You have to understand why investors need to do portfolio rebalancing. If the investor has 40 years to slowly accumulate his mutual funds and is still in the initial accumulation stage, he may not need to rebalance his portfolio, especially if his portfolio is an all equity portfolio.

In the immediate stage of transitioning to the 3rd and final stage of mutual fund investing, he may choose to adjust the portfolio to have a balanced mixture of bond, money-market and equity funds, and may choose to rebalance it periodically.

Buying the same fund that focus on a specific region for decades, why not? If you believed that Asean or Asia Pacific region will have economic growth in the next several decades, then you invest in it until you believe another region has better returns for your investment.

===========

“What fields to play? Aggressive small-cap funds, and non-local funds. And this is supported by the funds that beat EPF:...”

The gist of the post was that mutual funds can give better returns than EPF. The funds mentioned were selected examples and nothing to do with funds within the EPF scheme.

As in a previous post, most of the funds approved in the EPF scheme were focus on the local stock market. It is only recently that more non-local funds were approved this year.

Anyway, any funds that were specifically mentioned are not recommendations. I am not qualified to make recommendations, just highlighting them as examples to lend support to the presentation.

It is more convenient for me to select and show their annualized returns as I received the monthly magazine from Public Mutual.

You may want to refer to Morningstar Malaysia where all the funds from every mutual fund companies are available for comparison.

Withdraw all my unit trust in PMO and invest in ASN

Yes, I have made comparisons using Morningstar months ago and came to the following conclusions back then:

1) there are better mutual funds from other providers compared to PM's pool of available funds

2) highly rated funds from PM by Morningstar are usually or mostly, not available under PM's EPF approved funds

3) wrt to (2), for those PM funds not EPF approved, you can buy these with cash, but you would incurred high SC of 5% (or 5.5%?) for each cash deposit. Why bother when you can buy other better funds from other providers with low or no SC?

Since the comparison is made against beating EPF's compounded dividend (if you have not withdraw out), I agreed with EPF's report (google yourself), most of the investors did not get what they bargained for, when they invested out of their hard-earned EPF savings...

"Since the comparison is made against beating EPF's compounded dividend (if you have not withdraw out)…"

There seems to be a misunderstanding here. The ‘compounded dividend’ in the 1st post on EPF rates were to have the ‘total returns’ in 10 years. The figures given in Public Mutual funds were in total returns, thus the annual dividends were calculated to total returns for easy comparison.

I repeat, the posts were not restricted to only funds available in the EPF withdrawal scheme. The 1st post shows that a small percentage of all available funds can give better returns.

The second post was on what types of funds are more likely to give better returns.

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

Moving on…

Rebalancing.

On the subject of rebalancing, how periodically should it be done?

The most common advise by financial ‘experts’ is once a year.

(I would personally prefer doing in at year-end, thus setting up the portfolio for the coming new-year.)

Now, since the Asia Pacific markets face sharp drop in the recent week, the percentage drop in an investor’s portfolio might be lesser or might be greater, depending on the funds the port is holding.

Let’s put some numbers into the equity/bond ratio, so that we can see how the ratio is affected by a sharp drop in the equities.

Assuming that the bond side is mainly money-market funds, and giving a conservative annual return of 4% or about 0.07% in a week.

Initial portfolio amount: $1000.
Equity/Bond ratio: 90/10
Percentage drop in Equity side: 5%
Percentage gain in Bond side (in a week): 0.07%
Total amount in the Equity side becomes: $855
Total amount in the Bond side becomes: $100.07.
Portfolio total amount becomes: $955.07

Equity/Bond ratio becomes: 89.5/10.5
(Difference: 0.5%)

So, the ratio differs by a mere 0.5% when the equity side faced a sharp 5% drop. Whether the investor would do any rebalancing to adjust the ratio back to its initial ratio is up to him. To me, it is small difference and would not readjust solely to track market movements.

Below are various ratios, before and after a drop of 5% in the equity side.
Initial Equity/Bond ratio: 75/25
New Equity/Bond ratio: 74/26
(Difference: 1.0%)

Initial Equity/Bond ratio: 50/50
New Equity/Bond ratio: 48.7/51.3
(Difference: 1.3%)

Initial Equity/Bond ratio: 25/75
New Equity/Bond ratio: 24/76
(Difference: 1.0%)

Initial Equity/Bond ratio: 10/90
New Equity/Bond ratio: 9.5/90.5
(Difference: 0.5%)

The differences would peak at the 50/50 ratio at 1.3%. If equities or major stock markets drops 10%, the difference at 50/50 ratio would be about 2.65%

In conclusion: Having an investment strategy using the Equity/Bond ratio ensures that the investor sticks to his initial investment plan since the changes and adjustments done should be subtle and not drastic big moves.

In other words, don’t panic when the going gets tough!

Edit: typo "shape" corrected to "sharp".

This post has been edited by j.passing.by: Oct 31 2018, 05:39 PM

Continuing from previous post on Rebalancing…

What is the proper Asset Allocation for a Unit Trust Investor?

In other words, what is the best Equity/Bond ratio that will be most suitable to the investor?

Explained in details in this blog by Financial Samurai, there are various models and all are based on the age of the investor.

https://www.financialsamurai.com/the-proper...d-bonds-by-age/

The classic model is using age 100 and subtracting your age to get the equity ratio. If you are 30 years-old, the appropriate ratio would then be 70/30; if age 60, then the ratio is 40/60.

There are 5 different models in the article. Do read the reasons why the models differ slightly from each other. Maybe you would be able to vary and adjust the ratio slightly and make it your own.

I find the Survival Model interesting. It is 50/50 from age 35 onwards. Perhaps it would be more appropriate if the age is set to 45 instead of 35, and taking into account that we (or rather most of us) have EPF too.

For those who are age 60 and in retirement and depending solely on passive income from their nest eggs, the 4-box method could also help to find the best ratio to have.

The 4-box method (as mentioned in an earlier post) is 2 boxes on expenditures (basic necessities and other things you can do or spent if there is the money for it) and 2 boxes on incomes (stable income and not-so-sure-and-risky income.)

In each of the 2 expenditure boxes, write down all the appropriate needs/expenditures and their cost. Then put as much assets into the stable-income to match the basic-necessities box.

For example, if the basic monthly expenditure is $3,000 a month or $36,000 a year, then there should be a principal of $600,000 in an investment vehicle giving an annual return of 6%. This ensures that you will never run out of money before you die since you are withdrawing only the annual returns.

Then put the remaining assets into the not-so-sure-and-risky income box. This is the asset that you can take some risk. If the annual returns are good, you spent more; if not so good, spent less.

Hopefully, the last box can conservatively, without too much risky expectations from it, match the other-needs box; else your nest egg is not as big as you had initially thought.

Edit: last sentence corrected to "not as big as..."



This post has been edited by j.passing.by: Oct 31 2018, 05:37 PM

Thanks for sharing, good reads though 👍

almost 10 yrs plus put in pbb fund still lost.. dun put to this stupid pbb fund..

sorry to ask in time of pain,
may I ask what fund is that?
you investing in lumpsum from start or DCA from then & at what periodic interval?

Generalisation is enemy of being smart

wondering if there is/are any generalisation of action(s) that he/she should have done between the purchase date till now?

since you are new,....
1) have you use this to check and compare the performance and the expected ROIs?
2) are you prepared to lose 5.5% Service charge for your purchase?
3) do you have the expectation that this fund can have an ROI of abt -20% in this 12 months period?

thus IF you had invested into it 12 months ago...you would have lost abt 25% ...in paper already.....
how long will this losses go? are you prepared for it?
do you know Unit trust investment can make loses too?

https://www.publicmutual.com.my/Home/Fund-Performance

This post has been edited by MUM: Oct 30 2018, 11:00 PM


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Some other fund houses or resellers of unit trust funds charges less.....at times they hv 0% too.
Some people said...when spiraling down is a time to buy.....ha-ha....
Important...is what you think?

there are 0% - 1.75% sale charges platform in malaysia, and can register directly online and buy online. eg: eUnittrust, Fundsupermart...

Morningstar is a good research website for which fund is good buy. Actually there are many investment house in malaysia that performs better than Public Mutual, of cos it depends on which funds which regions of investment you choose...

if you prefer to have agent to advice and guide you personally, then Public Mutual, but 5.5% sale charges.

Public Mutual declares RM238m distributions for 11 funds

Read more at https://www.thestar.com.my/business/busines...6usGZJvxMMuA.99

Public China Access Equity Fund

If not mistaken, this fund was established in 2013, and it was an in-house fund that was only open to other funds.

Public Mutual managed to get a license to trade the A-shares in China's stock market. Fund houses and foreign retail investors usually trade in Hong Kong's stock exchange in the H-shares.

The fund is now open to the public. There is a launching promotion till 30 November, so for those who want to switch some units into this fund will have to wait after the promotion ends.

My PAIF 25 cents ❤️

WOW,...with the current market situation that had been not good for the past 9 months......still got 25 sen .....
huat-lah you

hehe read the announcement properly... it is 0.25 cents, not 25 cents...

Hi sifus,

Sorry ya new to this stuff, want to ask how to withdraw using PMO? Also withdrawal can only be done during business days / working hours?

Thanks

Use repurchase function