QUOTE(Pink Spider @ Apr 7 2013, 06:06 PM)
It helps me to monitor my investment exposure
I read a research article on FSM magazine, they did a research (but based on US markets data) on portfolio allocation. Basically the finding is, a 50/50 balanced portfolio gives the best risk-adjusted returns. Applying the same here, I've studied the past returns and volatility of 3 HwangIM funds - Hwang Select Income Fund (max 30% equity exposure, global mandate), Hwang Select Balanced Fund (40-60% equity, 100% Malaysia) and Hwang Select Opportunity Fund (100% equity, up to 30% foreign exposure), and the result is also similar, the balanced fund gives the best risk-adjusted returns.
There's also this well-known formula of substracting your age from 100, to determine your equity exposure. E.g. I'm 29, I should have 100 - 29 = 71% in equity. But being the conservative accountant I am, I went for the balanced route.
Calling
wongmunkeong Seafood and pakcik
gark,
My non-current assets made up of:
(1) FDs equivalent to 12 months expenses
(2) Bond UT fund to park my excess funds
(3) UT funds as long-term investment (got bond funds, got equity funds)
(4) Malaysian equities
If combine 3 & 4, the allocation is roughly 50% fixed income + 50% equities. But if we include 2 into the picture, it's gonna be quite fixed income-heavy. If include 1 also, it's a very lopsided allocation toward fixed income.
But 1 being designated as cash buffer to cover for unforeseen contingencies, I'd prefer to take it out of the picture. Do u think I should take 2 into the portfolio allocation?
If yes, I should go 50/50 for my UT funds, and let 2 be the fixed income "balancer" against 4.
Guys, any comment?
Hm.. no expert here yar, just logical view:
a. One shd split "investment pile" (untouchable for >5yrs+, especially for new capital injected -think like biz)
VS for "use pile"
b. Emergency buffer funds aren't for investment but more for "use pile"
U've got (a) + (b) in your (1) VS (2)to(4)
Thus my Q would be:
c. Why are U not including your (2) into your investment pile's Asset Allocation?
Yes, U store your excess there BUT is it part of your investment pile OR "use pile"?
The next Q would be - may i understand your reasoning on using (2) to "balance" (4)?
Personally, i take a holistic approach - ie. i dont care whether foreign or local, i tag them as Asset Class first
THEN only i sub-tag each as Foreign or Domestic
Logic = if it's Stocks - whether Foreign or Domestic, when BIG kaka hits the fan, ALL Stocks fall hard (perhaps except REITs due to their nature).
Think 2008 US CDOs-caused credit crunch & more recently 2011 Europe scare dip Jul-Oct
d. IMHO:
Asset Allocation isn't just about risk management but to me, it is more of optimizing returns for risk, based on one's risk appetite, time for managing investments & skills.
Risk management to me is the diversification within asset classes.
eg.
I choose to own 3 types of vehicles for 3 types of usage/goals:
e. Sports cars - for fun & high speed + long distance driving, to reach destination faster
f. 4x4 All terrain vehicle - for reliabilty & usage when the roads flood + off road
g. Scooters - for easy in/out, cheap & affordable usage for nearby solo usage & easy parking
The above is my choice of Asset Allocation - each class/type of vehicle for a specific reason
My risk management is then:
i buy 2-3 sports cars (one local, the rest foreign),
2 or 3 4x4 (one local, the rest foreign),
and 2 or 3 scooters (one local, the rest foreign),
all from the top manufacturers.
Just a thought
This post has been edited by wongmunkeong: Apr 7 2013, 08:07 PM 
Mar 8 2013, 02:14 PM
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