when the KLCI drop or when it do the correction. i would not recommend you to top-up just based on the speculation unless it come out with a strong backup/reason. And also feel free to read more about our market condition, so at least you know what to do with your investment and achive your financial goal.

My opinion, unit trust is different from share, where the up and down won't be so obvious. We should find out which types of funds are suitable for us. Different funds have different methods to decide when to buy or sell or switch.

I think that, when KLCI goes down until the level that you think it's low, you can buy index funds. When KLCI is going up and you think that there should be the peak, then you can buy bond funds. If you think that share market will doing well for the next 3 years, then you can buy equity funds. Nobody will know when exactly is the lowest or highest point in share market. Anyway, unit trust should not cause you bankrupt.

Equity unit trust is as same as the share. They used the fund money to invest into share. Whether the unit trust NAV move 'big or not is related to its portfolio value.

The movement of unit trust is not so obvious is because of their portfolio which is more diversifed and mainly hold some blue chip (some fund not depends of fund type and its manager strategy). Normally, large cap and blue chip movement not so drastic compared to those 'goreng' and small cap and with diversification, it average up more with lesser movement on its fund performance unless all its portfolio goes up dramatically altogether which seldom happened.
Like even index hitting new high, still some stock like Maybank still doesn't go up.

That's the thing I want to mention here. Unit trust is different from share in terms of the price movement. Since unit trust is widely diversified, the price won't go up and down as much as share.

Edif, i just bought 8080 units of Public Islamic Asia Dividend Fund

There is NO REAL diversification for domestic equity fund. With 50% of the KLSE owned by GLC or GLIC, one single share holder controls the whole market and is the major share holder for most public listed companies.

Dreamer

I understand this, but we can't do anything for this. Most of the listed companies in Msia is hold by the government. We're not able to invest oversea market, so still have to struggle in domestic market. The diversification here is in terms of Msia market.

Leekk8,

We can start by NOT lying to ourself that we have diversification in domestic UT. Since we have NO diversification in domestic UT, UT is not safer than individual blue chip stock. The rule in oversea about mutual fund / UT is safer than individual stock does NOT WORK in Malaysia.

Why you lie to yourself long enough, you start to believe the lie as opposed to the cold hard truth. This lie will cost you a lot of money!!!

<<We're not able to invest oversea market>>

That is not true. You can invest in global UT or open a US stock brokerage A/C and buy ELF.

Dreamer

, I'm going to buy it too...
Now just waiting for a good timing. To have Equity fund yet moderated with annual income adjusted seems interesting to me.

Gonna sell some shares to buy,... hence I need a good timing before its expiry date. ^^v

Public Bank Achieves 24% Increase In Profit For The First Quarter Of 2007

http://ww2.publicbank.com.my/cnt_press206.html

UT is not safer than individual blue chip stock??? This is a good point that I should think about.

Dreamer, how about some UT that invest in foreign market? I mean global funds or far east funds, so forth. These funds have diversification?

Anybody also can open US stock account? Anyway, is US market really good compared to others?

Leekk8,

1) We were discussing diversification. Given that Global UT do not invest in Malaysia Stock Market, it has DIVERSIFICATION. It can do well even if Malaysia stock market is not doing well.

<<Anybody also can open US stock account? Anyway, is US market really good compared to others?>>

2) I am using asset allocation model of investing. That means I diversify my investment across countries, asset class and so on. I am NOT DEPENDENT on any single stock market or asset class to do well for my investment to grow. This is what we called INVESTMENT. I can go to sleep for 10 years and my investment will still do well.

3) If you have a US stock account, you can buy ELF which is the stock version of UT/Mutual fund. And, via ELF, you can invest on mutual fund of US stocks, single country stock market, REIT and so on... Everything is possible now.

4) The funny thing is it is cheaper and easier to invest in Malaysia market via EWM stock symbol (mutual fund of 30 largest stock in Malaysia)

http://www.ishares.com/fund_info/detail.jh...ID50?symbol=EWM

The annual expense is only 0.54%

5) You need at least a few thousand USD before we can talk about US stock A/C.


Dreamer

diversification sounds like a good idea, but most of the global funds are heavily leaned on Asia, and Asia-Pacific region; not much funds outside this region

well, I guess better than just sticking to Malaysia, although local UT has got offshore exposure

btw, is it good to then invest in local UT instead of offshore UT in a bearish market since we have a low beta and high dividend yields, and switch when the markets turn bullish again? asking because i'm planning this strategy

It depends on which type of fund, there are some fund heavy on Europe, some US, some mixture, normally global fund is a feeder fund that feed into others mostly developed country fund like Templeton, Henderson etc. Check their fund portfolio will know.

It is much better to invest into global market especially those dveloped market like US and Europe than local fund. You will get real diversification as Dreamer said. KLSE market is too simple and lack of choice sometimes. Just last year or so, only local fund outperform global fund due to catch up play by KLSE. For long term (10+ years) global developed market still outperforms KLSE way way ahead except certain counter like Genting, IOIcorp, a few more, not many.

Eg. You bullish on crude oil but in KLSE, there is no single counter that drill oil like Exxon, Shell. Even listed in KLSE of shell is just a refinery business, not related to crude. A bunch of oil related company listed in KLSE is oil servicing company.
When you bullish on gold and comodities but KLSE also had none of it. So if you have explored other major bourses then you will find local market is just so small and lack of choice.
If you want to buy blue chip in Malaysia, I think it won't be many although current got 1000+ counters but real quality one is just a few.

This post has been edited by cherroy: Apr 19 2007, 02:51 PM

I myself with all my "saving" in unit trust. Starting this practice since grad and after I get to know that the return from Unit trust is much higher than FD and safer if compare to stock market.

Yes, don't put all eggs in one basket, diversify... and Depend on how much risk that you can take.

But then we have so many fund management companies & if they are launching "almost similiar" fund.. how can we decide? Based on the proven track record they have? Or should we stick to the current funds that we invest regularly, instead of buying new fund?

<<I get to know that the return from Unit trust is much higher than FD and safer if compare to stock market.>>

UT is investing in the stock market!! Unless, you are talking about global UT, how can it be safer than stock market?

<<diversify.>>

Let me do it one more time to get through the thick head of people:

THERE IS NO DIVERSIFICATION in KLSE. Government directly or indirectly owned 50% of KLSE. Learn from history about reverse take over of Renong by UEM before you buy any stock in Malaysia.

Dreamer

Diversification not necessary unable to achieve with local market. Diversify can be in term of Bonds vs Equity ratio, or different categories of industries. Rules of diversify = not put everything in the same basket, m i right?

Bond versus Equity -> Maybe. But, most of the bonds are issued by Government and GLC too. Single player dominated the bond too.

<<different categories of industries. Rules of diversify = not put everything in the same basket, m i right?>>

It does not work in Malaysia

A) KLSE is not a good representation of Malaysia economy since NOT all indutries are listed or listed in equal weight.

B) With a single large share holder (Government) in all industries, where is the diversification??

C) All you eggs is hold in one basket!!!

So, you are maybe right about bonds versus stocks. But, you are wrong in diversification over industries.

Dreamer

Unit trust (equity) is as same as investing in stock market. They used your money to invest in stock market.

I think people have wrong perception it is safer than stock market because 80% of the retailers in KLSE like to buy those 'goreng' stock that's why it is different than unit trust since unit trust managers normally (it depends also) buy those blue chips and more based on fundamental compared to retailers who always like to buy those tips and rumour stock.

If you know how to invest and have sufficient fund to do it yourself, it is much better than unit trust since you don't need to pay 1.5% management fee annual and 5-6% entry charge. If you have discipline and knowledge about the stock market based on fundamental, you can easily also surpass their performance also. Discipline is also a key to success in stock market.

I see, thanks for the information. I'm still new in UT and investing either. What i'm trying to say in economic downturn, the diversification is work in UT assume government didn't make significant impact on KLSE. M i right?

I think buy and sell stock incurred brokerage fees either. The reason most ppl invest in UT rather than stock market directly is because of diversification like i said assume government didn't make significant impact on it. For example, one is holding stock A,B,C with the money invested rm10k. Compare with the fund itself with holding various industries and numbers of stock across KLSE. This is the differences. Furthermore, I think if the management of the UT is working, when the market crashes, they can liquidate it faster than the other and keep most money in cash. But I dont really know what happened inside the UT mgmt, that's just what i think they'll do.

Any comment?
PS: UT investor, they have to take note of something with the brochure given by the agent. I think compare to overseas brochure, the overseas brochure return are normally show in annualised return which is different from just calculating
(SP-PP)*unit and find the return. If you annualised the return, you might find that the return from UT is actually very low compare to overseas.

The other thing to take note is that the return from the brochure given by the agent/UT, is NAV with NAV. Meaning it's the repurchase price Over a period of 5 years. But it didn't take the 5-6% service charges which incurred during you buy the trust.
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Dreamers: Personally, i think funds in SG is doing quite well. 1st. They're international trade market, the funds participate in international market and they have more experience in investing overseas compare to Malaysia's UT. M i right?