Less talk MOAR mathematics!

Let's take two UTF A & UTF B

Recall the standard formula for portfolio std dev is sqroot of [(w1r1)^2+ (w2r2)^2 + 2w1r1w2r2 x (Corr-Coeff)]

where w = weighting of the UTF, r = risk aka std-dev

In one scenario, where there is little diversification the corr-coeff will be around 1, lets that = 1. Now you put that into the equation, you will see the overall portfolio std-dev will increase. That is why we say little diversification is bad, as shown mathematically.

In another scenario, where there is very good diversification, let's give the corr-coeff = zero. Now you will see the bolded part of the equation becomes zero. Do you see now the portfolio std-dev becomes less than the first scenario?

Hence back to T231H's assertion that putting 7.5% each into Ponzi 1 & 2 instead of into either one only. You check the corr-coeff btw Ponzi 1 & 2, you will see the corr-coeff is very high probably > 0.90, which is close to 1 which means no diversification at all.

T231H, actually, if you do that, that is, putting 7.5% each into Ponzi 1 & 2, instead of reducing risk, you are actually increasing it. Why? Coz numbers don't lie.

Xuzen

This post has been edited by xuzen: Aug 20 2016, 02:54 PM

Friend Prince_mk,

In a recent investment talk I attended, the speaker assigned a neutral rating to Malaysia. When an analyst / fund manager gives a neutral rating, it means it can go either way.

So, my question to you friend Prince_mk, do you feel lucky? Do you?

Xuzen

This post has been edited by xuzen: Aug 20 2016, 02:58 PM

I cannot answer for you, but I can answer for me.

ESISC has been on the uptrend since Qtr3Yr2015. Those who DCA or lump sum since then would have gained around 20 ++ % or so from it.

But since Qtr2 Yr 2016, I notice that the risk - adjusted return worsen. Hence I have been reducing it by DCA since then.

From a high of 40% holding I now hold around 25% and will target to 20% exposure.

Currently my good advisor, that is, Algozen™ is bullish on Asia-Pac specifically North Asia (HK & China) and advocate India.

Xuzen

For sake of argument, try putting corr-coeff = zero into the equation, you will get Port Std-Dev = 5.XX % instead.

Can you see that when there is no correlation between the two risky asset, the total risk drops.

Xuzen

This is your assumption based on personal bias. The only way to show you is to throw these numbers into Algozen™ and let the numbers speak for itself. But not tonight, I have a date with "Don't Let China Win"

Xuzen

The bump is caused by JPMorgan newly created Global Bond Index - Emerging Market [JP-GBI (EM)]. The Malaysia sukuk market is 0.62% of its weightings.


Xuzen

Arr Hedge Bee Asset management Some asset management company sold a chuck of it, but due to the illiquid nature of these stock the price came tumbling down. Other asset management companies saw the price came tumbling down, they too panicked and pressed the SELL button together-gether. I sell, you sell, all hell break loose. Pasar malam cheap sale time!

This episode will probably be made into compulsory reading material at the next CFA-BOK.

Xuzen

This post has been edited by xuzen: Aug 25 2016, 04:32 PM

My good doctor,

K.I.S.S.

RHB Asia Income & RHB Asian Total Return fund have a corr-coeff of 0.8 (considered highly correlated). I'll choose RHB Asian Income, since she has better risk-adjusted performance.

Xuzen

I feel you brother, I really feel your pain too. All those RM 5K FD certificate x n being eaten alive by inflation.

Xuzen

This post has been edited by xuzen: Aug 25 2016, 09:02 PM

Chen Fan Fai wor... Lee Sook Yee's ex-mentor. Moh Man Tai lah!

Xuzen.

Fuyoh! Min investment is RM 100K. Lukenn, heres a "sophisticated / accredited investor" for you. Take good care of him OK?

Coffee at Starbucks first, then dinner at Ding Tai Fung, before handing your Meisterstruck in rose gold to Arivaaa while gently guiding his hands to fill up the 20++ pages application form.

Xuzen

This post has been edited by xuzen: Aug 25 2016, 10:21 PM

This statement shows that you are not aware of the finer working of this fund.

Let me elucidate you:

This is a close-ended fund, meaning once in, no out nor any top up until the mandate has been expired which is in seven years time. In this seven years, you can only see the money but you cannot touch. In this manner this UTF is very similar to those Insurance type saving plans.

Since you are a nice boy / gal and wanna be a filial child, perhaps have you made consideration whether in seven years time your parents have, ahem, how should I put it..... have time to enjoy the fruit?

Xuzen (this is habitual / OCD lar... pls excuse me can or not?)

This post has been edited by xuzen: Aug 26 2016, 09:41 AM

Satu lagi satisfied customer. Sister Dasecret, you and I make good team of CIS hor....

Next time retire from our present job, we both sama-sama apply for FSM - CIS position and tokok with UTF investor hor boh?

Xuzen

I am not for hire. Besides, my advise is free and is for all and sundry. How do you pay for free advise anyway?

How do you know? FSM private message you kah?

Xuzen

Hey! Those are exactly the UTFs that I am also buying.... what a co-incidence, oh wait!

btw how come is 0.57% , not 0.31% or better 0.08% ar?

This post has been edited by xuzen: Aug 26 2016, 04:54 PM

Lu beli Unit Trust Fund macam main Pokemon Go je!

"Gotta catch BUY em' all™" kah?

Xuzen

This post has been edited by xuzen: Aug 28 2016, 06:11 PM

Merdeka sales lai liao.... 0.57% special discount!

What to buy, what to buy? This is the most pertinent question on LYN - FSM regulars' mind.

I too am also curious on what to buy hence I have decided to throw some numbers into Algozen™ and see what she throws up.

So, after crunching some numbers, it looks like this:

She still favour Asia-Pac ex-Japan, India and US.

For Asia Pac x-Jp:

i) Reits x 35% (Can choose either Manulife REITs or AM Asia Pac REITs), if cannot decide, then half half lor!

ii) RHB Asian Income x 35%

iii) India x 15% (Can choose either Manulife India or CIMB China-India, but I prefer the Manulife pure India since RHB Asia Income is already heavy on China & HK)

iv) US x 15% (Can choose either Manulife US or TA Global Tech). Although TA Global Tech by name is global, in its FFS, more than 75% of its assets held are in US stock - market.

Total = 100%.

Xuzen.

P/s: Currently Algozen™ no like Bolehland, Europe & Gold or Precious Metal.

This post has been edited by xuzen: Aug 28 2016, 11:11 PM

Yes. TAGTF is a good proxy to US exposure. If you look at the TAGTF-FFS, you will see that she has around 75% exposure to US stock market but highly concentrated on the Tech sector.

Xuzen

p/s A little more comment on the REITs themed UTF; for the Manulife REIT UTF, from the FFS, this UTF is more concentrated in the SG & HK, whereas AM-REIT UTF is more spread out across various countries (that is more diversified).



This post has been edited by xuzen: Aug 29 2016, 11:16 AM

This one simple, just use 100 less current age = percentage to hold in equity UTF.

For example if auntie is 45 years old, then 100 less 45 = 55% to hold in equity UTF, 45% in fixed income UTF.

Xuzen

This post has been edited by xuzen: Aug 29 2016, 01:46 PM