First of all, don't readily believed all the bs I wrote. But some certain bs do make sense, especially to my self!

I think you're reading that post wrong, no body has any control - not even the FM. It is ridiculous to think the FM has any control over the stock market or has his own crystal ball.

The first and main objective of an unit trust is having as many stocks as possible in the specified market category or sector. All the FM can to do is make a selection of stocks as wide as he could in that specific sector. To widen this FM's selection, an investor can pick several funds within this same market sector as well.

The investor can also diversified into other market sectors. But he need to be aware that with each diversification, whether within or out of the same sector, the diversification averages out the risk, as well as the gains.

Meaning that, if the investor is in a top performing fund in the chosen sector, any other new funds he later adds will dilute the returns. Similarly, if the chosen sector is already a promising sector, any new funds outside the sector will also dilute the returns.

So IMHO (my 2 sens worth of bs), an investor can also do very nicely with a single fund (which he has had carefully selected).

okay, please pardon as I'm about to be 'busybody' here...

There is only a handful of lessons, tips, insights or whatever you called it, in unit trust investments. Most of the articles I read in the past 2-3 years are repeats of the same matter again and again.

When reading them, one should know who the writers are addressing to - the young investor who is just beginning his working career and beginning investing into unit trusts, or the elderly investor who is also just investing into unit trusts but nearing retirement with a big sum of savings, or investor who started late with his/her savings and has another 2 decades or so towards retirement. Or even a investor who has a very specific financial plan - like savings to buy something in 3 years time.

So if the article is not addressing you, and if its suggestions were followed without much thoughts, one will end up with confusing thoughts after reading several of these articles.

We should also be aware that the articles are at times biased and the writer may be introducing and marketing a new fund, or simply try to drum up sales.

A good example would be the above opinion that a holding a single fund could be as good as, or even better than a widely diversified portfolio of funds. It could be disastrous for you, but it could be very appropriate for a young investor who is just beginning his/her working career, having a right attitude in his/her personal money management, putting aside excess and unneeded money towards retirement from his/her monthly salary into a small cap fund.

The small cap fund could be an aggressive and volatile fund. The young investor could, maybe, have the same investment emotions as you do... but this has nothing to do with emotions, or rather the emotion can be put aside with rational investment 'theory' (or bs.) Which is the past academic studies of the stock market (from the market in USA, obviously, since most financial articles in the internet are from that country) that shows that the small cap sector out performed the S&P 500 index.

The catchword in this single-fund-investment 'theory' to be successful would be 'long term investment'.

"Long term investment' is NOT "buy-once-and-hold" the investment for years, and years.

"Long term investment" is invest or buy regularly, be it monthly or quarterly, for years, and years.

(For those running out of years, this single-fund-investment would not work. )

Cheers.

Why is that thread closed? Too boring? Cepat kaya as in the name, is more 'quick' and more 'profit'.

I see, I don't get much replies because I don't have a sexy avatar.

What you are calculating is the ROI. ROI has no time factor in the equation. But the purchases you are evaluating is a series of purchases at various times. So the correct measuring tool to use is the IRR. Use the XIRR function in Excel to work out the IRR.

In the above examples, if you are calculating both the ROI and IRR on the same day the new purchase was made, while the total ROI will change, the new purchase will have no effect on the IRR.

And why should you be worried that the IRR is diluted with each new purchase when each new purchase is giving positive ROI? For example, the first purchase in an equity fund is giving 9% ROI. The 2nd purchase is giving a lower ROI and thus lower the IRR. If the lower ROI is 7% and is a better return than what it is currently getting in money-market fund or FD of 4%...

Is there any lock-in period after switching into the new fund? Or can you switch in today, and switch out tomorrow without any extra charges?

Thanks for showing the way, and I think I know what do...

You need to be cautious in using IRR or CAGR when the time period is less than a year. Both these measurements are projections to give a full year %. But it is one way to compare 2 different purchases bought at different time.

Of course there is a risk that the investment will go sour. That's why others were talking about investment strategies. If the strategy is abandon mid way, there is no method to speak of.

It depends on how we use it. If we use CAGR to measure a volatile fund, then we are erroneously projecting that the fund will grow at the same rate in the following months.

If we use it to measure a consistent fund like bond or money-market, it can quickly tell us the effective rate. In my experience, the rate becomes stable after 30 days, sometimes less.

Am glad that you get my point...

I think we should also be aware of the difference between CAGR and XIRR. CAGR is the annualized rate on a single purchase.

XIRR sums up all the purchases and give the 'average' rate after taking the time factor of all the purchases into the equation and compare it to the total current value.

Thus in the previous post, the new purchase has no effect on the IRR on the day it was bought, is valid. The investment (in negative figure) and its current value cancelled each other.

For most China funds, which is the more appropriate index to follow? Shanghai or the H-shares?

Name Value Net Change % Change 1 Month 1 Year
SHANGHAI SE COMPOSITE
4,785.36 -182.54 -3.67% +11.72% +132.81%


HANG SENG CHINA ENT INDX
13,259.76 -155.07 -1.16% -4.79% +26.96%

... so which index the benchmarks are based on for most of the China funds? Any quick answer, as I'm too lazy to check all the funds. Thanks.

The fund may not follow any index too closely on daily basis, as this would means the fund consists of all the stocks in the index. But there is a huge different in the monthly change between the 2 indices.

Which one is closer to your China fund? +11.7 or -4.7?

"The MSCI Golden Dragon Index captures the equity market performance of large and mid cap China securities (H shares, B shares, Red-Chips and P-Chips) and non-domestic China securities listed in Hong Kong and Taiwan."

Thanks for the links. So the benchmarks are combo of several indices... and the H-share and other index and trading in Hong Kong is still more relevant; I have not been keeping track of the news out of China, and it seems that though mainland China has open up, the trading in their markets is still 90% domestic; while most if not all the foreign fund managers are trading in Hong Kong markets. Am I right?

If so, Shanghai index is more resilient as it is supported by domestic funds and retail investors, and if the market would crash, Hong Kong's market will go first due to pull out by the foreign fund houses?

And if we were reading and following news of the wrong index - which has little bearing on the fund, all the monitoring effort to time the purchase or to sell is just for entertainment? Or media porn, as someone said.

It seems like a starting point of another rally in China. The retail investors got another boost and reminder that China is prosperous, and can bail out Greece if EU can't do it!

yup, bigger than wall street. Premier Li Keqiang is there in France, with some interesting sound bites in the news... you think the Chinese will simply let their market be affected by Grexit?

I think he already put some people in EU to shame. Germany & IMF making so much noise like they don't have money and will go bankrupt because someone owe them a bit of money...

that's a prediction lar...
no point say something when it is already obvious.

Sometimes we have to be confident of the things we knew...

Like we all eat rice our entire lives, and there are many grades of rice in the market, and we can differentiate what we were eating. And yet when 'news' of plastic rice appeared, people got worried...

This post has been edited by j.passing.by: Jun 30 2015, 08:12 PM