Next ball reading at the end of Jan16 based on data dated 31st-Dec-15.

Xuzen

Contradicting data from diff fund houses. Some gung-ho, some pessimistic. In the end, opinions are like ars3hole, everyone has got one. So, how do we retail investor do it? Go by the numbers.

And my numbers tell me to:

I) Neutral on small cap
II) Underweigh Large cap
III) Overweigh on corp bonds. (Avoid gov / MGS)

Xuzen

p/s The above are specific to Bolehland stocks nia.

This post has been edited by xuzen: Jan 8 2016, 11:38 AM

I repeat my allocation:

I) Large develop mkt cap = 54% (Titan)

II) Asia Pac ex-Jp = 36% (Ponzi 2.0)

III) Bolehland small-cap = 10% (ESISC)

No change at until next reading. I am reducing Ponzi 2.0 from previously 40% to allocate more into Titan. A caveat wrt Titan: I am betting on this horse due to our MYR weakness. When MYR reverse, I will review my holding on Titan. The MYR weakness factor overrides the fundamental valuation of the underlying assets.


p/s I just glance through my data and I see that the fundamentals do not change. What you are seeing are typical knee jerk stochastic oversold signal. It is just market noise. Ignore them for the time being.



This post has been edited by xuzen: Jan 8 2016, 11:32 AM

My most spectacular failed reading (which I have written here before) is my wrong bet on China specific fund in Qtr2 - Qtr 3 Yr 2015. I was so gung-ho in China that at one time I allocated 80% into china specific fund (Manulife greater china and CIMB greater china). It was not a happy ending. But I recovered and now I use longer term data to smoothen my prediction.

Xuzen

p/s That is why Pinky always boast his IRR >>> Xuzen. He did not kena the China poison mah!



This post has been edited by xuzen: Jan 8 2016, 11:45 AM

Btw RHB & CIMB, I would prefer the CIMB one, but I no longer have the stomach for single country specific fund. hence for me, I will keep neither.

Xuzen

Libra Asnita Bond... now before any of you all say, this bond fund return is very low. Always bear in mind a bond fund in a portfolio is to decrease the total portfolio volatility, given its return of around 5% p.a. with a volatility of 1%, it is one of the best bond fund in the FSM universe . Bond fund is not for you to create extra profit, it is to protect profit.

Wrt Ponzi 2.0 and Titan... read back a few posts. Already shared my thoughts liao.

Xuzen

LOL , so many of you guys top up Titan & Ponzi 2.0.... I bet Jennifer of FSM in her heart knows these must be LYF-FSM thread regulars.

there is a well known saying, when US sneezes, the whole world catches a cold.

Now, I want to add, when China sneezes, whole of Asia Pacific catches a cold.

The who,e of Asia Pac is so interdependent with China, when SSE tumbles, all will also be correlated.

Xuzen

While you guys are at FSM talk, I was at another seminar to collect my CPD hours.

Some salient points I want to share:

On Malaysia:

a) MYR appear to be positive correlated to oil price. Meaning, if crude price drop, MYR drop and vice versa.

b) Oil supply is more than demand at the moment and for the foreseeable future. In Economics 101, when there is. oversupply, price will drop. So, don't expect oil price to nailk, neither do MYR.

c) The general KLCI will be neutral, but stock picking will be crucial if Fund Manager want to deliver above benchmark return. From past history, we have quite a few good fund managers. No need for me to say who, you regulars already know liao.

On China and Asia Pac

To be continue....

Continue:

On China & Asia-Pac:

d) It cannot be denied that China is the major buyer of Asia-Pac goods. Aust, MY, SG, Vietnam all are very much dependant to Big Brother China for its export. Hence, when China slows down, all are expected to be affected.

e) China fundamental is strong, despite its slowdown. At its , planned slowdown to 6.5 - 7% p.a. growth, is still much higher than its regional countries. Take M'sia for example, our growth rate is only at 4.5%, and that is not a planned slowdown.

f) On RMB devaluation; China has such a huge forex reserves (USD 3,400 Billion) worth versus USD 115 Billion for USA. With such massive forex reserve, China can basically dictate how much they want the RMB to be wrt USD. If China wants to devalue RMB, they can. If they want to increase RMB value, they can. But China knows that they cannot devalue RMB too much, and if they do that, the rest of the region will suffer. It serves China no purpose to be surrounded by unhappy neighbours.

On a side note, as of Q4Y2015, M'sia forex reserves stands at USD 94Billion, which is not too bad for a country so small.

China stock market: what china stock market is experiencing now is what M'sia stock market is like in the mid 80's to early 90's. Full of punters and speculators. Hence, expect the market to be extremely volatile. It is a growing pain process. But, fundamentally, the numbers shown that China is very strong financially. The volatility is caused by speculators.

Xuzen

On US & Europe

g) US is the largest market in the world and is a very matured market. Its stock exchange is so efficient, it is almost impossible for any mutual fund to beat the index. That is why to invest in US, it is best to go the ETFs or passively managed index fund.

h) When one is talking about US, one cannot stay away from the topic of Fed raising rate. Basically, the Fed is in no hurry to raise interest rate. So far, inflation is manageable, unemployment numbers are within target. So, the Fed will raise interest rate in small baby steps.

I) For those studios type, CFA material, what happens to stock market when interest rate increase? The academics will say stock market will drop. Everything else being equal, when rate naik, risk free rate up, the stock market price to drop to compensate for the increase in risk free hike. But, remember this: this very low interest rate regime is not normal and when fed raise rate, they are actually "NORMALIZING". i.e., going back to what it is suppose to be. Hence the stock market already priced in. Also, take note that the hike is only 25bps and is easily absorbed by the market.

II) US equities are not at any more risk than usual. However, for bonds, the risk of interest rate hike will be greater. Avoid sovereign bonds if possible.

To put it in perspective:

I) Overweight US equities
II) Overweigth China and Japan (esp JP)
iii) Maintain M'sia neutral (home ground advantage)
iv) Maintain neutral on Europe
v) Underweigh govt bonds and ASEAN equities (Viet, INA & Thailand)
vi) Brazil and Russia avoid and all commodities exporting countries.

Disclaimer: The avoid are not my views but is sharing from what I heard from the speaker at my CPD event.

p/s For me, I will still maintain my current asset allocation:

Titan for its US, Eurozone & Japan exposure.

Ponzi 2.0 for its Asia-Pac ex Japan exposure. Ponzi 2.0 is a good proxy for China since a lot of its holding are in regional countries that serve Emperor China, but with less risk as it is not direct exposure to A-share. and the fund is spread around a few countries.

Eastspring Small-cap for Malaysia small to mid cap exposure.

M'sia Corporate Bonds (Libra-Asnita bond) and / or Money Mkt fund to create stability in your portfolio.

Xuzen

-----------------------End of commentary ------------------------------

This post has been edited by xuzen: Jan 11 2016, 02:58 PM

Pasir Sungai,

I may be finance trained, but am certainly not a fund manager nor analyst to have the inside numbers to make my own report. Hence I have to listen to these fund managers and / or fund house Chief Investment Officer seminars. I am sharing what I heard.

My caveat is this, opinions are like arseholes, everyone got one. But as an investor, you must know your numbers well enough and place your bet with the best probability of winning.

Xuzen

May you learn you lessons well! Distribution means SH1T to a savvy investor. Pink Spider shall be here in a short while to give you Biawak SH1T!

CIMB APDIF as of 30/11/2015 fund size is MYR 2,620 million only, i.e., Eqv to USD 600 million only. In a global context, USD 600 million fund size is consider kacang putih aje!

Xuzen

So, is it a good thing or bad thing?

Xuzen

Those who don't know will say it is due to random luck;

Those who know will use probability and statistic to his advantage and make luck come to him / her.

Xuzen

Let me assist you:

Let's say on 1/1/2016 you buy a ASX fund at RM 1.00 / unit. The fund made 20cts per unit, or market up 20%. By now your fund NAV should be RM 1.20 right? You sell it, you should get RM 1.20 right?

But how much is ASX price? Forever RM 1.00, what happened to your 20cts? They declare a 7% dividend and all of you go ga-ga! This means ASX only pay you 7cts, what happened to you other 13cts?

ASX FM then use the 13cts to keep in their holding.

Let's say next year the fund lose 20% and the NAV is now RM 0.80 and you want to redeem it immediately. They will use the rollover profit to pay you at RM 1.00.

You will say that this is good, as you are assured of RM 1.00 all the time. But for those who are financially savvy, we want full disclosure and be compensated accordingly, i.e., follow market force. We want to be able to fully able to enjoy the whole 1.20 when it is time opportune.

Now you get it?

Xuzen

p/s for the past 10 years tracking, KGF annualized return is 16% p.a. How much is ASX? 7 or 8 % maximum right? Now you see how much opportunity cost you have lost?

This post has been edited by xuzen: Jan 12 2016, 08:04 PM

My equity portion of my portfolio has dropped a total of 5%. Both Ponzi 2.0 & Titan are soooooo red! No eye see.

Xuzen

Ans to Q1:

I need to benchmark it to KGF as ASX is a 100% local exposed fund, so is KGF. I need to compare apples to apples. But I need to bring you back to the original point of my argument which is not about the return per se, but at how ASX is not reflective of the total assets it holds.

Ans to Q2:

It has not happen and whatever we say is purely speculative. However, for the sake of argument, I speculate both will not persevere capital as neither both are capital guaranteed.

Ans to Q3:

It is an opinion expressed by you, it is difficult to argue on opinions. If 7 to 8% is what is comfortable to you, who am I to dictate otherwise. Nonetheless all I am saying is that given an apple to apple comparison i.e., both are locally exposed equity fund, one gave you 8% p.a., the other 16% p.a, you be the judge.

Ans to Q4:

Noted. Equity fund such as KGF are used to increase one's wealth, if someone who already have wealth and need to persevere it for next generation for example, then there are other tools out there. KGF / ASX may no longer be the right tool.

Xuzen

On Monday, I am topping up (auto-debit DCA) into Titan from CMF.

Ponzi 2.0 will also sell 5% to switch to Titan.

Xuzen