To chase or not to chase performance: getting your perspective correctly.

This is in reply to all who have asked if there are any recommended funds to invest, when the funds they are having were not performing to their expectations and in negative growth currently.

1. Equity funds are volatile and would be either in an uptrend or downtrend at one moment, and could make a u-turn the next moment. When any recommended fund is suggested, the recommendation is based on its past performance. If you follow the recommendation because of its current positive growth, will you stick to it when it made a u-turn? Or will you curse the so-called sifu who made the recommendation and switch yet to another fund made by another new sifu?

2. Public Mutual has many UT funds, and some of them are in the same market sector. It would be easy to compare those in the same sector and pick the best performing fund. But again, the ‘best performance’ or highest returns is based on the past years’ statistics. Will history repeat itself the next several years? Most probably not, as the topmost funds seemed to be changing every year and each fund rotates to the top each year. (Maybe this is by design so that each similar fund will not be too popular and causes the neglect of other funds... or maybe not, as this is just my speculative conjuncture on how the company could possibly manage the funds.)

3. If you think you are having the wrong fund (because of its negative growth and you are feeling the lost), first ask yourself how and why you had selected that fund. If you are selecting another new fund using the same method as before, then ask yourself why you will not encounter the same problem with the new fund.

4. If you are feeling the pain of having poor or negative returns, are you chewing more than you can bite? In other words, you may be taking more risk than you think you can handle, and had allocated too much money into the fund. Switching to another similar fund will not lower the risk and solve your dilemma.

5. If you feel that the fund you are having is not the “right” fund to have, maybe you should take a step back and review what you are doing and what was your objective in having UT funds. There are lots of articles and writings on this subject in the internet, and this Lowyat forum and some basic points in this thread... maybe a bit too many.

Get to know which ideas and advices would be applicable to you. I had in a couple of previous posts, identified 3 major categories that most UT investors would belong to: the beginner (age 21 to about 45), the mid stage (45 to 55) and the senior (55 and above). Generally, each would invest and behave differently (buying, selling and switching/trading funds and the types of funds, whether it is mainly equity or income funds)... mainly due to their finances and the time they have or running out of.

Cheers.

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Playing the game: Chasing the Hot Funds.

1. What is hot at the moment: a) China Titans Fund, b) Singapore Equity Fund, c) Australia Equity Fund, d) Global Select Fund e) Worldwide Equity Fund.

2. All of the above gained more than 5% last month (Nov.)

3. Or you can play the contrary game and go for Indonesia Select Fund; lost about 5% but YTD still gaining more than 14%.

4. Cut off time is 4pm... and take note that the stock markets are most active in the last hour and could U-turn just before closing.

5. There is a switching fee for all transactions into equity funds. Generally, for those in the beginning stage and still accumulating UT funds (ie. actively doing regular purchases, whether DCA or VA), not ideal and recommended to chase and switch in and out too frequently, as the switching fee will slowly adds up. When the total amount of fees incurred is compared to the total amount of UT funds, the cost may not be justified.

6. If you have to review which are the hot funds, you may have already missed the boat!