You know I was calculating whether unit trust is really worth it or is it just hype. So I took one as an example and benchmarked it against the FD to see whether it is really good or is it all hype.


Name of Fund Public Growth Fund

Category of Fund Equity Fund

Approved Fund Size 4.5 Billion Units

Launch Date 11 December 1984

Investor's Risk Profile Moderate




Fund Objective
To achieve long-term capital appreciation with income considered incidental.



FEES & CHARGES
Service Charge 5% - 7% of NAV per unit
Repurchase Charge Nil
Annual Management Fee 1.5% per annum of the NAV
Management Expense Ratio(%) 1.56 (for Financial Year Ended 31 July 2005).


Annual Trustee Fee
0.06% per annum of NAV, subject to a minimum fee of RM18,000 and a maximum fee of RM450,000 per annum.


For fund financial report please go to
http://www.publicmutual.com.my/page.aspx?name=PGF

go to review, register and download the report

Now


Assume I have RM100,000 and I invested on 2004 (since they have only 3 years data shown)

Beginning 2004
Service charge for purchasing = RM6000 (average service charge)
Total investment = RM 94,000

Annual return 2006 = 4.78%
Annual return 2005 = 12.3%
Annual return 2004 = 16.79%

Investment value end 2004 = 109782
Management fee = 1700
Net Investment Value = 108082

Investment value end 2005 = 121376
Management fee = 1820
Net Investment Value = 119556

Investment value end 2006 = 125270
Management fee = 1879
Net Investment Value = 123391


End of 2006 Sell
Sale value = 123391
Service charge = 8637
Total amount = 114754
Net profit over 3 years = 14754
Annual returns = 4.918%


FD returns

4.2% for 36 months (3 years)


Now the point of my post , take a look closely. The unit trust "supposedly" has an average annual return of 11.29%(I think this is considered on the high side) for the three years but after cashing in on the profit you realised that it ONLY ouperforms FD by 0.76%. Can you imagine if the fund annual returns was just average say 7-8%.

Where did all the money go?
1.) Management Fees charged annually. This fees can go up to 3% REGARDLESS of how the fund is doing.
2.) Service charges. Every buy and sell are charged 5-7%.

So if a Unit trust fund boast on high annual returns, please do the maths and calculate how much the fund need to perform to cover all your "losses". I notice most of you just take annual returns figure without taking into account these factors at all.

Now do you still wonder why hundreds of million has been lost in unit trust as reported in the newspaper?

Drian : if not mistaken,
2.) Service charges. Every buy and sell are charged 5-7%.

they only charge that when u buy not selling.

now KLSE bull market...
unit trust will rise as well..

i agree with u tat unit trust average annual return is only around 3-7% if u takes management fee and service charge into calculation, which is only slightly higher than FD. Some unit trust even return negative, wasting investor's $..

do u know wat the fund manager do? highly diversified their investment and maintain low risk low gain.. as long as the fund do no lose much $, their salary is safely in their pocket..

simple calculation: low risk low gain - management fee = no gain

unit trust is for not so smart ppl that believe the fund manager is smarter than them..
do some homework and throw ur $ directly in stocks can actually earn more than unit trust.

This post has been edited by lipkhin: Oct 27 2006, 10:17 PM

Yes, unit trust service charge is only applied when you buy it, but not when you sell it. So,

End of 2006 Sell
Sale value = 123391
Service charge = 0
Total amount = 123391
Net profit over 3 years = 23391
Annual returns = 7.797%

So, Public Growth Fund has average return, which is around 7-8% annually. For sure, this does not mean unit trust sure earn profit, as the fund may not give 11-12% return every year... If you want to invest in unit trust, must know about the risk level that you can bear with and which fund you should choose.

Anyway from 11-12% to 7.8% is a significant drop. I wonder those "average" unit trust whether they even make money at all compared to FD.

This post has been edited by PowerDunk: Oct 28 2006, 01:53 AM

Friendly speaking, current stock market can't be classified as bull market, don't be fooled by the Composite index, ask some old timers and experienced traders will tell you current market condition is not exciting at all, just some selective buying especially those index related heavy weight by EPF board and PNB (gov related investment arms and some few foreign interest only) and some 'goreng' stock. Others still like dead water, little movement.

It depends the fund portfolio, even CI reached 1000, some of the local equity funds still underperform.

Currently, local equity fund is so so only, return is barely above FD rate. The better performance mostly come from global fund which most of them enjoy double digits gain due to well performanced market in overseas particularly US market which reached multi-years high while dow jones hit all time high. -> that's call bull market.

hey the DJIA last hit their all time high in 2000 and now it seem the signs are a bull run might be ignited since tech stocks are up across the board

Seemed like Msia market is not so good...but no choice, I have no idea how to invest in foreign market, except buying some global funds.

Anybody can provide some information about the historical dividend distribution of some bluechips?

Malaysia is now the least attractive bourse among Asian countries, even JCY (one of the biggest hdd manufacturer based in JB) has postponed the listing in KLSE and consider to be listed in Singapore or HK as The Edge reported. KLSE really lack of quality company to be invested, also liquidity is quite low which make some listing meaningless.

Unless there is major restructuring of GLCs company, and policy revamp, it is difficult to attract really serious foreign interest and fund coming. We don't need hedge fund that 'goreng' Iris like mad which won't do any good to the market.



This post has been edited by cherroy: Nov 1 2006, 04:32 PM

HEY GUYS...

Im planing to do FOREX in china ren ming bi....pls gv me some comments on it...

it seems they have stop gorenging Iris.... no more huge price change on it

This post has been edited by Darkmage12: Nov 3 2006, 12:00 AM

Yup... its because they are now facing investigation and imminent prosecution by US and M'sia authorities.

earlier this year there was 1 hedge fund from US suffering huge loses right? they under investigation also now

FYI, your culculation is too straight forward.
as i mention on my previous post....

3 type of source of return from UT which are:
1. The rise in unit price (We call it capital appreciation)
2. The annual dividen/distribution/bonus declared
3. The unit split declared. Switch from one fund to another whenever there is dividend or split unit to be announced, so that it can maximize the ROI

Of course at one point of time, once the item 2 and 3 declared, there is no value added, but once the unit price increase.., the value RM will definitely increase..


Why hundreds of million has been lost in unit trust as reported in the newspaper?

There is a few reasons why this thing happen
1. The fund they invest not really perform
2. They got a lazy ass fund manager
3. The company they invested in, holds small fund size.
4. Inexperience fund manager. For example; the fund manager put all the money in equity fund which is high risk fund without diversified the investments OR just leave the money fluctuate without do any proper switching method,


* Public Mutual only imposed the service charge once, on your initial/first investment. After that only management fees 1.5% perannum

This post has been edited by pidah: Nov 3 2006, 06:02 PM

A manager who manage equity fund only can invest the money into equity, not bond or anything else which is bound by trustee and its objective. So can totally blame them since they have nothing to choose from.

The main issue why local equity fund mostly suffer losses because of poor performance of KLSE. Although CI manage to hit 1000 today but what is the meaning for the whole market? Nothing, even when CI reached 1000, the counters loss still more than gain one with 400 to 300 ratio.
Also with high management fee and entry fee, it left not much from unit trust holder to gain. eg. a fund manage to make profit of 10%, sound quite good, but after deduct the entry fee of 5% and 1.5% management fee, it left 3.5% for the unit trust holder only. Still think the charges or fee are quite expensive in Malaysia.

The index can go up is much due to some push up by EPF and PNB with few selective buying which can be done easily since liquidity are low as well as volume so a few ten million of buying will easily push the index up few point which is peanut for EPF board or PNB who manage asset of billion. While other than index link heavy weight still like dead and buried state.

The scenario is like they are having large chunks of share in those heavy weight like TNB, MISC, Maybank so push up these stock will make them good profit on paper as well as having good report card so pushing up these stock won't do any harm. That's why you see the index keep on climbing although without much participant from foreign fund.

A lot of listed company are already become GLCs, it is almost impossible to find a heavyweight in the market that EPF or gov investment arm don't have more than 20-30% of share of it.


This post has been edited by cherroy: Nov 3 2006, 06:32 PM

nah....the 1000.6 is just a false break.
It managed to went up there,but lasted for only 1 minute LOL.

Not to mention,the 1000 level ISNT the true resistance,its merely a psychological resistance,due to the price dwelling in the 800-900 levels for nearly a year.The true resistance lies within the 1021 level,and the "major" one is located at the 1200s.The FKLI didnt even went up to the 1k level today.

To be honest,i'm quite skeptical about CI right now.Some of the trend indicators are already in the state of overbought,and there are bearish patterns forming.

Pidah,

If his calculation is wrong, show your calculation and tell us where he did wrong.

Dreamer

I think I have corrected the calculation at post #1461. It should be 7.797% return per annum. For sure, we assume there is no switching activities in this case, as not many people are free to monitor the market always and switch the funds. In my opinion, people who invest in mutual funds are mostly busy people and don't know about market performance. So, most of the mutual funds owners will not switch their funds. Dividend distribution is not value added, so we do not take this into profit calculation.

In fact, I admit that switching is a good activities to maximize the profit. I bought a fund two years ago, but lossing money. So, I switch half the funds to Index funds, when at that time KLCI is only 860++. So, now I do not loss money, but earn a little bit from this investment. The objective I invest mutual funds is, I know I can learn about investment faster when I really put money into it. Is it silly?

This post has been edited by leekk8: Nov 3 2006, 09:58 PM

It is quite true also, you can have tons of theory behind you but can't match a few real experience.