Stay away from bond, stay far far away from it.

Go into equities now. For M'sia, go small cap. For world, get into US, China or North Asia market esp Nikkei link.

ASEAN = bleah!,

For bond, unless you are putting into bond first and do DCA i to equities, then it is ok.

Xuzen

Currently, im holding pb fixed income and island bond fund for 2 years d. Im thinking whether wan to dispose it or continue hold it.

Any advise ?

Profit / Loss ?

Both also giving me around 5.5% pa. But recent drop quite worring me, that's y im thinking whether wan to dispose it or not. My agent told me to dispose half and park into asian dividend fund. That's y i quite dilemma now.

Domestic (Malaysia) - Go for PSSCF or PITGF lo.....

PSSCF - SmallCap (Conventional)
PITGF - Small to Medium Cap (Islamic)

This post has been edited by transit: Aug 11 2013, 10:21 AM

I don't get why bond funds are at risk, especially in Public Mutual funds as they are conservative and their returns are low, and most of them slightly higher than fixed deposits. With the recent dip, some of them are lower than FD. It makes no difference to me if they are giving 4.4% or 2.2%.

The basic of bonds is that they are government or corporate IOUs.

They would be worthless if the government or corporation goes broke and tutup kedai and can't redeem the bonds on the due date. Before the due date, the bonds are traded with a premium or discount. If the concern government or corporation is not going broke, I don't see (and understand) how the bonds would be traded with such a steep discount that it is lower than its face value upon due date.

As I'm currently aiming for a buy-and-hold portfolio, the bond/money market segment is to re-balance the portfolio... can't exactly run away from bonds unless I want to restructure the bond/equity ratio and change the desired risk ratio.

And if bonds are going to crash due to all the gulung tikar, then cash is king, and should stay out of equities too.

Don't follow what your agent said blindly do your own study first. whichever fund you purchase your your agent will get commission but w/o guarantee you getting profit.

Since Bond return almost same as FD why not invest in Equity ? Is it the rebalancing principal is that important ?
I invest all in equity none in bond. 5 funds in green 1 fund in red. overall still a healthy investment in PM.

Thank you for bringing up the above point, JPB.

My initial reply was to Nano2 and his question was a simple and direct one i.e., is it time to enter bond?

Now to answer JPB:

Bond are at risk even bond fund because they are marke-to-market. I.e., even if you hold the paper and do nothing, the value of the piece of paper is priced according to the market. Hence, with the looming threat of interest rate hike, bond price has taken a beating, hence the drop in NAV these few days.

Also, there has been a increase in risk appetite in the US and Japan equities due to US's better economic data and japan's Abenomics whatever that is. Hence when risk appetite increase, money move to equities leaving a sell down in bond, anothe factor contributing to its NAV drop.

However, if you are a follower of modern portfolio theory and do asset allocation wisely, then you should stick with your confirmed asset allocation and adjust accordingly.

===========================

A little something I want to add:

Now I am talking from a fund manager KPI's perspective: Equities is your main driver of growth (the alpha part), whereas bond is your portfolio stabaliser (reduce sigma aka stan-dev). Fund manager do keep a little in money market to act as a buffer for taking advantage of unexpected opportunities. Money market with its risk free like return is useful for ramping up your beta (risk ratio) without compromising too much the alpha. When all this is done right, fund managers will be awarded those little monrning stars by MorningStars Inc.

In the end, the fund managers get fat pay-cheque from the fund house, you get an above benchmark risk adjusted performance. You happy, they happy. Everybody happy. Life is a bed of roses.

Xuzen

This post has been edited by xuzen: Aug 11 2013, 12:33 PM

listen to what aoisky said: "Don't follow what your agent said blindly do your own study first. whichever fund you purchase your agent will get commission but w/o guarantee you getting profit".

Recent drop worrying you?..I suppose it was May til June. how much % did it dropped?
my advise to you is that have a frank discussion with YOUR SELF....find out the true grading of risk you can take.
there are many investment websites that have some sort of risk profile analysis that you can try to evaluate yourself.
there is no shame to admit that one does not have a high risk grading....because many criteria affects it.
just a note: in UT investing, there will be times when your holding MAY drop 20-~30% (and maybe more) in a few months and stayed there for another 18 months (or continued to drop)....
just be prepared..or maybe UT investing just does not suit u.

This post has been edited by yklooi: Aug 11 2013, 12:57 PM

Xuzen,
Thanks (again) for another clarification.

As you all know, I'm new to the game and got a wee bit worry with the "Stay away from bond, stay far far away from it."; as if it will sucks your life.

Cheers.

It boils down to what stage of investment you are in... beginning, mid-way or already at end stage with nest egg.

The bond/money-market funds I having are all loaded units, ie. switched from equities. Can't have all 100% in equities, as when a golden opportunity comes then no 'money' to 'buy'.

"Buy low, sell high" remember? So take profit and switched some equities to bond/money-market when market is high, and switch back to equities when market is low.

"Buy low, sell high" is timing the market. Portfolio re-balancing is an "auto timer".

Say, the portfolio at the beginning is 50/50, when the equities go up or down, the ratio becomes heavy on one side, then we 're-balance' the ratio back to 50/50 by moving equities to bonds or vice versa.

Thus it forces us to buy/sell accordingly to a strategic rational... not reacting according to our emotions or sentiments of the market.

This is why portfolio re-balancing is important in buy-and-hold investment strategy.

Portfolio re-balancing could be expensive if you're not doing switching under same fund house.

Since this is PM thread, I assume that portfolio re-balancing is restricted to PM which only involves switching fee.

That is true, the switching fees can be costly TOO... need to know some background battlefield tactics before going into warfare wide command.

There are some tactics to reduce the costs, ie. the 90-days rule, usage of money-market instead of bond funds... as mentioned in previous posts. Also the "Gold" status for free switches... so it depends on how much resources you can put into the battle, and how much to diversify the resources into different battlegrounds.

Can't allocate resources into PRS or other fund houses if the resource is barely enough to achieve 'gold' status. The resources would be spread too thin to justify the fight... wars and countries were lost when generals went into battle halfheartedly!

This leads to strategy of not running from one battlefield to another; leaving the grounds without ensuring that resources, troops and portfolio are properly set-up in the field, without any medical and food supplies in place.

Strategic solution: a complete portfolio for each battlefield.

Another way to reduce switching costs... very simple... do less switching! Some say do re-balancing every quarters, but a financial guru (of course, not me la, just starting and yet to have the commanding officer experience) say to do it annually, as semi-annual makes not much difference in the longer term.

Cheers. Happy hunting.

PS. If doing switching every other day or week, the intelligence unit has gone AWOL. Sure lose battle.

This post has been edited by j.passing.by: Aug 11 2013, 05:47 PM

Can anybody share what motivate u guys join PM?
For me, i myself got motivated after experiencing gaining around RM750+++ from my investment of RM2481.. (investment period from 2009-2012)

found out that PISEF not opening for cash investment today after topping up my fund. what happen??

PM have stop this fund for cash investment, but you still can buy thru EPF.

Among 9 funds that closed for investment in PM, 5 of it still can buy thru EPF, anyone know what type of strategics is it? What is the benefit to do that?

just a note: Don't miss this "Investment Disclaimer"
Investors are advised that unit prices and distributions payable, if any, may go down as well as up.
There are fees and charges involved and investors are advised to consider the fees and charges before
investing in the Fund. Past performance of the Fund is not an indication of future performance.

what motivate me to invest not only in PM....., well,....trying to grow my little monies without loosing to inflation...at the same time can sleep peacefully at night.

This post has been edited by yklooi: Aug 11 2013, 11:46 PM

Hi all sifus,
I hv just made a switch from all my equity funds to money market fund for the cash investment. Also did the switches for all equity funds in EPF to islamic money market. All this done just before Flitch announced the downgrade. ...

I would like to hv bigger exposure in regional markets / Australia / China due to no confidence in Malaysia currency. ...

May I know which funds n when should I switch back to equity for:
A) cash portion
B) EPF portion

Thx for sharing.

deleted

This post has been edited by felixmask: Aug 12 2013, 04:57 PM