That long running thread finally got closed.

Let's continue here... without any reference to any previous posts... a new reboot and new chapter to begin fresh, and travel to old worlds where mankind had gone before.

Back to Basics.

Hi,
Another relaxing weekend with nothing much happening, so another long post... This one is for those who are interested in investing in mutual funds and what are the benefits of having mutual funds; so it is a sort of sales pitch, except that I’m not a UTC nor am I advocating PM as the funds to have. (You may stop reading here... as it’s a rather long bs. So don’t find fault with the post if you continue reading and find it not worth your time!)

Liquidity.
As a comparison to other investment vehicles like properties and arts, mutual funds is very liquid, in that you can disposed it almost instantly and get your money immediately. I would also factored in the lost of value as part of this ‘liquidity’ benefit. When an investment is sold at the wrong time but needed to be done, the disposed value could be at a lower value ... which is reasonably expected in any forced sale.

Unlike a piece of property or art which much must be sold wholemeal, mutual funds (which are sold in ‘units’ and fractions of a unit) can be sold back to the fund company partially – bit by bit.

In comparison to other income generating financial instruments like fixed deposit and fixed-price mutual funds, I would also take into account the lost of interest/dividends, when there is early withdrawal before the maturity date as in FD or the dividend declaration as in fixed-price funds.

When we take this maturity date into account in deciding the time and date of disposing, the FD and fixed-price funds are less liquid compared to variable priced funds. (Please note that aside from higher risk equity funds, mutual funds are also consists of low risk bond funds, and money-market funds.)

So how liquid are mutual funds? Well, it depends... Usually, it is about 2-4 days, depending whether it is a direct transfer to a bank account, or a cheque is issued and whether it is self collected, mailed to you, or deposited into a bank account on your behalf.

It would also depend on whether an income distribution has been declared. This is the blind-spot period when you don’t know how much, or actually, how many units you would get in the distribution. You could get your account updated in about 2-3 days with PM, maybe within a week with other fund companies, while in investment platforms like FSM, a bit later within 1-2 weeks.

In short, mutual funds is about as liquid as you can get in any investment – be the investment period long or short, either several months, years or decades.

Entrance fees and ROI.
Well, whether you want to spend and party away your savings in a club or put the savings into a investment vehicle, there’s always a fee to pay – the entrance fee.

In mutual funds, the entrance fee is called the service charge. (And it does not include the GST.)

Much has been said and written on the service charge, and obviously depending on who is the source of the article and what products the writer was selling or promoting... so how much weight should we put on these service charges in our decision on whether to have mutual funds or not?

Well, it depends... me, I gathered as much facts and info I can get, and consider why the fund company is charging lower or higher than another fund company.

And also be aware that the service charges are not the same across the board from equity funds to bond funds to money-market funds. (And please, please note that NOT ALL investors into mutual funds MUST buy equity funds. Maybe I should do a post on how an investor can save money with bond funds...)

Aside from the service charge, there are some funds that have exit fee. So beware, and check out all the info on any funds before buying. Also take note of the lock-in period, which is usually 90 days, whereby there would be a fee charged when exiting out from the fund within the lock-in period.

This charge could be rather high –as it is not a fixed amount, but based on a percentage of the value of the investment. (In Public Mutual equity funds, it is 0.75%)

As for the annual management fee and trustee fee, I don’t really pay much attention to them. There is a bit too much hype on these fees – especially by those who are selling funds with lower fees.

What we should understand is that the reported return on any funds is the net return. When we choose one fund over another, or choose mutual funds over other types of investments, the decision is based on better returns. This same factor, net return, also influences the decision to exit any fund.

In short, be aware of the entrance fees, but don’t let it deter your entrance. Or you will miss the party.

Amount to invest.
This is the major reason in choosing mutual funds over other investments.

One can elect to begin the investment in the minimal amount as low as RM1000 (or rm100 in certain cases) and each subsequent amount as low as RM100. Or as high as you want and wish to have.

Even when compared to ‘paper gold’ (a gold savings account), the smallest amount is one gram. And one gram is based on its market value, and the market value can move beyond your affordability. But you can buy the mutual fund in fraction of a unit... spending the same amount of money in each transaction if you wish to.

Above are the 3 main factors why I chosen to have mutual funds... as to why I would stay on, is another story, for another day.

Cheers. Keep investing. And thanks for reading.

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

Add on... to clarify further the annual management and trustee fee.

Please note that aside from the one-time service charge, there is no other cost to the investor. When redeeming the fund outside of the lock-in period, there is no fee or extra charge; you will get the full amount as indicated by the NAV/unit price x the number of units you have.

(NAV = Net Asset Value)

The annual management & trustee fee is deducted from the total asset value of the fund; and is already priced into the NAV/unit price at the end of every business day. In other words, you don't pay it out of your wallet.



This post has been edited by j.passing.by: May 18 2015, 03:54 PM

Happy investing

wow finally new thread..

I'm check in

I thought somebody has just opened one thread:

https://forum.lowyat.net/index.php?showtopi...61423&hl=mutual

Therefore, I closed the old running one.

Anyone of you uses Maybank2u for investment in Public Mutual? Any differences of doing it online vs via a Public Mutual Agent?

M2U can do Public Mutual?

No difference as you use PMO or PBeBanking.

SC is still the same.

Yes
http://www.maybank2u.com.my/mbb_info/m2u/p...d=/mbb/Personal

Not sure if there is any extra charges incurred.

Do you have PMO access?

If yes, why don't use that and pay using FPX with M2U?

This post has been edited by David83: May 18 2015, 11:44 AM

is mutual fund return goods in 5 yrs as compare to property investment?

seems like Public Mutual funds NOT in the list....can buy from maybank2u?
http://www.maybank2u.com.my/mbb_info/m2u/p.../INV-Investment

on the Maybank link you provided, public mutual fund is not under their fund list...

i think depends..location, when did you enter, subsale or new and etc...
i think it most would agreed that "most" new property is a better investment due to past 6 yrs records property prices booms...
but some UTs are also good for a 5yr returns...with an annualised rate of about >20%pa. with the benefits of easy of disposing.

What is PMO access?

that would be Public mutual online...

AFAIK, Public Mutual Funds is only distributed by Public Mutual, while funds (those funds which begins with "PB" in their names) issued by Public Bank can only be bought in Public Bank.

PMO is Public Mutual Online. It is their online system where registered members can do various types of transactions, except for purchasing funds under EPF withdrawal scheme.

To register as a member, you must first need to be a registered investor with either Public Mutual or Public Bank. Meaning you must initiate a face-to-face contact with an agent from Public Mutual or go to a Public Bank branch and purchase your first fund.

PMO distributes both the funds from Public Mutual and Public Bank. If I'm not mistaken, you can also do transactions on those PRS funds from Public Mutual.

And it also depends on who you approached. Any salesman will say his product gives better value.

And what is better value or how is the returns calculated? Is it a simple estimate of double the investment, which is 100% returns? What's the time length? Let's say 10 years, and this can be simply calculated as 10% each year for 10 years.

But the annualized rate (which is Compound Annual Growth Rate - CAGR) is 7.2%

Secondly, how is the ROI calculated? ROI = Return on Investment.
Is "Investment" only the buying price, and "Return" the selling price minus the buying price?

Have we left out the 'service charge' as in a mutual fund investment? And not to say the legal fee, stamp duty, real estate agent's commission, and the whole gamut of annual payments such as insurance, cukai tanah, etc. etc. in an investment in property?

From experience, it is not easy to keep track of my own portfolio... while for my properties, I already given up trying to estimate the IRR long ago.

(IRR - Internal Rate of Return.)

Ah great! I have savings on Public Bank, guess i can do some money transaction from PB to buy some units of Public Mutual. Guess RM 7000 is a good start, rather than putting the money lying in the savings account.

PRS fund is another scheme under Public Mutual?

I don't have PRS, so can't comment much on it... but you can look into this link http://www.ppa.my/prs/about-prs/prs-providers/

haha.. why lazy to maintain it?