEDIUM
Hwang Select Income
+11.68% (as of 30 June 2012)
Mixed Asset MYR Flexible
MEDIUM
MAAKL-HDBS Flexi
+16.20%
Category : 5 YEAR (by Fund)
Bond Malaysian Ringgit
HIGH
AmDynamic Bond
+8.56%
Equity Asia Pacific Ex Japan
HIGH
Pheim Asia Ex-Japan Islamic
+0.72% *
Equity Global
HIGH
Pacific Focus 18
-1.96% **
Equity Malaysia
HIGH
AMB Value Trust
+11.06%
Equity Malaysia Small & Mid Caps
HIGH
Public Small Cap
+12.81% (as of 31 Aug 2012)
Mixed Asset MYR Bal - Malaysia
HIGH
Apex Dana Al-Faiz-I
No info
Mixed Asset MYR Conservative
HIGH
Hwang Select Income
+7.06% (as of 30 June 2012)
Mixed Asset MYR Flexible
HIGH
PRUdana dinamik
+7.05% (as of 30 Sept 2012)
Category : 10 YEAR (by Fund)
Bond Malaysian Ringgit
HIGH
Public Islamic Bond
No info
Equity Malaysia
HIGH
CIMB-Principal Equity
+12.04% (as of 30 June 2012)
Equity Malaysia Small & Mid Caps
HIGH
Public Small Cap
No info
Mixed Asset MYR Bal - Malaysia
HIGH
OSK-UOB Kid Save
+11.93%
Islamic : 3 YEAR (by Fund)
Bond Malaysian Ringgit
MEDIUM
PB Islamic Bond
+8.6%
Equity Asia Pacific Ex Japan
MEDIUM
CIMB Islamic Equity
-1.84% **
Equity Malaysia
MEDIUM
Kenanga Syariah Growth
+18.09%
Mixed Asset MYR Bal - Malaysia
MEDIUM
CIMB Islamic Balanced Growth
+14.25% (as of 30 June 2012)
Islamic : 5 YEAR (by Fund)
Bond Malaysian Ringgit
HIGH
PB Islamic Bond
+7.24%
Equity Malaysia
HIGH
Kenanga Syariah Growth
+11.01%
Mixed Asset MYR Bal - Malaysia
HIGH
Apex Dana Al-Faiz-I
No info
Islamic : 10 YEAR (by Fund)
Equity Malaysia
HIGH
Pacific Dana Aman
No info
Mixed Asset MYR Bal - Malaysia
HIGH
CIMB Islamic Balanced
+6.68% (as of 30 Sept 2012)

* Fund Performance below EPF average annual returns of 5.5%
** Negative returns for Fund Performance

My views
As you can see, not all award winning unit trust fund generate positive income. To be honest, any fund that performs below the EPF average return of 5.5% is not worth investing for the long term. Surprisingly lower risk fund such as OSK-UOB Kid Save fund is returning double digits profits over a span of 10 years.This fund in particular is definitely worth considering especially if you're saving up for your kid's education. Purchase OSK-UOB Kid Save from eUnittrust at only 2% sales charge.

For higher risk investment, I'm seriously considering Malaysia Equity funds such as Public Small Cap, AMB Value Trust and Kenanga Syariah Growth. All three are on my watchlist. 

For investors approaching retirement, low risk bond fund such as PB Islamic Bond should be the best choice for investment. Unfortunately, investor can no more purchase AmDynamic Bond as the fund size has already maxed out.

Summary
By writing and researching on Lipper Fund Award, I've gained another new tool to help me decide on the best fund to invest in. I've also realized that despite the high service charge, some of the award winning funds are worth investing as well. With the 2013 Lipper Fund Award just around the corner, I'm expecting a few award winners to be toppled by rival funds. Coupled with the impending General Election, unit price for various high risk funds would most likely drop thereby offering investors and myself an opportunity to purchase more units at lower price.

Till then, I wish all of you a fantastic long weekend break!

Cheer and Happy Investing!


If you love this post:

1. Share this with your friends on Facebook!


3. Subscribe to me. See the "FOLLOW ME TO FINANCIAL FREEDOM" section located at the top left? Just key in your email and click Submit.
4. Visit my blog for other articles on investment at http://invest-made-easy.blogspot.com/