No need

There is an interesting news this week: Bursa launched the Bursa Malaysia REITs Index. It is capital weighted, and would encourage formation of new products like Malaysia REITs ETF. If new ETFs indeed formed, market players would make the price move. I like the idea

Sorry for being a bit off topic though.

--
Kokman (Guo Wen, not kok man)

The fees do not make a difference if the buying is using fresh money (not fund switching). Buy 10 times of 1000 or buy 10000 in one shot you get the same total fees: 1750.

It does matter for switching, so you should ideally reduce fund switching frequency if that would incur larger amount of money as fees.

I would recommend quarterly switching not because of fees but for better portfolio (smoothing) management.

1.75% fees is not high. You definitely is able to see the spent money recover. Just need to be patient and not let the itchy finger takeover your brain

:: Kokman ::

If switch to bond funds yes but to equities nope. Fees vary depend on how the fund house is calculating it.

FSM has made it handy to know how much we will be charged for switching: the tool is at Transactions > UT Switching > Switching Calculator

Good luck

:: Kokman ::

Dividend in funds is not same as in stocks.

To put it more correctly, we shouldn't call it dividend, it is called as income distribution. The term "dividend" is incorrect for funds.

Income distribution, when given to fund holders will not change anything in terms of the value of the holding. If you hold RM 1000, after dividend is given (assume the stocks holding held by the fund remain constant in price), your total holding would still worth RM 1000. The only difference is the units becomes more (because of they now have lower NAV value)

How this is good to the fund holder? It benefit us in future NAV upward movements. When the units is more at your hand, you got more return when the NAV moves up further.

So buy funds and keep on topping it up consistently, hold long and you will see the nice compounding.

Unlike ASNB products, income distribution of funds is not pro-rated.

Happy investing

:: Kokman ::

This post has been edited by Kokman: Oct 28 2017, 11:41 PM

Investment: RM 1000, NAV RM 1, 1000 units -- every 1 cent upward movement yield RM 10
Income distribution: RM 0.10 per unit, NAV RM 0.90, becomes 1111.11 units -- every 1 cent upward movement yield RM 11.11

I did not say that price will never go further down after the NAV is corrected with the income distribution reinvestment. The example was a quick view of what could haven been when the total worth remain constant (RM 1000) but units have expanded because of the reinvestment.

Anyone can buy funds before a distribution, yes you will get more units. But it does not mean anything in the very short term (sell after 1 week) because the price movement afterwards is not guaranteed to be upward within that short period of time. But if one would want to hold long, much longer to yield the benefit of increase unit incremental yield, then it also doesn't matter if the buying is done right before a distribution, or afterwards. Future income distributions will still be given for some fund, yielding the same effect (distribution plus NAV up/downwards move). "Trading" a fund by income distribution timing is completely meaningless.

Fund price would not stay permentantly low, unless we are suicidal investor who choose funds because they dive deep down all the time.



So this is the AMB Dividend Trust I use as an example, the movement of "absolute price" in 1 year, not total return. Assume we hold RM 1000 worth of units right before the distribution at 4/28; the value of our portfolio still is RM 1000 after the distribution. The units in our portfolio expanded. Every single cent growth after that point will give us a bit more money because of the increased unit count at the point of distribution. The return is better if you are patient and let the price move up a bit more longer (if not forever).

Happy investing

:: Kokman ::

This post has been edited by Kokman: Oct 29 2017, 09:36 AM

You can calculate CAGR of an appreciated asset in the form of equivalent annual compounding rate.

But you can also compound your portfolio by re-investing any returns gained. In FSM, this is done automatically by reinvestment of income distributions in the form akin but not similar to the "split units or bonus units" of stocks.

If units reinvestment does not cause compounding, holding RM 1000 of AMB Dividend Fund would be a dismal since the last 5 years:



But the fact is it has moved up 45.11% in total return, at an annualized return of 7.59%.



I use it as example, and I am not advocating the buying of this fund.

Happy investing.

:: Kokman ::

Hi there, I used AMB Dividend Trust fund as an example to this. Cheers.

:: Kokman ::

You are right. Bloomberg plot the absolute NAV and FSM plot the total return, something like "adjusted close" of stocks price. Actually the total return is useful because it would correctly reflect the annualised return. I sometime use Bloomberg chart only to see how the underlying stock holdings perform when the inc distribution effect is not shown.

Happy investing.

No no I didn't said it will jump back quick or automatically. Upward or downward moves are driven by the movement of the underlying stocks from the next day onward. Could be up or down in (very) short term. But in long term it is up.

This post has been edited by Kokman: Oct 29 2017, 10:26 AM

Done

This is an important point to others, thanks for pointing it out.

Don't worry, you will not have any money taken from your portfolio by the end of the year.

The annual management charge and trustee fee are factored in the NAV every day when it is updated. So what you see (the NAV) is what you got.

I quote:

"Firstly the annual management fee will be deducted from the fund's Net Asset Value on a day to day basis. Therefore when a fund publishes their fund price at the end of each business day, this is the true value of the fund after deducting all cost incurred for the day including the annual management fee.

Next, when calculating a fund's Annual Return for a particular year (say 2012), the fund price on 31st December 2012 is subtracted from the fund price on 31st December 2011. After which the difference is the percentage increase or decrease of the fund value as compared to the fund price on 31st December 2011. "

Source: http://invest-made-easy.blogspot.sg/2013/0...-investing.html

Only the platform fees will be taken from your portfolio if you use FSM for investment. It is 0.05% per quarter, taken from your cash management fund. If you do not hold any money there, it will be taken from your bond fund. The platform fees normally charge to the bond funds you hold in your portfolio.

Happy investing.

:: Kokman ::

This post has been edited by Kokman: Oct 30 2017, 06:42 PM

Are you talking about back loading fees (fees subtracted from your sold amount)? I think bond funds no longer charge back loading fees. Last time some bond funds take 1% from your sold bond if you are selling it within 1 month. I think this fee is removed already and no longer available.

Mind you on RHB KLCI Tracker Fund though, it has back loading fee of 1%.

Happy investing

:: Kokman ::

CMF transaction should be fast. As said, it is based on historical pricing so it doesn't need to wait for the next day's closing NAV before starting to process/calculate the number of units you would gain. I don't remember how soon exactly but fastest experience should be processed the next day, and units appear in account the day after.

Good that you have taken the first step to fund investing. Ask any questions if you have; happy investing.

Assume you are buying Affin Hwang Select Bond fund and its annualised return at 6.5% nominal, and you never adjust the size of your portfolio for 1 year. Having the total platform fees of 0.05% x 4 = 0.2% only lower your return to 6.3%. Inflation rate should be 4.042% (based on our 4 year MGS yield). So you are still beating the inflation well.

I would think the platform fees as insignificant.

:: Happy investing ::

Good ones, thanks! Yes I will use this text "(we)" to differentiate we from they in future.

You can "buy everywhere" and re-balance from time to time (may be quarterly) and do that with long stamina (more than 5 years perhaps). As long as those funds picked are of good quality and most has recorded annualized return of say > 10%, the return would be good.

May be is time to add in new candidates of probably US to your present portfolio

:: Happy investing ::

Warren Buffett is not worried about the US market. I think it is likely US market would go higher up in the long run (like 20 years or so) rather than flat or in a consolidating mode. Market fundamental may change (tax reform, etc) and the current stated expensive valuation is based on the current state; we never know if the next market fundamental change would contribute to the move positive or negatively. Anyhow, US market is definitely a good place to park some money in our portfolio.

:: Happy investing ::

Thanks for sharing the link.

I never like European market, it is a fake market