Proceed from http://forum.lowyat.net/topic/347861/+2480

Yup, this is true.

Fixed price doesn't mean surely good as well, got pros and cons.

Pros, investors don't need to scare of losing money.

Cons, there is no transparency like UT (which they reported their NAV daily). So if PNB actually make 50% from the fund money, and now you redeem back, you still get back the same Rm1.00 and never will be Rm1.50.

The extra profit made is channelled into smoothing the return rate will be given down to few years time.

1. It is a benchmark means the fund is aim to meet or exceed the benchmark figure. Just like you take money out of FD, your benchmark return rate from the investment should be more than FD rate is giving which is the most basic logical sense.

In my definition/view, the benchmark carries no credibility nor it signals anything. More like paper work and tellling only. Just like you sit on exam, you aim/benchmark to beat your friend or score 70 points. Whether it achieves afterwards or not, it doesn't relate at all. In other word, it is just a target set by you.

2. Although it is still the same for most people, they can't use the word guarantee.

If said fixed price, means they will fix the price at Rm1.00 as long as they could <-- but this doesn't mean guarantee as if something really bad happening, (which is unlikely but not guarantee), as if it did it could shatter investors confidence across, which gov won't let it happening, unless gov goes under as well. But think deeper, if gov goes under, your/our Rm in bank also won't spare from it.

As it is an equities fund, they cannot guarantee your capital. They also can make loss in equities market, once they loss money and no longer have Rm1.00 as same as initial capital, they cannot guarantee your capital.
Just they will maintain the RM1 fixed price as much as they could. If their portfolio loss 50%, while every unit holder made redeemption at fixed price at RM1, then it is not sustainable for them to do it anymore.

On equities part, over long term, it tends to rise, so chance of fund losing big over the long term is low as long as fund managers are doing an ok job. PNB fund managers also not stupid, they are investing in good dividend stock across as well. Although they might invest in some part on GLCs which has no good track record, but a lot of investment are on Sime, Maybank etc those big blue chips which paying good dividend one. Those corporate are money making machine for them. Even one might say Maybank might not as good as other better well run one (which I also view the same), still it is a money making machine for them. As long as they are making money for PNB enable them to pay 5-6% which is much higher than FD rate, little people will redeem their unit.
So RM1.00 fixed price is intact.
Also bare in mind, they are controlling how much money can be into those AS1M, ASM, so basically, they have lot of control on the fund running ability to pay annually.

The fund risk or only can collapse, if everyone invested Rm1.00 initially, and PNB use the money invested in equities and equities value drop let say 50%, then everyone redeem back at RM1.00 at the same time, then they will have some trouble already in this scenario, which is unlikely to happen.

Unlike capital guaranteed fund, the 90% of the fund money is parked at gov highly secured bonds or AAA rating bonds etc, which you can get back the capital after maturity. <-- that's where they can use the word capital guarantee because it is expected to be happening, unless those bonds also being defaulted, which is another different story.

3) Gov is running on budget deficit, funding need to come from some source, either raise borrowing, issue debt to foreign investors or source it from domestic. Actually it is not that bad for gov to source the funding locally. As instead paying 4-5% interest to foreigner by issuing foreign debt, why not pay to your citizen that eager to look for some return rate that higher than FD one? A win-win situation. Also locally our financial market got lot of liquidity which people save a lot in bank, which the money could be doing nothing actually.

I don't mean gov budget deficit is a good thing, too high deficit indeed a worry. Just instead getting money from overseas and paying interest to foreigner, it is better to fund it locally and keep the money flow within the country.

One of reason of budget deficit is due to stimulus plan.

Can you mind your capital letter, in forum, it is considered shouting and rude as well as irritating for other to read.
We welcomed any posts, view and opinion, but please mind your capital letter. Cheers.

Warning can be issued by staff if persistent posting in capital letter. Thanks for the cooperation.

Back to the topic,

There is no such thing of bank backed UT company. UT company is UT company, even though it is under the same group of the banks, it is a separate entity, nothing to do with banks, they won't guarantee your fund nor they have anything to do with the UT company.

Yup.

They will try their best to give some rate much higher than FD rate if can, to avoid redeemption as well as confidence issue. Having said that nothing is for sure, that's why there is no stated capital guaranteed nor any rate guaranteed or any indicator to state how much they will/can make.

If not (cannot give higher rate than FD), then redeemption can happen which by then might be problematic for them if equities investment value goes down. They don't scare people redeemp if their equities value goes up, as its NAV of the fund might go to 1.10 but you still redeemp at Rm1.00. They earn 0.10 from you if you redeem eventually they can use the 0.10 profit made to pay the rest at higher rate.

Only problem will occur of there are massive redeemtion when their equities value goes down a lot like its NAV has dropped to Rm0.50. But if the fund can pay some rate higher than FD let say 5%, then no people will redeem.

Kinda funny, right?

But this is the reality.

AS1M 50K per individual and 100 K for 55 years old above one.

Your worry sounds reasonable.

But to call it a pyramid scheme is a bit too much, and not fair to PNB either.

But I do agree there is lack of transparency how PNB invested or how much its NAV already is or how much appreciated or depreciated those invested fund.

Anything related to politcal issue can be discussed in RWI, this is more on finance and investment related stuff. It is ok to have skeptic view on it, but for further discussion on cronies, political issue, please do a favour by bring the discussion at RWI, especially like below qouted post. We just want constructive comment as well as critical post, not something consipiracy theory which is better suit in RWI.
If sketical about just state your opinion, and don't invest, then fine, but for further discussion like bolded part which bring in those political issue into discussion in this section is not appropriate, as this section is about investment related stuff.

Cronies, corrupt? then don't invest. Confidence or ok with PNB investment, then invest. This is what this section about i.e to dissecting investment whether it is worth or not worth and risk of it.

Don't get me wrong, it is ok if one views skeptic about it, just we don't want to see too much political issue involved in here which by then the topic is diverted not related to investment stuff already.

Thanks for the cooperation.

Cheers.

This post has been edited by cherroy: Aug 10 2009, 02:06 PM

It is not like cannot touch any on politic, but as said, can just state the reason why you think so, fullstop at there, any further can raise it at RWI.

The reason why we advise to do so because it can lead a lot of political post later on which is not related to ASx issue already.

Cheers.

I think this is down to several reason:

1. Previously few months, there are massive capital raising exercise from Bond Simpanan Merdake, Sukuk, ASM which at least suck in 10 billion of fund or FD in the market. While this AS1M comes in late, people might not that eager for it anymore and could stress in funding for individual.

2. The fund size of AS1M is extra-ordinary large i.e. 10 billion, which previously month of ASM only 2-3 billion if not mistaken. Even the 5% Sukuk come in around 2.5 billion only.
If fund size of AS1M is 2 billion or so, now almost near full already.

3. This fund is relative new compared to ASM, ASW or sukuk that carries 5%, so people might wary about the fund performance. It doesn't help people spread some rumour that the fund only pay 4% which is not the real case here. But a lot of non-investment savy people out there just heard the 4%, all turn back or not having high interest anymore.

a) Sorry, I don't agree on this issue , (not to say no corruption or got), but if really for corruption conspiracy theory, they can tap it everywhere, from ASM, ASW, Sukuk, or even EPF, I don't know why people say this fund/AS1M as borrow money for corruption but not other funds like ASM a month ago. Doesn't make sense.

If said this fund is new and have low confidence, still make sense. But to say AS1M means for borrow money for corruption while ASM, ASW and EPF money is not, sounds not logic.

b) The risk as same with ASB, ASM, ASW, as are at fixed price at Rm1.00

This question has been asked many many time.

Those fixed price fund is as similar as capital protected.

Neither is ASB, ASW or ASM is capital guaranteed. They are fixed price as well at Rm1.00.

Fixed price is almost identical to capital guarantee, but capital guarantee is not the word to be used, because nobody guarantee the capital of the fund, except gov/PNB tries as hard as possible for it to remain at fixed price at Rm1.00.

Fixed price mechanism can collapse or under serious threat as well under some special circumstance which very unlikely to happen, so it never a capital guarantee.

So how can AS1M be riskier if they are same at fixed price? I really don't get it.

If said potential return from this fund might be lower due to no track record, or poor timing of the fund, may be at least understandable and reasonable.

But to say it is riskier, we need to have reason and facts of it.

This is not called riskier, this is more about its potential return rate.

Risk - you lose your initial capital.

It is misleading to say AS1M is riskier than ASB,ASM,ASW. It gives wrong impression to other.
Also, ASB, ASM, ASW, even AS1M, there is no guarantee payout on each year, although track record is good for ASB, ASM and ASW, but this is no guarantee future will be the same as well.

The more appropriate is to say they are carrying the same risk. But opportunity cost and potential return could be different.

AS1M is going to invest in equities aka stock market. So their investment has not started yet nor how well stock market is performing in the coming future will be known, no answer for the dividend part.
Stop looking for dividend rate, never will be known until it is due.

Just like haven't sit the exam, how do you know the result.

Yes, should be.

Same with EPF calculation, saving book calculation.

Cannot expect too much especially in current economy and equities environment.

A lot of UT investors suffer at least 20-30% loss in last year alone.

It is impossible for PNB to pay 10% if they are not making money out of equities for the last year.

UT is long term investment, but it doesn't mean long term must generate your profit, it's return rate is total unknown which generally depended how equities market performing.

It can still generate you negative return rate aka loss money for you even after long term.

Guys,

This thread is about ASM, ASx fund discussion, not about general investment discussion.

So can everyone please discuss something regarding or related about the ASx issue, as any investment purposes discussion can be done via existing other investment thread/topic.

Thanks for the cooperation.

This post has been edited by cherroy: Sep 27 2009, 11:09 PM

Please stay on course on this topic that is fund issue related, others not related can post via RWI section.
Thank you for the cooperation.