WHAT I HATE ABOUT UTC AND PM.

This is just my opinion, no intention to flame any unit trust consultant (UTC) in this forum.

PM likes to launch new funds when the market is HIGH. I think this is because it is easier to sell and introduce unit trust funds to the general public when market prospect is looking good.

When UTCs approach you in malls, and worse still at EPF buildings, trying to corner you to buy into new funds, enticing you with market growth and that the new launching fund has discount – BE AWARE and BE WARY.

Please check the market trend first before departing with your money. Check the market trend for at least one year. You cannot judge it by the past one or two weeks. The market can be up for the past one week or so, but it can be still volatile shooting up or more likely DOWN. It can be like +1 +1 +1 +2 +1 +0 +1 +2 for the past 8 business days, and suddenly -5 and -10 the next 2 days.

Unit trust funds invest in the stocks. They pool funds (your money) to invest over a long, long list of stocks, which you can only pick several stocks at a time if you buy stocks directly yourself. (I believe KLSE stock is relatively new, and I still yet to check it out...)

The UTCs do play a good role in educating the public on an option of saving their money in unit trusts. But most tend to leave out the importance of investing bit by bit (taking full advantage of dollar cost averaging). Even if they do talk on DCA, they would tend to pull in your savings all at once.

(Auntie/Uncle/LianLui/LianChai, how much you have in saving? Why not invest in this xxx fund launching now? Now got discount...)

I think the right approach should be:
1.How much can you spare to invest at the moment? Put this X amount aside.
2.Divide this X amount over a period of time – at least 6 months.
3.Buy into the fund each month till X amount is depleted.
4.In meantime when X amount is slowly reduced, put aside monthly savings (Y pool of savings) for further investment.
5.Continue monthly investment with Y pool of savings.
6.The monthly investment could be on a fixed day of the month, if you are lazy or too busy; or it can be at your discretion if you think you can do better in spotting which day the stock market would be at its lowest point in the month. (I think the former would be better than the latter, as analysing too much could paralyse you into no motion.)

(PS. As you know I gained some with PB ASEAN fund. I did not purchased it during the launching period, but after the launched date. It went down slightly a week after its launching date. Actually I did not pre-planned my actions. Was lucky. I was feeling sad in missing the discount period; and then was glad I missed it. )

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Added on April 23, 2012, 3:58 pmYou get to break even because the market BOUNCE back. Dollar Cost Averaging only lowers the break-even point.

About 12 months ago, some funds like Public Far East Dividend went up above 0.25 and then spiral down to about 0.21 now. Like you, I should have switch it to a bond fund then.

Well, lesson learned. Now waiting for it to bounce up again. It's okay as I can hold and wait as I have no urgent need of the invested money at the moment.

The bad thing is that it was transferred from EPF. It would still lose the cost of opportunity (EPF interests over the past 4 years) even if the fund price goes up from negative back to breakeven zero.

This post has been edited by j.passing.by: Apr 23 2012, 04:10 PM

Spot on j.passing.by.
Most UTCs, not all - there are a few ok and good ones around, are eyeing the lump sum instead of the long term returns from their customers.
ie. instead of them giving value first, they want to get the value (commissions/lock in) from the customer first
Your experience, mine + several buddies & their wives' experiences are similar:
IF U have lump sum, most UTCs will try to get all of it one lump sum (even if several funds, all same time), saying sure 20%+pa wan (the infamous PCSF), long term sure win, etc.

The better UTCs will do as per what U've thought out,
plan out a 3 to 5 years' monthly/quarterly sustained investment using their lump sum & foreseeable cash flow or EPF savings (excluding buffer),
thus, not only diversify through mutual funds but diversify through time as well.

The even better ones will throw in Asset Allocation into the brew, taking into account the customers' holdings / investments + implement other investment,
and also discuss investment methodologies other than DCA (which is just auto-pilot "sign here once" ).
Note that DCA is only "entry rule", there's no exit/switching rule(s)

IMHO, a simple method to separate the "wheat from chaff" UTCs, is to ask a few simple Qs:
1. So how do U do your own investments?
2. How much (if shy shy, ok... how much % then), how often and/or why ENTER VS how much, how often and/or why EXIT/switch?
3. Can show me your own investment tracking / results ar? U ask me to trust U, U also have to give me a good reason mar
If the first two Qs don't stop most of the SALES agents, the last one sure to be your "anti-pure sales agent barrier"
Well, of course some agency fellows may say against this/that rules to show/share if one is a UTC blah blah blah.. oh.. U mean UTCs cannot be investors and cannot have records and opinions... to protect the consumers from fraud.
IF like that and true... then the good UTCs can't share, fraudulent UTCs sure share wrong things.. .. no eye see

This post has been edited by wongmunkeong: Apr 23 2012, 07:31 PM

Just some bragging post:

I just did a whole lot of analysis on my portfolio and the results are such:

My expected return is 12%p.a. with a Downside Standard Deviation of 2% (aka semi-deviation).

The Risk adjusted performance is 2.5 times better than KLCI's .

The Value at Risk at 95% confidence level is 8.5%

To put it in plain english, my portfolio of assets will give me a rtn of 12% p.a. with a downside risk of 2% standard deviation, and in the worst case scenario, the maximum lost I will be exposed is 8.5% and the chance of that happening is like once in every twenty years.

And yes, I out-perform KLCI in a risk-adjusted environment.

Xuzen

Congrats Xuzen.
I gotta spend U some good food one day AND suck your brains dry on "how to.." calculate all that for an entire portfolio
I baka - only can track stats per transaction and per fund/stocks/fixed incomes/properties/etc.

Mostly due to a changing variable (and my own blurness with stats) - available resources (monthly savings for investments & EPF), which also influences asset allocation and total assets (net worth and investment/investable assets).

Really need to kacau U one of these days, can ar? I hope you're around Klang Valley heheh

If you have a blackberry or and Iphone or Ipad, you can use free apps like bloomberg to track the funds. There's also a bookmark/watchlist feature, very convenient

Regarding poster serious1 question on monitoring funds performance and price.

As topic/thread is on Public Mutual and its fund, I'll answer by pointing you to its website. http://www.publicmutual.com.my/OurFunds/Fu...manceChart.aspx

I hope "monitoring" means looking at the performance trends and prices from time to time or after office hours.

If you mean to monitor it frequently to buy or sell on the spot, then this defeats the purpose of unit trusts. There is a cost in buying (service charge is usually 5.5% of your investment) and in switching (RM25 service charge.)

(And if you want to switch OUT after switching into a fund within 90 days, there’s a penalty charge – at least RM50 or 0.75% if I’m not mistaken.)

You buy (or switch) into a PM fund by 4.00 pm on a business day. After 4.00 pm, your buy/switch is effectively for the next day.

The fund price is calculated and known after the stock markets are closed. So there is no the spot buying as in stocks.

(You cannot order your UTC to buy/sell like you see in wah-lai-toi drama, a taiko ordering his stock broker to buy/sell over the phone! )

If the fund only invest in the local Malaysia stock market, its price is usually posted the same day later at night. If it involves foreign stocks, then its price could only be known the next day, or even the next, next day if that foreign market is closed for holiday.

Secondly on the fund prices. Actually the fund prices do NOT tell you anything meaningful. It does NOT tell you whether it is expensive or cheap. You cannot compare its price against another, and say this fund is a better buy because it is cheaper than the other.

DO NOT MAKE THE MISTAKE of thinking that a lower price fund is a better buy because you get more units from your X amount of money and less units from another fund with a higher price.

But you can try to analyse it by looking at its performance trend. The PM website allows you to show the tread line since it was launched and also within a specific time period. The later trend line is more helpful. For example, you can set it to 01/01/2012 till today’s date, and compare the percentage gained (or lost) of various funds.

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After saying all of the above “amateur rubbish”, I found that the funds mostly overlaps each other and there are some funds that cover regions i.e. China Pacific, Australia, Indonesia, South East Asia, Europe etc. And some on certain markets i.e. Consumer products, infrastructures, etc.

The thing is all of them seem to act in tandem. All goes up or all goes down at the same time. Europe market goes down; Asia market tends to follow suit, etc, etc.

So how to select and pick the better fund to invest?

As all the equity funds tend to move the same direction, I think it is more crucial to know when to buy or not to buy. As for local funds, the KLSE index hits all time high at around 1600 points and still hovering at around 1590 points.

I cannot suggest or recommend which fund to select, just above points to share. From personal experience, the local market has ‘rubber’ and can bounce up readily after it plunged down.

Yes, wongmunkeong, I lost money too in the “infamous PCSF”. I think PM got tapau by foreign and China investing houses by venturing too far abroad. It could be nice of Tan Sri Public Bank if he can recognised their shortcomings and foolhardiness, and redeemed us loyal followers for venturing with them into the deep end.

Mr WongMK,

Let me start by quoting a fellow forumer here (Dreamer): "Average people are not rich, and rich people are not average"

I desire not to be just an average when it comes to personal investment and I desire to have my future cash in-flow mainly from the I-quadrant as defined by Robert Kiyosaki.

Next, let me indulge in some personal backstory:

I started to be serious about investing beginning 2008 (about 4 years ago). What started the ball rolling was my enrolment into the CFP class and from there I started to acquire investment related knowledge rapidly.

I read widely on investment related topics, I bought books, I attended seminars, workshops, hell, I spend a lot of time and money to acquire these skills.

A little bit about attending seminars: I did not attend those like Mariam McWilliams et al, where all they do is to teach you trading skill. I attended seminars that are more academic, given by lecturers who work in the fund management setting as well Investment banking sector.

I also attend workshops given by Private bankers and Licensed Financial Planner where they share their knowledge on Personal Investment.

The above calculation I did are actually not too difficult once you know the mechanism of it. These informations are usually taught at CFA Lvl 1. I attended some CFA class (Lvl 1) although I have no desire to go all the way to Lvl 3. CFA is too much for personal investor like me, unless you desire to have a career in Corporate Investment, and that is a different cup of tea.

There you are Mr WongMK, a little background about my personal investment journey so far. I have to stop here, got to go back to my day to day job.

In my next posting (maybe later tonight after work) I'll share with you my calculations.

Xuzen

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Added on April 24, 2012, 9:55 amYes, PCSF suxs big time.

Its fund evaluation parameters (jessen-alpha, treynor, sharpe, modigliani, sortino ratio) shows that this fund is bullocks.

I have zero exposure in it, thank god.

Xuzen

This post has been edited by xuzen: Apr 24 2012, 09:55 AM

Danke danke Xuzen
By the way, don't lar Mr Mr - i'm not part of the old singing band (Mister Mister ) nor my surname's Mr
Ready to absorb and also to "pay back" - Zen, RakuZen, Tony Roma's?

Hello xuzen,

Good to hear someone reading the CASHFLOW Quadrant. I have read it and about to finish the book, but I have yet to begin the 7 steps he had written at the end of the book. Then today I came across this post - which made me thinker. Although I know that it a writer may be writing all sorts to be a bestseller, CASHFLOW Quadrant indeed has shone light to me, so I decided to continue his guidance despite what others say about him. I just came out to work but I do want to start early in moving to the right side of the quadrant.

How old were you when you read the CASHFLOW Quadrant? I am buying funds from PM, but I am investing in a recommended fund as a start. I don't know how well did it perform, or determine how well will it be able to perform, but I believe it is a good start to get involved. What do you think?

This post has been edited by Malformed: Apr 24 2012, 04:46 PM

hi..
I have KWSP 100k.
if I invest some amount of my KWSP money to Public Mutual.
how much percentages of dividend I will get ?
how about risk?
normally KWSP give 6% pa dividend with no risk.
Please advices.. thanks

Nobody can give you an answer.

UT can make money or lose money as well.
It can be 10%, it can be -10% as well, all depended on investment or specifically stock/bond market condition.

this is very risky..
the percentages dividend also not so high. I perfect to keep my money into KWSP.
Thank you for ur advice

This post has been edited by mzzzk8819: Apr 24 2012, 05:41 PM

-10%pa +10%pa was just an example given as a possibility by Cherroy i think.

Reality can hit harder or reward better
eg. "recently"
end 2007 to end 2008, something like -40%ish
beginning 2009 to beginning 2010 +60%ish

long term / 10 years' average based on a few of PM's equity funds like PIX: CAGR 6%ish pa to 9%ish pa (recalling from memory ar - please don't burn me at the stake if it's slightly higher/lower)

Thus, if U prefer the "safety" of EPF then yes, stay as it's "saner" for U.
Personally, i'd rather have some of my honey out of EPF's and especially the government's hands + long term-wise, i think (no crystal ball, just historical stats yar) certain types/equity funds will beat EPF's returns.

Just a thought

This post has been edited by wongmunkeong: Apr 24 2012, 06:28 PM

Now lets get down and dirty to the mathematics section: I will not explain all the terms here as I assume you can google them.

1) Look through your assets. Look at their past return, lets take 3 years, now, annualized their return. You may take 5 years or whatever years, but my data is 3 years only. So I'll stick with three years. Remember to take the annualized return and not the absolute return.

2) Now, do a standard deviation calculation of your assets return. Formula = [(Sum of [individual rtn - mean rtn]^2)/n]^1/2. If you want to use Semi-deviation instead of standard deviation, then count only the assets which have a rtn below the mean instead of all points. But the n remains the same.

3) Now you would have a return and her corresponding standard/semi deviation.

4) To calculate risk adjusted performance (aka Modigliani^2 ratio) = [(Rtn of your portfolio - Risk free rate)/Stan-Dev of portfolio] X Stan-Dev of benchmark + Risk Free Rate. NB: I used KLCI as my bench mark and One year FD in local bank as my risk free rate.

5) Value at Risk is given by the formula = Mean Portfolio Rtn + (zeta x Stan-Dev of portfolio) where zeta is taken as -1.64. The assumption is that zeta is -1.64 for a normal distribution curve at 95% confidence level.

Don't ask me more about this zeta value, I just take it as gospel truth from my lecturer, I am a pragmatic person, therefore I am not so concern for its theory and how zeta is derived.

WongMK, wrt you belanja me makan, not necessary, as long you think what I say is useful and is not bullocks and as long as other who are interested about personal investing find my post useful for them, that is reward in it self. Beside, I am not living in Klang Valley. Very far from it.

Xuzen

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Added on April 24, 2012, 7:04 pmIf you do not do any financial analysis of your fund, how could you confidently answer this. As usual, we can never predict how it will perform in the future.

That is why there are so many ratios and theory made by the financial gurus to measure and mitigate the risk but not the return.

Please note that in most of this theories/ratio, the risk is more important than rtn.

As one famous investor puts it (can't remember who): Take care of the risk, and the profits will take care of itself.

But as a start, buy The Edge weekend newspaper, look at the Normandy Fund Table and choose the fund that has high Sharpe Ratio... that can be a good start.

Happy investing, Malformed.

Xuzen



This post has been edited by xuzen: Apr 24 2012, 07:04 PM

Heheh danke danke Xuzen.
Screenshot your guide and going to meditate on it over the weekend when i can concentrate better after a few cups of coffee locked in my house and no women distracting me

Off-topic a bit - eh, far away from Klang Valley? er.. ok lar, drop me a pm when U are visiting around Klang Valley, makan's on me.

eh, by the way, i read / heard (audio book) somewhere that high Sharpe Ratio as one of the basis, is good but not to place too high an over-riding importance to it
eg.
Long-Term Capital Management (LTCM) had a very high Sharpe ratio of 4.35 before it imploded in 1998. Just like in nature, the investment world is not immune to long-term disaster, for example, like a 100-year flood. If it weren't for these kinds of events, no one would invest in anything but equities.
LCTM gila leverage on the their investments in Russian bonds and it went kablooey.
Of course that's a hedge fund lar, not a mutual fund

Just sharing what i read/heard

Read more:
http://www.investopedia.com/articles/07/Sh...p#ixzz1sxIpanyv
http://en.wikipedia.org/wiki/Long-Term_Capital_Management

This post has been edited by wongmunkeong: Apr 24 2012, 07:26 PM

It was a recommended fund by a relative of mine. He told me many things but I couldn't absorb everything in one shot. So I put my money in, and let the game begin.

Can I choose to look at The Edge online rather than the newspaper? Though I searched in the website to find Normandy Fund Table and got lost. I will look for The Edge this weekend, thanks for your advise.

My rebuttals are as follows:

1) LTCM is a hedge fund. Hedge funds tend to be illiquid. Why Sharpe ratio failed in those scenarios are already explained in the links you provided, so I need not elaborate.

2) Sharpe ratio when used to evaluate plain vanilla unit trust is still ok, because the unit trusts' assets are equities and they are highly liquid. Furthermore, the funds move in tandem with their respective benchmark. Hedge funds usually have no benchmark to compare with.

3) Another point I want to highlight wrt Sharpe ratio is that it can only be used to compare within assets of similar class. For example, bond funds tend to have very high Sharpe ratios, do that mean we put all our money into a bond fund? No, because a Sharpe ratio is only meaningful when compared with assets of similar class.

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Added on April 24, 2012, 9:37 pmGive me the name of the fund and let me run some numbers before I comment further.

Unfortunately, the Normandy Table is only available in the Print format (The weekend version, not the daily one).

Xuzen

This post has been edited by xuzen: Apr 24 2012, 09:37 PM

It is PB AUSTRALIA DYNAMIC BALANCED FUND (PBADBF), my relative advised me to invest in Public Mutual as a start. If I were to save 300 a month, 3.6k a year, it would be 36k in ten years, plus the annual interest rate. But I am still wondering what if the NAV gone down.. and a Public Mutual Unit Trust Manager told me that although the funds will go up and down, it will eventually break even, for example if this year it drops, the following years to come will get back up, thus monthly investment.

Forgive my naivety

Wow, brain close to exploding. I'm allergic to abbreviations

wongmunkeong, if you gonna meet up with mr xuzen anytime soon, can i join ? U belanja him makan, i topup minum la sikit, can

Wanna learn too

invest in UT is with ur own risk and no guarantee in UT. its clearly stated in prospectus and fund review.

no dividedns in UT. its call distribution (if any). UT profit = Total return = capital gain + distribution (if any).

yes, UT has risk determine the returns. higher risk = higher returns.

if u want to make more than 6%, u can manage ur EPF money in UT by urself. UT agents can guides u.

EPF INVESTMENT SCHEME allows you to manage ur money by urself.

yes, UT capable to give u more than 6% returns and it depends on ur risk tolerance and the fund performance u choose.

go to epf scheme in my signature for better understand UT EPF SCHEME.

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Added on April 24, 2012, 11:43 pmif u dont want to take the risk, better keep ur money in EPF.

This post has been edited by kparam77: Apr 24 2012, 11:43 PM