Thursday 30 June 2016

Top 10 Malaysia Shariah (Islamic) Unit Trust Funds Comparison!

I have been receiving quite a number of requests lately asking for the best Shariah compliant unit trust fund to invest into. In light of these requests, I've decided instead to come up with a blog post which will provide a comprehensive comparison between the best Shariah Compliant unit trust funds.

With hundreds of Shariah Compliant Unit Trust funds available for Malaysians investors, it is not possible to compare all of them. Therefore, I will only choose the 10 best Shariah funds for comparison according to the following criteria:

  • Invest into Shariah Compliant Malaysia Equities/Stocks
  • Rated 4 or 5 STAR by Morningstar
  • Top performing in terms of returns
  • Funds come from various fund management company

The 10 Selected Shariah Compliant Funds
Here are the 10 selected Shariah compliant funds and respective fund management company: 
Top 10 Shariah Unit Trust Funds (Fund Management Company)

The 10 funds according to their Morningstar category:
Top 10 Shariah Unit Trust Funds (Fund Category)

(%) Annualized Return Comparison
Comparing the (%) annualized returns of each funds is what most investors would normally do. This method is the easiest and quickest way to make an apple to apple comparison between funds.

Using data from Morningstar taken on the 24th of June 2016, I am able to obtain the (%) annualized returns for 3 Yrs, 5 Yrs and 10 Yrs for all 10 funds. Let's take a look how these funds fare against each other.

3 Yrs (%) Annualized Return
Data for 3 Yrs (%) Annualized Returns as of 24th June 2016:
Top 10 Shariah Unit Trust Funds according to 3 Yrs (%) Annualized Returns
Top 3 Ranking for 3 Yrs (%) Annualized Return:
  1. PMB Shariah Aggressive - 10.19% annualized
  2. Eastspring Investments Dana al-Ilham - 8.28% annualized
  3. Manulife Investment Shariah Progress - 5.95% annualized

5 Yrs (%) Annualized Return
Data for 5 Yrs (%) Annualized Returns as of 24th June 2016:
Top 10 Shariah Unit Trust Funds according to 5 Yrs (%) Annualized Returns
Top 3 Ranking for 5 Yrs (%) Annualized Return:
  1. Manulife Investment Shariah Progress  - 13.61% annualized
  2. PMB Shariah Aggressive - 13.36% annualized
  3. Eastspring Investments Dana al-Ilham - 10.92% annualized

10 Yrs (%) Annualized Return
Data for 10 Yrs (%) Annualized Returns as of 24th June 2016:
Top 10 Shariah Unit Trust Funds according to 5 Yrs (%) Annualized Returns
Top 3 Ranking for 10 Yrs (%) Annualized Return:
  1. Eastspring Investments Dana al-Ilham - 13.21% annualized
  2. Kenanga Syariah Growth - 13.04% annualized
  3. Public Islamic Opportunities - 12.93% annualized

Fund Size Comparison
Another key aspect for an investor should check is the size of the fund. The bigger the size of the fund, the harder it is to generate returns. In this blog post, I showed that 19 out of the 20 top performing funds in 2015 have fund sizes that are lesser than RM500 million.

Now let's take a look at the fund sizes for the top 10 Shariah compliant funds:
Top 10 Shariah Unit Trust Funds according to fund size
Key takeaway:
Shariah funds with RM500 million or lesser in size are worthy of consideration. In the above table, there are 8 funds (AmIslamic Growth, PMB Shariah Growth, PMB Shariah Aggressive, Manulife Investment Shariah Progress, Kenanga Syariah Growth, Affin Hwang Aiiman Grwoth, Manulife Investment Al-Fauzan and Eastspring Investment Dana al-Ilham) with fund size below the RM500 million threshold. 

Fund size is also an important criteria for investors to monitor on a regular basis. Once a fund get's too big (exceeds RM1 billion), an investor might consider switching to other equal or better performing funds which are smaller in size.

Fund Standard Deviation
Standard Deviation of a fund is defined as variation of a fund's returns around its average return. The higher the standard deviation, the more volatile the fund is. Now let us take a look a the standard deviation of the 10 Shariah funds:
Standard Deviation of the Top 10 Shariah Unit Trust Funds
Key takeaway:
The standard deviation of a fund go hand in hand with the type of strategy that an investor uses. A lump sum investor might prefer to go for a lower standard deviation fund. On the other hand, an investor that uses the DCA method would prefer to select a fund with high standard deviation as the fund's volatility are seen as opportunity to purchase units at low prices.

Fund Actual Annual Returns
Earlier I showed the (%) Annualized Returns for each fund over a 3, 5 and 10 Year period. Another way to evaluate the Top 10 Shariah funds is to look at the actual annual returns. First let us take a look at the actual annual returns of the 10 Shariah funds from 2009 right up till 2015.

Actual Annual Returns 2009 to 2015
Top 10 Shariah Unit Trust Funds Actual Annual Returns 2009-2015
From the table above, it is clear that each fund tend to perform differently on a year to year basis. However there are a couple of meaningful information which can be abstracted from the actual annual returns.

Number of Top 3 finishes from 2009 to 2015
Between 2009 to 2015 (7 years), some of the Shariah funds in the top 10 have performed consistently by placing top 3 yearly in terms of annual returns. Shown below are the statistic for the 10 funds in terms of number of top 3 finishes:-
Number of Top 3 Finishes for the 10 Shariah Unit Trust Funds
Graphical illustration of Number of Top 3 Finishes for the 10 Shariah Unit Trust Funds
Consistent Top 3 Finishers in terms of Annual Returns
  • Eastspring Investments Dana al-Ilham (4 times)
  • Public Islamic Opportunities (4 times)

Number of Ranked 1 Finishes from 2009 to 2015
Going one level higher in terms of comparison, is the number of times a fund has finished at the top of the ranking on a yearly basis. Over a span of 7 years, you can see that only 4 funds have managed to achieved the number 1 rank in terms of annual returns as shown below:-
Number of Ranked 1 Finishes for the 10 Shariah Unit Trust Funds
Graphical illustration of Ranked 1 Finishes for the 10 Shariah Unit Trust Funds 
Ranked 1 Finishes in terms of Annual Returns
  • Eastspring Investments Dana al-Ilham (2 times)
  • PMB Shariah Aggressive (2 times)
  • Kenanga Syariah Growth (2 times)

Number of times the Annual Returns Exceeds 10%, 15% and 20% from 2009 to 2015
This is another interesting comparison to make. Based on the annual returns from 2009 till 2015 (7 years), we are going to see how many times each fund was able generate returns of 10%, 15% and 20%.
Number of times the 10 Shariah Funds exceed 10%, 15% and 20%
Funds with 7 Consecutive Years of Positive Returns
  • Eastspring Investments Dana al-Ilham
  • Manulife Investment Al-Fauzan

Funds with highest number of Annual Returns (Exceed 10%)
  • Eastspring Investments Dana al-Ilham (5 times)
  • Manulife Investment Al-Fauzan (5 times)
  • Public Islamic Opportunities (5 times)
  • Kenanga Syariah Growth (5 times)
  • PMB Shariah Growth (5 times)

Funds with highest number of Annual Returns (Exceed 15%)
  • Public Islamic Opportunities (5 times)

Funds with highest number of Annual Returns (Exceed 20%)
  • Eastspring Investments Dana al-Ilham (3 times)
  • Kenanga Syariah Growth (3 times)
  • PMB Shariah Growth (3 times)

Summary
A comparison between the current 10 best Malaysia Equity Shariah funds using 4 different criteria yielded some interesting results.

The % Annualized Returns comparison especially for 3 Yrs, 5 Yrs and 10 Yrs was dominated by Eastspring Investments Dana al-Ilham. Upcoming PMB Shariah Aggressive is also making headlines especially in the last 5 years.

In terms of Fund Size comparison, we see that 8 out of the 10 funds are still below my personal threshold of RM500 million. Fund that are smaller in size generally tend to generate higher returns.

The Standard Deviation comparison does not yield any winner in particular. As explained in the standard deviation portion, funds with lower standard deviation are more suitable for lump sum investment while funds with high standard deviation would do well for investors practicing the DCA strategy.

The final criteria of Actual Annual Return comparisons were broken into 3 parts. The first part compared funds in terms of number of top 3 finishes annually. Once again Eastspring Investments Dana al-Ilham stands out along with Public Islamic Opportunities. 

The second part showed the number of Ranked 1 finishes in terms of annual returns. This comparison highlighted the strength of Eastspring Investments Dana al-Ilham, PMB Shariah Aggressive and Kenanga Syariah Growth fund as each fund finished twice at the top of the pile over a period of 7 years.

The third part is a statistical display of number of times each fund was able to generate returns exceeding 10%, 15% and 20%. Results showed that half of the funds were able to generate 10% or higher returns in 5 out of the 7 years. For returns of 15% or higher, only Public Islamic Opportunities was able to achieve 5 times in a span of the 7 years. Lastly only three funds were able to achieve 20% or higher returns for as many as 3 times over a period of 7 years. The outstanding funds are Eastspring Investments Dana al-Ilham, PMB Syariah Growth and Kenanga Syariah Growth.

Based on the comparisons made, an investor should have no problem in identifying which funds are the cream of the crop. It is my greatest hope that by providing a fair and equal comparison among these top funds, investors would be able to make wiser decision in terms of which fund to invest into. 

Cheers and happy investing!

P.S : 
  • Are you already invested into unit trust? Why not let me check for you how your funds compare against that of the 5 STAR rated ones. Just drop me an email at shanesee03@gmail.com if you like me to do a check for you!
  • Eastspring Investments Dana al-Ilham, PMB Syariah Growth, PMB Syariah Aggresive and Kenanga Syariah Growth can be invested online at very low sales charge. Find out how you can use eUnittrust to invest into these funds. Just click HERE to find out more!
  • I've recently launched an online learning platform called Unit Trust Made Easy to help Malaysians to kick start their own unit trust investment. For further details, check it out HERE

Thursday 16 June 2016

PhillipCapital Investment Conference 2016 as low as 0% Sales Charge Campaign!


In conjunction with Phillip Capital's 7th Annual Investment Conference, the awesome people at eUnittrust is giving all Malaysian investors this opportunity to invest into 148 unit trust funds for as as low as 0% sales charge!

Promotion Period:
From 13 June 2016 to 31 July 2016

Number of award winning funds under this promotion:
148 funds from 8 fund houses!

IME's Recommend Unit Trust Funds that are available in this promotion:

How to register a FREE eUnittrust account and start investing
The great thing about eUnittrust is how easy it is to open a FREE account. Takes you about 4 simple steps to register an account!
  • Step 1 : Head on over to their registration page at eUnittrust and fill up all the required online details.
  • Step 2 : Upload a copy of your scanned IC.
  • Step 3 : Once you've submitted the online registration, an Account Opening Form will be automatically generated. All you need to do is to print and sign that form.
  • Step 4 : Scan or fax the signed form along with a copy of your IC to phillipmutual@poems.com.my
If you are still unsure on how to register an account, then check out this step by step guide below:

Full list of funds under this promotion:

Aberdeen Funds (0% - 1% Sales Charge)
Affin Hwang (0% - 1% Sales Charge)
AmFunds (0% - 1% Sales Charge)
Eastspring Funds (0% - 1% Sales Charge)
Kenanga Funds (0% - 1% Sales Charge)
Manulife Funds (0% - 1% Sales Charge)
Pheim Funds (0% - 1% Sales Charge)
RHB Funds (0% - 1% Sales Charge)
Like this promotion?
  • Give us a LIKE on our Facebook page and share this post on Facebook
  • Give us a "+1" for Google+ located below.
Not sure how to start investing into unit trust?
Just drop me an email at shanesee03@gmail.com for help.


Tuesday 14 June 2016

Investing into Morningstar's "5 STAR" Rated Unit Trust Funds

The present dilemma with Malaysia's unit trust industry is that most Malaysians believe in the concept of "bigger is better". Malaysian investors generally buy into the idea that a fund will be top performing if it is managed by a large and well known fund house.

This data from Morningstar clearly indicates that the Unit Trust market share is dominated by a few fund houses.

Malaysia Fund Houses Market Share as of April 2016
While there is nothing wrong investing into large or popular fund houses, I believe that an investor can get better returns by investing into funds that are highly rated instead. The term highly rated in this context comes from a system of STAR rating provided by a neutral fund tracking website called Morningstar.

What is Morningstar?
Morningstar is a non bias website which tracks the performance of all unit trust funds in Malaysia. Morningstar also rates and categorizes unit trust funds using its own STAR rating system introduced in 1985. The best performing funds will be rated with the maximum of 5 STARs.

What are Morningstar's 5 STAR Rated Funds?
Based on the data extracted from Morningstar as of 5th June 2016, there are only 28 funds with overall 5 STAR rating. The list of 28 funds are as shown below:

Fund Name
Category
RHB Smart Balanced
Blended - Balanced
RHB Growth & Income Focus
Blended - Balanced
RHB Dana Hazzem
Blended - Balanced (Syariah)
Apex Dana Al-Faiz-i Inc
Blended - Balanced (Syariah)
Dana Makmur Pheim
Blended - Balanced (Syariah)
RHB Smart Income
Blended - Conservative
AmDynamic Bond
Bonds - Malaysia
AmDynamic Sukuk
Bonds - Malaysia (Syariah)
RHB Islamic Bond
Bonds - Malaysia (Syariah)
CIMB-Principal Asia Pacific Dynamic Inc
Equity - Asia Pacific ex-Japan
Affin Hwang Select Asia (ex Jpn) Quantum
Equity - Asia Pacific ex-Japan
CIMB-Principal Global Titans
Equity - Global
CIMB-Principal Greater China Equity
Equity - Greater China
Eastspring Investments Equity Income
Equity - Malaysia Income
AMB Ethical Trust
Equity - Malaysia Large-cap
CIMB-Principal Equity
Equity - Malaysia Large-cap
Manulife Investment Regular Savings
Equity - Malaysia Large-cap
Public Ittikal Sequel
Equity - Malaysia Large-cap (Syariah)
Eastspring Investments Dana al-Ilham
Equity - Malaysia Large-cap (Syariah)
Eastspring Investments MY Focus
Equity - Malaysia Mid/Small-cap
Kenanga Growth
Equity - Malaysia Mid/Small-cap
Eastspring Investments Small-cap
Equity - Malaysia Mid/Small-cap
RHB Smart Treasure
Equity - Malaysia Mid/Small-cap
Manulife Investment Shariah Progress
Equity - Malaysia Mid/Small-cap (Syariah)
KAF Money Market
Money Market - Malaysia
RHB Cash Management
Money Market - Malaysia
Libra MoneyExtra Fund
Money Market - Malaysia
Libra Dana Safa
Money Market - Malaysia (Syariah)


Breakdown of 5 STAR rated funds according to Fund Houses
The table below indicates the breakdown of 5 STAR funds according to fund management companies.

Fund House
No of Funds
Percentage
RHB Asset Management Sdn Bhd
7
25.00%
Eastspring Investments Berhad
4
14.29%
CIMB Principal Asset Management Berhad
4
14.29%
AmFunds Management Berhad
2
7.14%
Manulife Asset Management Services Berhad
2
7.14%
Libra Invest Berhad
2
7.14%
Pheim Unit Trusts Berhad
1
3.57%
Amanah Mutual Berhad
1
3.57%
KAF Fund Management Sdn Bhd
1
3.57%
Public Mutual Berhad
1
3.57%
Kenanga Investors Berhad
1
3.57%
Apex Investment Services Bhd
1
3.57%
Affin Hwang Asset Management Berhad
1
3.57%


Percentage (%) of 5 STAR funds according to Fund Houses

By comparing the data above with the earlier data on market share by fund companies, it clearly shows that funds companies with top rated funds are being overlooked by Malaysian investors. For example, RHB Asset Management Sdn Bhd has seven "5 STAR" rated funds yet only has a meager market share of 4.83%!

On the other hand, Public Mutual Berhad with the biggest market share of 57.41% (and 97 funds under management) has only one "5 STAR" rated fund! As a matter of fact, if you look at the growth of  Public Mutual Berhad, the company has amazingly increase its market share from 56.67% in 2015 to 57.415 in 2016 despite not having many top performing funds.

The ignorance of Malaysian investors towards unit trust fund is the very reason why they are losing out on investing into funds that could provided better returns in the long run!

What are you losing out when you are not investing into these 5 STAR funds?
As mentioned earlier, Morningstar ratings are given according to the performance of each fund in terms of returns. A 5 STAR rated fund is normally one that is top performing in its respective category.

Now what I'm going to show you next are the annualized returns of these 28 funds in terms of 3 Yrs, 5 Yrs and 10 Yrs. Do take note that this is not a performance comparison between the 28 funds because each fund come from different categories with various risk level.

1) Fund performance in terms of 3 Yr Annualized Return


Fund Name
3 Yr Annualized Return (as of 2 June 16)
29.84%
YES
Eastspring Investments MY Focus
20.26%
YES
16.87%
YES
15.90%
YES
CIMB-Principal Global Titans
13.97%
NO
13.69%
YES
CIMB-Principal Greater China Equity
12.87%
NO
RHB Growth & Income Focus
12.30%
YES
Manulife Investment Shariah Progress
11.93%
NO
11.56%
YES
11.19%
YES
11.09%
YES
Eastspring Investments Equity Income
8.33%
YES
RHB Dana Hazzem
7.44%
YES
7.24%
YES
Manulife Investment Regular Savings
7.08%
NO
Affin Hwang Select Asia (ex Jpn) Quantum
6.70%
YES
RHB Islamic Bond
5.80%
YES
Apex Dana Al-Faiz-i Inc
5.62%
NO
AMB Ethical Trust
5.61%
YES
CIMB-Principal Equity
5.01%
NO
Public Ittikal Sequel
4.99%
NO
AmDynamic Sukuk
4.27%
YES
AmDynamic Bond
3.89%
YES
Libra Dana Safa
3.77%
NO
Libra MoneyExtra Fund
3.66%
NO
RHB Cash Management
3.49%
NO
KAF Money Market
3.36%
YES

2) Fund performance in terms of 5 Yr Annualized Return


Fund Name
5 Yr Annualized Return (as of 2 June 16)
17.08%
YES
15.69%
YES
Eastspring Investments MY Focus
14.01%
YES
Manulife Investment Shariah Progress
13.87%
NO
12.85%
YES
12.19%
YES
Affin Hwang Select Asia (ex Jpn) Quantum
11.79%
YES
11.58%
YES
Eastspring Investments Equity Income
11.38%
YES
11.04%
YES
RHB Growth & Income Focus
10.19%
YES
CIMB-Principal Global Titans
10.17%
NO
8.82%
YES
8.41%
YES
Manulife Investment Regular Savings
7.76%
NO
RHB Islamic Bond
7.68%
YES
CIMB-Principal Equity
7.00%
NO
AMB Ethical Trust
6.85%
YES
Apex Dana Al-Faiz-i Inc
6.36%
NO
CIMB-Principal Greater China Equity
5.98%
NO
AmDynamic Bond
5.57%
YES
Libra Dana Safa
3.63%
NO
Libra MoneyExtra Fund
3.53%
NO
KAF Money Market
3.37%
YES
RHB Cash Management
3.31%
NO

Note : 3 funds does not have a 5 Year performance track record yet. 


3) Fund performance in terms of 10 Yr Annualized Return

Fund Name
10 Yr Annualized Return (as of 2 June 16)
16.73%
YES
15.95%
YES
15.68%
YES
14.79%
YES
RHB Growth & Income Focus
13.96%
YES
Affin Hwang Select Asia (ex Jpn) Quantum
13.73%
YES
AMB Ethical Trust
13.12%
YES
CIMB-Principal Equity
13.01%
NO
13.01%
YES
Apex Dana Al-Faiz-i Inc
11.47%
NO
Eastspring Investments Equity Income
10.85%
YES
Manulife Investment Regular Savings
10.82%
NO
8.85%
YES
8.37%
YES
AmDynamic Bond
7.61%
YES
RHB Islamic Bond
6.17%
YES
CIMB-Principal Global Titans
4.07%
NO
Libra MoneyExtra Fund
3.33%
NO
Note : 10 funds does not have a 10 Year performance track record yet.

Summary
I must stress how important it is for every investor to include the Morningstar's star rating of a fund as a key criteria when it comes to selecting a fund to invest into. However the awareness about the use of star rating is extremely low among Malaysians investors. 

Only if you are an investor that diligently searches for information about unit trust investment would mostly likely discover the star ratings of funds via the Morningstar website. If you're the type that depends on an agent or consultant for advisory, chances are you would probably never heard about Morningstar rating. In addition, most fund fact sheets does not display the Morningstar's star rating because only a limited number of funds (28 only) has the bragging rights to show off their 5 STAR rating. 

Other funds have no reason to put the star rating because there is nothing to brag about. As a matter of fact, it could be counter productive for a fund to show off a 3 or 4 STAR rating which could possibly trigger an investor to ask is there a higher rated 5 STAR fund? 

After all that is said above, I feel that putting up a post on the list of unit trust funds with 5 STAR ratings is justifiable and in line with my personal goal of raising awareness among Malaysian unit trust investors. It is my believe that an investor should be given the right to access to non bias information about unit trust fund as well as make comparison between unit trust funds easily. If you're reading this post now, do share it with your family and friends. Help educate those that are yet to be "enlightened" with knowledge and resource. Give those that you care for the option to make wiser and better choices when it comes to investing into unit trust!

Cheers and happy investing!

P.S : 
  • Are you already invested into unit trust? Why not let me check for you how your funds compare against that of the 5 STAR rated ones. Just drop me an email at shanesee03@gmail.com if you like me to do a check for you!
  • 18 our of the 28 funds above can be invested online at very low sales charge. Find out how you can use eUnittrust to managed your own unit trust investment! Just click HERE
  • I've recently launched an online learning platform called Unit Trust Made Easy to help Malaysians to kick start their own unit trust investment. For further details, check it out HERE