my pool of fresh epf money already empty... can only sit and watch.

The drop is not deep enough to switch out old funds in mm... my strategy smallcap fund - all switch in this year - average -4%.

Still okay... till I feel a bit panic with deeper lost... then do reverse to emotion - switching in, not switching out.

The above growth rate on 1/12 corrected:

PUBLIC DIVIDEND SELECT FUND -1.94%
PUBLIC ISLAMIC ALPHA-40 GROWTH FUND -2.50%
PUBLIC ISLAMIC MIXED ASSET FUND -1.97%
PUBLIC ISLAMIC SECTOR SELECT FUND -2.61%
PUBLIC ITTIKAL SEQUEL FUND -3.09%
PUBLIC SELECT ALPHA-30 FUND -2.47%

It looks like many people will loose some money and regret investing in unit trusts and/or PRS.

I may be wrong, but somehow I got this impression after reading some of the posts in this and other threads; mainly due to improper financial objectives... like taking advantage of tax rebate, offer of cheaper service charges, cheap NAV at launching price, looking for short term gains, searching for better returns on the savings to buy house in next several years, etc. etc...

As in the previous post and article on the difference between investor's returns and fund's returns, some investors will pull out at the wrong time, when the market cycle is down, and realizing the paper lost.

Even stopping regular investments (DCA method), could lessen the returns when the market rebounds. Which most will do when they don't have the proper objectives when they first started the investments.

Cheers. Stay invested.

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

I think the starting phase (at the accumulation stage) is the easiest phase to stay invested. Use DCA method, setting aside a fixed percentage of income for the long term (retirement), accumulating unit trusts/PRS as you worked and earned. IGNORE THE MARKET.

From Bloomberg:

S&P/ASX 200 5,186.08 -33.49 -0.64%
Straits Times Index STI 3,288.56 -35.57 -1.07% 03:42:10
FTSE Bursa Malaysia KLCI Index - Kuala Lumpur Composite Index 1,701.53 -31.46 -1.82% 03:42:00
Stock Exchange of Thailand SET Index 1,403.12 -111.83 -7.38% 03:36:27
Jakarta Stock Exchange Composite Index 5,115.70 -44.73 -0.87% 03:42:36

FTSE Bursa Malaysia Small Cap 14,060.78-716.49(-4.85%)

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

Chase if you must, just don't trip and fall.

UNDERSTANDING IRR (Internal Rate of Return)

Another dollar, another day... been quite some time since my last post...

As mentioned previously, I'm keeping track of the portfolios using Excel... in 2 tabs, the main tab showing the current funds, and the 2nd tab on those funds that were switched out (including those that were repurchased.)

So the main tab has the YTD figures, and the CAGR (compounded annual growth rate or in simpler term, the annualised growth) on each line of the fund purchased. If the fund was purchased in several dates, also did a IRR on the fund.

Wiki has IRR as follows: The internal rate of return (IRR) or economic rate of return (ERR) is a rate of return used in capital budgeting to measure and compare the profitability of investments. It is also called the discounted cash flow rate of return (DCFROR).[1] In the context of savings and loans, the IRR is also called the effective interest rate.


In the 2nd tab (the switched out funds), I also did a IRR on them... it's not on each individual fund, by rather grouping all the switches (and repurchases) by year. The data is not really useful... since they are 'history' and gone. Just something to browse back and review how many switches I'd done, and how profitable were they. (I guessed I picked some pointers over the years since there is hardly any negative switches in the past year. )

Now, with all the transactions in 2 tabs, what is the IRR of my portfolios (or investments) since day 1?

Simple, create another tab.

Before you shake and smack your head on the workload that needed to copy and combine the current and historic data in the 2 tabs into the 3rd tab, I have to say that it is much easier than I had initially thought.

1. All those switches, all those funds that were bought and dumped are "history" and has no bearing on the IRR of the portfolio/investment.

2. Only those purchase transactions that are cash out of wallet, or out of EPF, are relevant.

3. Only those "repurchases", that were truly cashed out into bank accounts or direct to wallet via cash cheque.

(Those funds that were switched out into money market funds, are still inside and part of the portfolio and investment... they don't count.)

For example, I have only several withdrawals out of EPF over the past years, buying into a bond fund first and then over a regular period of time (or when ever there is a market dip) switched bit by bit into equities. I also did many switching back and fro from equities to bond/money market funds.

The calculation of the IRR of the investment is only on those withdrawal dates and money withdrawn, and the current size of the portfolio/investment.

So in this example, the data is only 4 lines.
1st withdrawal: 1/7/2011 (10,000.00)
2nd withdrawal: 1/3/2012 (15,000.00)
3rd withdrawal: 1/10/2013 (15,000.00)
Current Value of Portfolio: 31/1/2015 46,000.00
IRR of Portfolio = 5.71%

Cheers. Stay invested.

1. You came to the right place to continue your research... I think you think you are right as you are already into mutual funds, and that you are not sure whether to trust what you heard from other people who are less informed than you.

2. Yes, to your last question. But you could do better to know that the initial fee charged by Public Mutual is not competitive, and there are other fund companies (via online platform) charging much lower (sometimes, almost zero%) service charge on each new purchase.

3. "Dumbed RM21,770.00 now the balance is RM21,610.00. But the drop is mainly due to last month January dividen just been announced."
Get the basics correct. It is 'income distribution', not dividend - as the funds are variable priced funds, which are priced at the end of each day; unlike fixed-price funds like some funds offered by ASNB. Any drop in the growth rate or value of your fund is due to market forces, it is never due to income distribution.

I guess you have checked your funds via PMO (Public Mutual Online)... and the funds are updated with the correct units 2 days after the income distribution. If so, the lost is due to the service charge incurred and the funds have grown some but yet to fully cover the amount invested.

Dig back a couple of old posts on what is the difference between fund's returns and investor's returns; and also 'amortizing' the service charge over several years to avoid being disheartened by poor returns in the beginning stage of savings/investment.

4."1. PFSF 2. PISGIF"
Take a bit more risk and go for small cap funds. If you read back some older posts, you will get to know about Paul Merriman and his academic opinion on small caps growth over the long term.

Cheers. Keep saving & invest regularly over the years.

13/4/2015 PUBLIC CHINA SELECT FUND PCSF 0.2561 0.0080 3.22%
Now above 0.25 after so long... but still a lost to those who bought in at 0.28.


PUBLIC CHINA SELECT FUND : Total Returns from 14-Apr-14 To 13-Apr-15 45.59%

How I got cheated by Public Mutual Online (PMO) and their Customer Care does not care.

Sometime ago, I did lots of switches from equity funds to money-market funds, and back to equity funds. As we all know, the switching fee from equity to money-market is zero (after holding the equity funds for more than 90 days).

And from money-market to equity, it is RM25 per transaction, whether it is before or after the 90 days holding period.

I have an existing money-market fund; and all is good and fine when I switched out of several equity funds to this money-market fund. Then later on, I did a full switch (switching out all the units inside the money-market fund) to another equity fund.

So I was surprised when I was charged RM50, as the expected cost should be RM25 only.
When I checked the transacted details in PMO, it was shown that PMO broke the full switch transaction to 2 separate transactions – as some units were before 90 days, and some units were after 90 days, hence 2 separate transactions costing RM25 each.

Okay, my beef is that the full switch should be counted as a single transaction, since PMO presented the switching transaction as one transaction. The online screen do not show the available units in 2 portions, before and after 90 days. If it did, it would be understood that it could be treated as 2 transactions...

It is also understood that previously the fee before 90 days was different (RM50), and logically the system will have to do 2 separate calculations to get the correct fee. But the switching fee was changed to the same RM25 regardless of whether the units were before or after 90 days. So why break it down to 2 separate transactions?

Furthermore, as mentioned above, the online screen presented the switching transaction as ONE transaction. I was not informed it will be counted as 2 transactions when I pressed the confirm button. Otherwise, I would have split the transaction, and do another transaction on another day.

So I think it is justified that it should be counted as one transaction, and called customer service to waive the 2nd charge. (I know, some of you are now LOL or even ROTFL. )

So long story short, the Customer Service guy on the other end of the line was more or less repeating back to me what I had said and had known. The extra charge still remains...

The Rotational Play and Tweaking the IRR (Internal Rate of Return)

This is what I have been doing to my portfolio of funds, which is a matured portfolio – meaning there is hardly any fresh money added into it.

It swings back and forth from 20% to 80% in equities.

When it was at 20%, last year, I started buying and buying (actually doing switching) into equities – mostly local funds, and the Aust and Sing funds when their index was below their 200 days moving average. So last year’s IRR was very low... which was expected, since the percentage of equity funds was below 50% for most of the year, and also because KLCI went down in the 2nd half of 2014.

This year it’s selling, selling, selling... it’s down to 30%, maybe will be down to 20% next week.

Got out of the Aust fund in February when its index hit its current peak. Since then, the index is moving sideways... on the good days, there would be some gains if I stayed in, on the bad days, there would be some negative growth. Currently after 2 months, it would be negative growth if I had stayed in. And this is not including the small gains made in the money-market fund which it was switched into.

(Imagine the gains that could be have if it was switched into a China fund then! Yeah, wishful thinking... don’t envy and expect high growth when the investment strategy is a conservative one.)

As for the local funds, some were still in the red at the beginning of the year, since some of the buys were at the upper part of the index. So when the KLCI started to rebound and every buys were positive, started to trim and take profit... switching out those positive buys with the lowest CAGR (compounded annual growth rate). Such that the archived tab of switched out funds (in the Excel file) is looking good with positive ROI (returns on investment).

By ridding off those buys with the lowest CAGR, the IRR of the current funds in the main tab will also be nudged higher.

P.S. When to take profits? First, determine the YTD growth you wish to have. Then trim the equities when this YTD growth is reached. To aid monitoring this growth rate, I calculate the growth rate that it could be at 31st Dec if the total portfolio amount is all in money-market funds now.

Yeah, the title of the post was purposely worded to grab attention. The more important point is in the first word, "How". The double charge will never occur again since we now know how the system calculates the transaction fees.

Will be having a wrap account when the time is right... I don't think it will be with investment platforms, as I'm leaning more towards direct interaction with fund houses. The portfolio must have 'cash distributions' and ease in transfer... as it's a 'forever' portfolio.

Gold accounts used to have unlimited number of free switches...

Without doubt, there was some improvement to the PMO system (it now shows the points, and requires PAC number for transactions), but there is still a lot of info that is good to have and yet it is not given.

For example, when the transaction charge is zero, it cannot be readily known whether the cost is actually zero or whether it is zero because the cost is deducted from the pool of free switches.

And PMO do not tell how many free switches is remaining for the rest of the year.

This is already year 2015... my phone in my palm has more computing power than those early days IBM minicomputers that occupied the entire room... why bother with a long list of 'terms of condition' when the system could be more helpful by showing the charges and fees before the confirm button is pressed?

That's the intention... portfolio will be transfer to the next of kin, and onwards to the next next of kin. They don't have to worry on how to manage or how to invest the funds as it is already set up in a portfolio giving annual cash distributions.

The investment platforms, if I'm not mistake, have only 're-invest' option in the income distributions. Then it is not truly 'auto' as we need to re-purchase units to have some income.

(Of course, every sen I have is not in the portfolio... and it won't be. )

Since the day I joined this forum... the recent 2nd portfolio using EPF money was a practical, real-time, trial run testing some ideas and methods.

Thankfully the IRR is improving every year... but can't really tell whether it is fortunate timing of the buys or the methods employed. I think it is the combination of both. Anyway, methods can bring in lady luck.

And the method is simple... once you understands that any control over any investment is when you buy it.

Whether it is gold or property, you can only control the buying price. Same as in unit trusts... you can hardly influence how the selling price will be.

In unit trusts, you can easily set-up a series of buys over a long period of time. And improve on the buys by selling those 'poor' buys while keeping those 'good' buys... eventually building up a good portfolio of funds with reasonable expected returns.

Cheers.

Still don't know what the bs I'm talking about? Okay, will explain a bit further...

If you were following some of the posts I've done in this thread, we have gone from dishing volatile and aggressive funds, to selecting conservative and consistent funds that we can have 'faith' in, to stages of investors profile - namely the beginning accumulative stage and the matured nest egg stage.

The 'series of buys' is in the same fund (which we have already narrowed down and selected beforehand).

The future is not foreseeable... we don't know whether the market will be going up or going down next month or in the near future... but we can be optimistic that the regional and global economic will grow no matter how many crisis it faced, and each and every crisis will passed; unlike a pessimistic viewpoint of a doomsday scenario with no hope of recovery.

So we buy, buy, and buy in the same fund... we can do a bit of timing whenever it is possible, but some of it will turn out to be bad timing - ie buying at high price.

At the beginning accumulative stage, we can ignore those 'poor' buys because every buys will averaged out each other, and we keep buying and keep investing our savings. (This is the stage of 100% in equities... which was also recommended by Paul Merriman - read the MarketWatch articles.)

But since the portfolio is already at nest egg size stage, and no more new money rolling in, the money inside the portfolio is now being rotated again and again looking for better and better 'buys' and higher and higher IRR... I want to grow it a bit further without taking too much risk.

The portfolio is actually not at its final stage yet. The final stage, I envisioned, will be something of a 60/40 equity/bond ratio, with most of the equities in conservative, less volatile, dividend/income funds. It will then be permanent and fixed, maybe without any annual balancing at all.

Cheers.

P.S. You will not get a straight answer what's the actual IIR% I'm having. As said, "... don’t envy and expect high growth when the investment strategy is a conservative one."

Just came across another good article from MarketWatch... "6 ways Vanguard has changed the way people invest."

http://www.marketwatch.com/story/6-ways-va...15-05-09?page=1

1. FYI, Vanguard is a fund company in USA, with very low fees.

2. 3 of the points is on why people choose to invest with Vanguard:
"Costs matter" - it gives the best value to its customers.
"Avoid complacency" - it constantly improves its method of doing business.
"It’s best to ignore trends, fads and..." - its sales is not market driven, but based on sound investment ideas.

3. The other 3 points is how its customers grew rich with Vanguard:
"Starting small leads to finishing big" - it is never too early to start saving.
"You must invest regularly" - Saves and invests as you earns.
"Patience matters, too" - never wavered from fundamental belief that doing the right things pays off in time.

Cheers. Keep investing... regularly.