Good point, cherroy...

Personally, I also think that buying blue chips are better than investing in UT. However, we need much money to buy blue chips. Currently, I'm also saving money to buy blue chips...UT I also invest, but only in bond funds and global funds...

brokerage fee 0.42-0.6% x 2 (buy and sell) is minimal only nowadays compared to UT entry charge. Also investing on your own, you get the dividend directly from the stock also liquidify also faster than UT redemption (T+3). Yes, you might get the diversification from UT but as I said before if you have sufficient fund you also can diversify on your own but remember always invest based on fundametal.
But too broad diversification also not good, stay in range of quality stock will do.

Too broad diversification sometimes mean average performance only just as KLSE index shown if yo buy CI (diversification 100 stocks) compared to just Genting, IOIcorp, Bat etc, eventually the three stock outperforms the CI at least 100-200%.

Another point of wrong perception is that fund can keep most money in cash. A fund can't have too much cash in their portfolio since it will violate objective of the fund and trustee agreement. Even though they know current market is high, they can't liquidate totally, the most they can do is liquidate a portion only or switching stock and for equity fund they can't switch to bond either. A fund simply cannot has more than 50% of the money in cash (for equity fund).

DPM: Malaysia's unit trust industry seen as biggest in Asean

KUANTAN: Malaysia's unit trust industry has been recognised as the biggest in Asean, reflecting the role of unit trust as the main engine to move the public's savings into the capital market, said Deputy Prime Minister Datuk Seri Najib Tun Razak.

He added that that the industry had become bigger and extended its influence among the people in the country, compared to 10 years ago.

``The Government is confident that the industry will register a more rapid growth with continous efforts taken to launch products for various target groups.

``It can be achieved when you have sound distribution channels supported by extensive planning and strategic marketing,'' Najib said in his speech at the launching of Malaysian Units Trust Week (MSAM) organised by Permodalan Nasional Berhad (PNB) at Padang MPK 2 here on Friday.

MSAM will be held from April 20-29.

Also present were Mentri Besar Datuk Seri Adnan Yaakob, state exco members, PNB chairman Tan Sri Ahmad Sarji Abdul Hamid and PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman.

Najib said if the people used to be comfortable with debts, now was the time to change the mindset and take the step to save and invest.

He added that last year, the unit trust industry recorded an overall increase with net asset growing 23.6%, from RM121.8bil while its fund management rose 29.2% to 164.4bil units.

``During the same period, fund management companies in the country increased to 38 as compared to 36 in 2005.

``The number of funds approved has risen from 340 to 416,'' Najib said.

He also said the size of the fund approved was 339.9bil units with the number in circulation registered at 154.1bil units, an increase of 27% and 10% as compared to 267.3bil and 139.4bil in 2005, respectively.

Ahmad Sarji, in his speech earlier, said MSAM was an important activity for PNB as it would be able to display the institution's ability to utilise, protect and expand the stakeholders' investments and eventually, distribute the profits in dividends and bonuses.

URL: http://biz.thestar.com.my/news/story.asp?f...43&sec=business

No. I understand that the fund itself is regulating by SC and trustee. What i'm trying to tell is the fund have a better/knowledgable person who managed it. Or in order word there's a professional team managing your money. So, in a normal circumstances, when the market is not doing well, the fund will allocate fund to shares with higher dividend payout (i think they'll have some sort of defensive strategy in equity fund to prevent too much losing out). Else what's the point of paying Mgmt fees to the fund who cannot manage for you? Like what dreamer said, if the fund is performing worst than KLCI, then why pay for it? I myself can be a fund manager to choose stock in KLCI. What a fund doing is actually minimizing the risk, and maximizing potential return to the unit trust holder.

Another point is that something you guyz seems never notice, the return you see 200%-300% is just something you can see for now. If you liquidate your investment, you get 300%. However, if the timing is incorrect, or you sold after the market crashes, there goes your 300% or sometimes even worst. This is call volatile. UT have better/smaller volatility compare to Share Market.

That's why choosing a good fund manager is very important in the first place. Everything there's a pros and cons, just make sure you benefit the pros most and minimize the cons as much as you could. Then you're happy with it.

This post has been edited by keith_hjinhoh: Apr 20 2007, 07:07 PM

1) You did not study history. Google "UEM Renong Reverse Takeover". Normally, in a recession, Government do a lot stuff to affect KLSE.

2) I invest via USA mutual funds.

Now, there are a lot of stock that you can speculate/gamble in KLSE. IMHO, I think only one stock worth buying/investing in KLSE. Some people believe that there are less than 10. So, what is the advantage of a fund manager where there is less than 10 stocks worth investing in??

1) You just have to sit and wait for any those 10 stocks to be cheap enough and buy.

2) Fund manager are forced by the UT investor to sell if there is panic and people redeem. They do not have a choice.

3) Fund manager are forced to buy where there is a bull market since people are buying UT.

How do you make good money when you buy high and sell low??

When you buy you own stock, you can buy low and sell high or even better NEVER SELL.

Dreamer

2. UT investor, there's a cooling off period. Meaning, the money is not immediate. They comes within 2 weeks or 14 working days. So, this shouldn't push the fund manager too much in liquidating their potential shares which might gone up higher. They'll just liquidate those shares that not up-to-their-expected return.

3. Fund size there's a limit. No one can continue buying same UT. The offer will closed once the fund already reaches it's limit.

<<How do you make good money when you buy high and sell low??>>
I guess the so called professional management team won't do this, else what for employing those people to look after or invest on-behalf. However, I do think those fund manager have better insider news compare to us (Normal investor).

<<When you buy you own stock, you can buy low and sell high or even better NEVER SELL.>>
Yup this is very true. However, the market is random. No ones know what price is low. You might say $1.00 of XYZ Bhd is worth to buy. But not for other investor. Different perception i think.

This post has been edited by keith_hjinhoh: Apr 20 2007, 09:58 PM

There are pros and cons...
Even fund managers are so called professional, I don't think they manage the funds alone. There is committee to decide the portfolio. I feel that you're very confident on the professional fund managers. Anyway, I don't think so. If you look at the history, actually UT in Msia is not performing very well overall. This shows that not many fund managers are really capable to help investor earn money.

For me, UT is good for us to invest in something that normal investor can't invest in, eg bond funds and global funds.

Dreamer is right on the fund manager side. When the money come, then the fund manager needs to invest and when people redeem they need to sell. They can't do much about it, they can just try their best to manage the portfolio so that stock pick is quality one and will generate better return.

There are still a handful of fund especially local one that are underperform, research around you will know. Fund house only takes good number to show to their customer but ignore those perform badly one or perform bad during a period of time. Take fund performance from 2003-2007, surely almost all register hefty gain due to global stock market rallying, but if you pick period from 1993 until now (2007) then you will see big difference.

No doubt there are some good fund or fund managers around that generate good return but not all, bare in mind. They might be professional but they are human also and might have same financial knowledge as you and me.

I am not saying investing in UT is not good, instead it is a not bad investment option or better for those not familar with stock market. But not all fund manager is as good as you think. There are pros and cons, no doubt.

Well all the things I've said is just based on ideal situation where the fund manager really fights for the investor's return. Of course back to the end, it's very important to choose a good fund managers. Even past performance doesn't reflect future performance, yet it's still the best indicators. I do agree with your comments which in the market crashing period (1993-1997), most of the fund perform badly and some even worst than KLCI.

Anyway, unit trust is a good start for new investors.

You ARE NOT buying the market. You are buying individual stock. If you know the fundamental of a stock and the company, you know when it is a bargain or not. In fact, you couldn't care less about the market.

The fundamental is NOT based on perception. This is for investment not speculation.

The bottom is very simple,

You lose 6% to 7% immediately on buying UT plus 1% to 1.5% every year.

You could have buy blue chip stock with lot of 100 with lower cost. Why you think the UT can do significantly better?

I bought my blue chip stock at RM6.60. I know it will at least give me Rm0.40 per year of dividend. Now, it is giving me dividend of Rm0.60 per year. Why do I need to sell?? And, I know this stock survive the 97/98 recession. How much intelligence is required to follow my method?? It is much much less than picking UT. And, it is much more profitable.

Now, I am just waiting for it to drop below RM7 to buy more.

Dreamer

Stock price is cheap or expensive is not based on perception alone. Stock price valuation is about a relative to its ability to generate earning, giving handsome dividend to the shareholder as part of return and wealth generation of the company aka asset appreciation and expansion.

A stock might be Rm0.50 but it can only generate an annualised earning of RM0.01 without much improvement or little improvement, do you want to invest into it? It is much better use to money to put into FD which has much better return.

It is much about how well the stock can generate the return rate. If the stock price is not attractive enough to provide better return than other alternative investment like bonds or FD than there is no reason to invest into stock anymore since you take bigger risk and get the same return as bonds or others which is totally not worth then you will start to see stock market bearish until it drops to a level which its return rate is attractive enough to lure back the investor.

It is not simple a perception. Although there are various opinion how the future economy will be but eventually stock price can't run away its basic fundamental. In short term, yes, stock price can overshoot its fundamental due to over bullishness but in longer term, it surely back to its reasonable valuation based on fundamental.

This post has been edited by cherroy: Apr 21 2007, 09:14 AM

Other than those points i've posted, I do think UT manager they have the economic of scale, don't they? They deal directly with those securities company and they can buy large quantities of blue chip stock in a significant volume, therefore, they might get better return than ordinary investor?

Any comments?

ASSUME -> Make an ASS of U and ME

1) They are not passing the saving to you.

2) When you buy stock at large quantity, you drive the price up. So, you buy stock at high price

3) When you sell stock at large quantity, you drive the price down. So, you sell at low price.

Buy high and sell low. Sure formula to make less profit.

Dreamer

Is that means actually funds got no benefits from the economic of scale they held?

This post has been edited by keith_hjinhoh: Apr 21 2007, 12:02 PM

Bingo. You need to start using your common sense. In fact, there is dis-economy of scale. It is harder to make money in stock market with a large pool of money.

The only exception is when people "goreng" the stock. But, that is NOT investment and I am not quite sure that they are legal.

Dreamer

This post has been edited by dreamer101: Apr 21 2007, 12:14 PM

Stock market isn't like that, the more you buy the more expensive it might be. Yes, you get lower brokerage fee but not significant 0.2-0.3% compared to retailers 0.42-0.6%, but the more you buy the expensive the stock become then there is no advantage at all instead of disadvantage. (not talking of 'goreng')

Even for IPO, instituitional price is higher than retailers price normally. As I said before why UT outperform retailers because retailers are poor on stock pick, always like those 'goreng' and 'tips' stock which hope for short term quick gain only while those blue chip which will make significant return rate in the long term looks boring and uninterested for the retailer.

Dreamer,
"goreng' is not illegal as long as it stays at a fine line that didn't cross the line of manipulation. It is somehow a grey area.

Effendi: Bond market has room for expansion

KUALA LUMPUR: Malaysia's bond market still has room for expansion, said Minister in the Prime Minister's Department Datuk Seri Effendi Norwawi.

He said the growth was in relation to corporate financing activities because commercial loans still accounted for two-thirds of the funding needs of the corporate sector.

"There has been a healthy level of financing in new investments, which constituted 66% of the total private debt securities issued last year. Refinancing of existing debts contributed 28% while the remaining 6% was accounted for by mergers and acquisitions as well as restructuring," he said in his special address at RAM's League Awards 2007 yesterday.

Effendi said since the financial crisis in 1998, the volume of outstanding corporate bonds in the market had been increasing at a compounded annual rate of 18.9% to RM186.1bil as at end-2006. Between 1998 and 2006, bond issues accounted for 59% of the country's total credit creation against 41% for commercial loans.

"Given the emphasis on private sector-led growth, the domestic bond market will become even more important for the channeling of long-term savings to finance private investments," he said.

Meanwhile, Rating Agency Malaysia Bhd (RAM) chairman Tan Sri Dr Abdul Khalid Sahan said Malaysia's bond market would have a significant role to play in fuelling the country's growth amidst other emerging economies.

He said the bond market was an essential component of Malaysia's financial landscape and would remain a vital nation-building tool alongside the banking system and equity market.

"The domestic bond market has made great strides within a relatively short span of time. Cumulatively speaking, as at March 31, 2007, RAM has rated 1,087 debt issues with a combined value of RM325.6bil."

A total 27 awards in 11 different categories were presented last night. CIMB Investment Bank Bhd was named Malaysia's top lead manager for 2006 after clinching the top spot in RAM's league table for the most number of deals and value of deals closed.

It bagged two Special Merit Awards for being top lead manager for both corporate bond and corporate sukuk market in 2006.

The Special Merit Award is accorded to the top lead manager in the country based on the institution's achievements in the Malaysian debt capital market.

CIMB Investment also received two Blue Print Awards under the New Project Finance Benchmark Deal for its RM9.17bil sukuk musyarakah and the Malaysia Innovation of the Year for its RM3bil Islamic commercial papers/medium-term notes programme and RM7bil Islamic medium-term notes programme.

The Blue Print Award is given for distinctive, groundbreaking bond/ sukuk deals in recognition of the institution's innovative and progressive thinking.

Alliance Investment Bank Bhd was presented the Special League Achievement Award in recognition of its outstanding accomplishments in RAM's league table.

HSBC Bank Malaysia Bhd won the Industry Recognition Award for its outstanding contribution towards elevating Malaysia's reputation in the global financial market.

Aseambankers Malaysia Bhd and AmInvestment Bank Bhd collected four and two awards respectively.

URL: http://biz.thestar.com.my/news/story.asp?f...59&sec=business

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Added on April 21, 2007, 11:05 pmGuys, I am sharing my results of my funds investment. Good or not?



Brasillion Fund has the best performance. I gained over 600 points increase within 1 month.

This post has been edited by razergold: Apr 21 2007, 11:08 PM

Dreamer, I just studied about the Renong, UEM Case. But then I couldn't related much that to the diversify of unit trust. What I could think off is just this is policital risk which exist at any country, and Malaysia share market lack of liquidity. Would you mind to explain a little bit more?

This post has been edited by keith_hjinhoh: Apr 26 2007, 12:03 AM

UEM is GLC. 50% of KLSE is owned by GLC and GLIC. So, in Malaysia, political risk affect 50% of KLSE.

This is different from most countries in the world. In most countries in the world, the government do not own 50% of the stock market.

If a single share holder (government) own 50% of the stock market, this share holder will and can affect the stock market directly. So, how can you say that you have diversify your investment when most and if not all your investment share one large share holder? And, government i is a non-profit organization. This share holder do not make decision in term of profit and loss.

Dreamer