Thank you for your email.



Generally a Malaysian bond performance is derived from 2 major factors : (1) the price of underlying bonds , (2) yield of underlying bonds. Recently there are outflow from Malaysia Government Bond market has caused the price drop of Malaysia bond and the corporate bonds were affected as well. In fact, the bond price will change on daily basis based on supply and demand but due to the bigger movement recently, it has caused some investors’ concerns. As a NAV of a bond fund will mark to market of the price of underlying bonds, therefore, the fund price dropped and investors may have similar panic like investing into equities.



From the perspective of investing in bond papers, the price will fluctuate but eventually come back as long as there is no default. With lower price and better yield, investing into the bond may bring better result going forward. For example, a bond that promise to give 5% coupon yearly was RM1000 and now the price of this bond is RM950 which translate to better result compare with you bought at RM1000 (provided the bond does not default).



Therefore, when you make the investment decision, you may consider whether the potential return is attractive enough or not at this level. If yes, you may consider top up instead of selling it. If you foresee the bond price will further going down significantly, then selling it will be an option but you also need to decide when will you want to come back to the market for better potential return.



We do not over pessimistic on the outlook of Malaysia bond market. Nevertheless, to mitigate interest rate risk, we will encourage investors to consider adding shorter duration bond fund into portfolio.



On the other hand, to answer your question about RHB Asian Total Return Fund, we do not overweight foreign bonds at this juncture eventhough we think that it is good to have some higher yield foreign bond fund in the portfolio to enhance the returns for long term. Therefore, I do not encourage you to shift your entire Malaysian assets into RHB Asian Total Return Fund. The depreciation of MYR may cause the foreign bond fund past performance looks attractive, however, the currency movement is hardly predictable in short term. If MYR bounce back, it will impact the performance of foreign bond fund.



I hope the provided information and opinion can help you make informed decision. Lastly, we wish to highlight to you again that investing should be forward looking. When the investment turned out of your expectation, the decision to hold or not to hold the investment should be based on the expectation of how the investment will perform in the future instead of past. To mitigate the risk, we will encourage investors to build diversified portfolio and aim long term to achieve the initial investment objectives.

Besides, Fed’s rate hike decision is around the corner, normally, the interest rate decision affect the Bond market as well as currency the most. I believe the impact towards stock market will be lesser. World fixed income market has dropped following the expectation on the interest rate hike, you may wait after the Fed decision if you are going to invest into fixed income, alternatively, you may also consider Asia or Malaysia fixed income fund as these sector are less sensitive towards news from the West.

Pertaining to the depreciation of MYR, it is actually a good time to invest oversea, especially if MYR may further depreciate in future, there may be some currency gain. In addition, we believe Asia Ex-Japan and Emerging Market are more attractive as compare to local market, you may consider increase your exposure in these market.

Market is still going to be volatile as number of factors still have not settle, such as Brexit issue, US presidential effect, Fed Interest hike. We believe a well-diversified portfolio could help to weather through this period. Even though we believe Malaysia market is less attractive as compare to Asia Ex-Japan market, certain exposure in Local market is still important, as Malaysia market is relatively more stable and resilience.