Quite number of times I heard that investing in UTF is more expensive than buying stock market directly. So, let me do some number crunching for the benefit of all.

Stock-market
My knowledge of stock market is a bit out-dated and my info is based on my last time when I was a stock market participant through OSK Investment Bank (many years ago, and at that time, calling your broker on the phone is still common). The charge levied upon me is 0.6%. Min brokerage is MYR 40.00 per transaction. So, to maximize the transaction, each tranche should be 40 divided by 0.006 equal to MYR 6,666.67. Anything below this MYR 6,666.67 threshold, you will still pay MYR 40.00 broker fee as that is the minimum.

UTF
For UTF, you pay 2% entrance fee each time you inject fresh capital. MYR 2,000.00 x 2% equals to MYR 40.00. Lets say you pump in MYR 200.00 x 2% = MYR 4.00 entrance fee.

The above I want to highlight is that often people will say UTF fee is expensive. But they forget to put it into proper context or perspective. When you buy a stock, unless your capital injected per transaction is large, the percentage you pay as broker fee is actually more substantial than UTF.

If you are a small ikan-bilis player and only have like MYR 200 per month to invest, which method gives you a more cost efficient way access to the stock market?

So, many are repeating something they read from somewhere or something they heard from someone, without further investigating, and they prematurely think that UTF is expensive.

Not so, if your amount is small. Stock can be more expensive. And don't forget, stock is charged both ways... that is entry and exit. So the total cost = 0.6 x 2 = 1.2%. Not that far from UTF.

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This post has been edited by xuzen: Feb 11 2017, 02:39 PM

Currently, CIMB offer brokerage commission 0.0388% (min RM 8.88) per stock per day, if 2 ways then min RM 17.76, but currently, regardless of brokers, you will need to pay bursa clearing fee (0.03%) and government stamp duty fee (RM1 per 1k trading block max RM200), and dont forget about GST

Significantly cheaper now compared to what you experienced, but for ikan bilis like me, UT cheaper

p/s: still struggling to whether keep KGF or kapchai

This post has been edited by AIYH: Feb 11 2017, 02:50 PM

Current brokerage fees now are 0.1% with minimum 8 myr per transaction. now you can do it diy style like fsm. truly cheaper if you apply long term investment into certain stocks.

correction. it's myr 1 per 1k stamp duty not myr 10 with a cap up to 200

AIYH bro i had the same thought about having just one* even though they carve out their own segment in the same market as it's been pointed out many versions back that both are correlated.

*that early days of jumping atop the most glitzy wagon to chase returns thinking heck, let's di(worse?)versify in the local market.

Since they both make up about 22% and both in the green, I'm undecided. Most probably sell off then and dump the measly amount into local stocks.

https://www.fundsupermart.com.my/main/resea...-Small-Cap-7981

Sure bo? Post by Dividend magic IFP.
http://dividendmagic.com.my/2017/01/13/inv...le-get-started/

Problem is I am still young (work within a year) and what I have now isn't sufficient to effectively invest in local stock market (unlike mutual fund which the fund manager study those stocks for you), you will need to study individual stocks from various sectors and decide which will have the most potential (easier for mutual funds since they diversified), not to mention the minimum commission is killing when small amount of capital (assumed comparison to fsm/eunittrust where SC is already minimize, put management expense aside)

Probably things will change when I have a pay rise and more experience in studying them to analyze and make a better decision to dump Malaysian UT

***Unless anyone can suggest highly potential penny stock, suggestions are highly appreciated as I am considering this

The thing is KGF is also kinda heavy in small cap section and closely track with FBMSC (although they have a fair share in big cap), so is KGF more diversified in long term compared to kap chai which only focus on small cap?

But aside from KGF, kenanga really lacks of any other funds that can shine in other segments (unlike eastspring which beside kap chai, they have other funds which can be the best in Malaysia, on par with Affin Hwang and CIMB principal, although may not be if sg mutual funds offer better option)

Just wish others can help me with some more info to make a more informed and convincing decision

But if you consider cost and experience from youngster standpoint (like us), mutual fund (provided you go with fsm/eunittrust to minimize fee) is a good starting point for investment.

Once you gather enough experience in analyzing and selecting stocks, then you can dump the mutual funds for that segment you invest

Agreed. But don't shoot me. I just sharing Dividend Magic post.

I understand that according to his post, but he did not consider each individual's analytics and financial capability in choosing and investing their own stock selection

My point is, don't take the advice as absolute, learn from it, and evaluate it time to time, once you have the capability, no harm to go one step further to try new things, provided you do your homework

This is after all, our improvement in financial planning as we gather more wealth and understand more about our investment option and risk appetite

I have seen DividendMagic post here but rarely. I hope he can come and show me or us his working and let us scrutinize it. I wish to see his logic behind the numbers. I hope the dividendmagic poster is the same person who owns that blog.

But Ramjade, while waiting for DividendMagic to come back to us, reread my post again. Stock trading comes with a price. Unless you are the type who buys and holds it for umpteen years.

===========================

On another hand however, your post highlight one thing that is quite common, that is, many of you noobs will read somewhere some articles written by some omputeh who talks about low index fund, low fees bla bla bla and then repeat it here in Malaysia context without first investigating that those articles are written for a certain country specific context, namely US market.

Yes, in the US you have ultra low cost ETFs and whatsnot. What is my bug bear is many noobs will quote these articles and treat it as gospel truth and not realizing that those articles are written for a different geographical and demographically different audience.

Xuzen

p/s Further more Dividend Magic makes an assumption that 7% ROI by a professional manager can be replicated by an ordinary run of the mill retail investor which I believe is over generalization. On the other hand, he assert that fund manager consistently cannot beat the market. This assertion is another fallacy that he and many other repeats without first investigating the origin of this fallacy.

The oft repeated mantra "FM cannot beat the index" originates from Vanguard's John Bogle and John is correct..... for the US market. Unfortunately this mantra has been used too freely and applied as a blanket statement to all mutual funds, when if one investigated further and thoroughly it was originally intended for the US market.

However, if you look at Malaysia context, our beloved KGF / Kapchai beats the benchmark year in and year out for the past ten years and that is despite already factored in the MER.



This post has been edited by xuzen: Feb 11 2017, 04:32 PM

Well it's the same person. Agreed. Stock trading needs to take account into broker commission. There are some stocks which can hold for.

If one really buy and hold then buying index fund in malaysia is very feasible via local broker. Go through LSE and buy VWRD. No need to look so far into orang puteh. Our neighbour SG have their very own index fund which track the STI. There are lots of SG financial blogger who recommend buying STI index over buying SG UT. So actually if one really want to invest in ETF, it's quite possible.

Lai lai, Xuzen gor gor give you spoon-feeding info. Open mouth wide wide and swallow whole:

1) Lu suka sama itu Lee Sook Yee fund kah? Then PRS into her using KenangaOne PRS Growth fund.

2) Lu also suka sama suka itu Kap Chai fund? Then buy from FSM lor... dua dua pun boleh kahwin. Apa yang susah sangat?

Xuzen

PRS, kenanga didnt give the best option (got cimb prs asia pac), so no chance

Thinking is KGF better cause got both big cap and small cap or kapchai cos strong small cap and got other better funds to intra switch?

Nikko Am did have 2 funds (one capital growth, and one dividend income), that can beat these etf over 3-5 years (despite factoring in MER), provided you invest with poems (kick out those annoying platform fee for equity in fsm )

It all boils down to "do you want a second job?" and "do you think your brain will still be as sharp 50 years from now?"

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2596698/


This post has been edited by wodenus: Feb 11 2017, 05:44 PM

If you look at his Freedom fund which he was kind enough to share, his return for 2015 was about 2.x % and 2016 was 3.x %

So investing in stock was not as easy in real life when you factor in all the variables. If you are a talented investor then for sure. But for an average Joe, who wants a simpler path, then maybe informed passive investment in mutual fund is a worthy consideration.

I mean for me that is, I don't care if UT can't beat the benchmarks in returns. My assumption is that UT did their due diligence in diversification so for sure that may dampen the returns, but if the UT loses more than benchmark in bad times then it says something negative about the fund. UT should be less volatile than the benchmark, that is my expectation.

I prefer to compare UT with all my existing crappy investment like FD, endowment and such. If UT is consistently >3% better in returns than these instruments then i am all for it.

This post has been edited by killdavid: Feb 11 2017, 05:53 PM

That's just dividend. His capital gain + dividends - 14.69%


Respectable for malaysian market

This post has been edited by Ramjade: Feb 11 2017, 05:47 PM

As a wise man said, "Better to be rich than right."