A lot of people have the misconception, that once you buy the UT and pay the manager, you can forget about it and reap all the rewards well into retirement. Those people are hopelessly misguided by either their rose tinted glasses or agents who promised them sweet returns.

Any investment carries risk, and those risk are rightfully borne by those who invest and wish to gain profits. If you do not know how to handle the risk, or choose the right time for investment, then you are taking greater risks for your investment. All investment needs effort, nothing will come for free, you need to research properly before buying including the fund, the risks, holdings, fund manager and the right time to invest. If you invest blindly, serves you right on having negative returns on your investment. There are no one to blame, other than the one that pays the money.

The 5.5% sales charge is used to pay your agent, who is suppose to educate you on the above, if he does not do that then get rid of him. The 1.5% management charge is a payment for the manager to buy a basket of equities according the the deed/target of the UT. If the fund says that he must hold minimum 90% in china equities, he cannot and will not sell down to below the percentage, although the economy is crashing, country is bankrupting etc etc. The manager only manages the investment, and hope to beat the benchmark slightly, based on the right stock holdings. If the stock market crash, all stocks will be suffering so it is understandable that the fund will have losses.

It is then up to you to manage your investment according to your asset allocation portfolio, to either sell or buy more depending on the market sentiment and economy. So as a summary of the above, no one is responsible for your investment other then yourself. If you don't put in effort, then you will not reap any gains other than blind luck.

This post has been edited by gark: Jul 4 2010, 11:10 PM

You have not been reading right, that's why I said in my previous post, YOU must do the research, so that you know what fund you are investing in. You don't just go invest blindly into whatever fund that is recommended by agents, that is your mistake and no one can help you, and you are well deserve to get whatever gains or losses there is. Before I will even considering to buy a fund, I will do quite some research. Here are a sample of things you must read and understand.

1. General Stock Market & World Economy performance - I will not buy at peak, I buy at the bottom, DCA is rubbish.
1. Performance vs. benchmark 5 years minimum - I will not buy any fund which does not have min 5 years performance
2. Audited annual accounts - income, expenses, turnover, fund size, fund manager & policies
3. Fact Sheet - Monthly - Latest 6 months - Holding, percentage, regional risks, interest, equity vs. fixed income risks
4. Standard & Poors, Morningstar reviews - performance vs peers - I tend to buy funds which have dropped the least compared to peers during bad periods ie. 1997, 2001, 2008. Any fund will make money in a bull period, it takes skill to survive in bear.
5. Asset Allocation - You must have a proper asset allocation to diversify your risks.

You should not expect performance if you did not do your homework. It is your duty to choose, looks like you have bet on the wrong horse. In fact around 80% of the funds in the Malaysian market now is rubbish and most probably trailing the benchmarks (over 5, 10 year period). I will not buy those, will you?

This post has been edited by gark: Jul 4 2010, 11:55 PM

If you buy stock, expect to do even more homework than buy UT. I invest in stock too, but the sheer amount of work it needs, makes me diversify some to UT especially fixed income & those out of Malaysia, where we cannot invest so easy directly. The stock market during boom times, any tome d*** and harry can make money, but when the bears come, those who are not aware will get eaten alive. I probably estimated that 60%-70% of the listed company in Malaysia is also rubbish. So did you do your homework?

Hot stocks will kill you faster in the long run. And no, I do not pay 5.5% when I buy UT. Shop around and you will see . And also not all of PM's funds are good, I estimate there are maybe 5 that can buy, the rest....

This post has been edited by gark: Jul 5 2010, 12:13 AM

Umm is there a hype in the first place? Avoid all those advertisement, awards and sweet talks from the agents. Focus on performance and hard cold numbers, wherever that might bring me to. In fact I am invested in 6 different UT companies, both in and out of Malaysia, some of them are so low profile, nobody has heard of them. Need to learn to tune out all the static and noise in the market and focus on whats right for YOU.

Also, please don't chase after all the hot/famous/hype funds, with their advertised big big earnings, at most times you are buying at the top of the market and there is no where to go but down. I rather buy UT which has lost the least rather than those who gain the most.

This post has been edited by gark: Jul 5 2010, 12:48 AM

Well, for me DCA is not worth it, but I will let you decide with the pro and cons ...

Pros
1. Continuous investment regardless of market sentiment - no emotions
2. Lets you average out your investments, so you will get at least get equivalent to fund performance
3. Automated process (if you can consider this one a pro...)

Cons
1. Your agent will get monthly commissions (like steady salary to him )
2. Tend to have average or below average performance over investment lifetime after minus the fees
3. Not able to take opportunity when the market is having a massive discount
4. Not able to cash out when the market is way over priced
5. Not able to re-align your asset allocation mix to market sentiments
6. Blindly invest in a fund, no matter how the fund perform, once you DCA, you tend not to monitor it anymore. So if the fund performs poorly, you will not realize it until very late. 80% of the funds perform below benchmarks over the long term.

Well you decide then.

Closed funds is not the same as 'bankrupt', funds close all the time. Once the fund close, they will refund you shares according to the NAV. You don;t lose all of your money.

What you are doing is not DCA, DCA calls for EQUAL investment no matter the market is up or down.

1. When you review funds, the best funds are those who falls the least during bad times and have a ever widening premium over benchmark, during good times any "capalang" funds also can make money. So the period when you are reviewing is very crucial. If you take 2009-2010 for your review, almost any rubbish fund also have good gains. Anyway don't look at quarterly results, look for at least 5 years worth of data and their holdings, turnover and fees.

2. If you want to learn investing, DCA is the worst place for you to start because then you will not learn anything at all. The best way to learn is to put your money at risk when you think it is a good time to invest and take it out when you think it is bad. DCA and averaging it out, you will not get any value out of it, because DCA is designed for those who could not care less about the market gyrations and valuation.

P/S if you are reviewing PM quaterly results, please beware those are bid-to-bid graphs, they have not minus out the fees yet.

PP/S what are the funds recommended by your upline?

This post has been edited by gark: Jul 19 2010, 12:41 PM

Well since so many people have already given their opinions, if you still insist to DCA, that is your choice. Sometimes the benchmark is relative, so you need to compare it against it's peers as well. Look for higher annualized gains than peers and benchmark. PRSF is quite a good fund, but not the best out there.

Bond funds have the least correlation to the equity market. They usually hold their value even if there is a market crash. But please be aware that bond funds, have relatively lower earnings, and have some risks. If you park your money in bond funds, and equity market rise, you will lose out the gains. For money market funds, it is not worth it as the earnings will be lower than FD, but the risk is the smallest.

Check out PBFI, good stable average yield of 6%-7% over the past 5 years, even with interest rate raise, and holds AAA or AA class bonds.

This post has been edited by gark: Jul 22 2010, 11:40 AM

have at least 20,000 MGQP points (or RM20,000 investment), automatic join for draw.

This post has been edited by gark: Jul 26 2010, 09:12 PM

Unfortunately that is what the unit trust wants you to believe, but they are often FORCED to sell low buy high. Simple reasons but makes a world of difference. UT is not immune to market euphoria.

1. During good economic times, share market go up and up, lots of people dump money into UT (due to greed), hence the manager have lots of cash. With such large influx of cash, they have to maintain their minimum stock holdings (most around 85%). So? The manager is forced to buy more and more as the prices are climbing and people keep on dumping money into UT hoping for spectacular gains.

2. During poor economic times, stock market is crashing, all the poor investor panics (due to scared of losing money), so they withdraw lots of money from the UT. Usually a UT keeps about <5% of it holding in cash, so if there is a large redemption from the investors, what can the UT manager do? They end up having to sell shares near it's lowest point to raise cash to pay off all the panicking investors.

3. Most UT are hampered by lots of holding rules, which actually handicaps the manager. For example most stock UT must hold a minimum of 80% in publicly traded stocks. In poor times which the market falls, the manager even however brilliant he is, he cannot sell off all his holdings to bond or cash.

If you want to invest in broad spectrum shares, but do not want to pay the high fees, you can consider ETF or Closed End Funds available in the share market. Each top up however will cost you 0.42% only vs. 5.5% of most unit trusts.

EFT = Electronically Traded Funds, similar to unit trust, but must buy and sell in the market (so subject to price fluctuations). So far the only ETF available in the market are index or passive funds. Examples include DowJonesTitan25 (Malaysia), CIMBAsean40 (Asean) and CIMBXinhua25 (China). The expense ratio of these funds are below 1% p.a.

Closed End Fund = Also similar to Unit Trust, but additional units cannot be created and destroyed. You have to buy those units from other unit holders. There is only 1 CEF in Malaysia, iCapital.biz (Malaysia). Expenses are similar to other funds at 1.5% p.a.

All the above have no sales fee, but have brokerage fee of 0.42% to BUY and SELL. You can purchase them from KLSE via a broker, from other unit holders.

This post has been edited by gark: Oct 1 2010, 11:33 AM

ETF are meant to perform exactly the same with the benchmark, it should not perform better or worse. The liquidity of the ETF are currently not too bad, unless you need to sell hundreds of thousands in a day, you should not have trouble matching orders.

The closed end Fund icapital.biz has been consistently beating the KLCI, for the past 5 years.

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Added on October 1, 2010, 2:27 pmThe risk is definitely market risk or just plain beta. The risk factor is the same as any unit trust which invest in the share market.

This post has been edited by gark: Oct 1 2010, 02:31 PM

Yeah, I have noticed that PM so far has good records for Malaysian and bonds funds, that's where I am keeping all my PM funds. For china and other international unit trust from PM, the performance is actually quite poor, hence for that I am invested in other unit trust from other companies. Maybe they are not so experienced in the international market.

My god, i look at the chart for PCSF, the fund has been consistently performed below benchmark since the beginning.

This post has been edited by gark: Oct 2 2010, 01:54 PM

Same sales charge whether you buy Pm funds online or through agent.

Investing in PM online have the maximum charge of 5.5% for equity funds, if you can get cheaper better go through an agent.

I thought PBFI have better performance while maintaining the same risk ratio? So why prefer PI Bond?

PBFI is not too bad, last year it manage to get about 9+% and on average it been getting me around 6% p.a. for the last five years.

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Added on October 31, 2010, 1:02 amAny reason not to consider PB, anyway it's your choice. PI Bond is a very very conservative bond, with very low votality but the gains is not too impressive, but consistent. If I have to choose a public series bond fund, I would Take Public Bond/Public Islamic bond, as it's earnings is much better than PI Bond and at similar risk factor.

10k invested in 2003 for these funds will results in the following, in 2010:

PBFI - About RM 16,000 - Std Deviation 2.6%
PBF - About RM 15,500 - Std Deviation 2.8%
PIBF - About RM 13,000 - Std Deviation 1.41%
PIB - About 16,200 - Std Deviation 3.26%

PBIB - New fund.

The above is the reason which I do not favor PIBF over other PB funds, because i see no point in taking less earnings for ~1% lower standard deviation. So far I am still very satisfied with PBFI risk/performance. Well that's just my opinion. Feel free to add.

This post has been edited by gark: Oct 31 2010, 01:03 AM