The danger of putting everything into a single investment is that if it is a bad investment, it can be devastating to one's financial health. Common sense applied. No maths needed.

“The mathematical principle that most ­investors don’t understand is this: What is the biggest loss you can suffer in one share? 100%, right? But what is the biggest gain you can make from one share? It can be infinite.”

This guy sounds like a venture capitalist.

In mutual funds, a single fund can be well diversified enough.

Not to belittle anyone but sometimes it can be out of context when a quote is repeated here in this mutual fund thread.

We rather have the viewpoint from a mutual fund investor, than from the perspective of a fund manager or a stock advisor.

Between a single stock and a single fund, when it performs badly (in terms of returns as indicated by its stock price or nav price, respectively), we can make a good guess whether it is a truly bad fund by comparing it to its benchmark index.

With a bad stock, can one truly believe the ceo if he annouced that the recent bad quarters were due solely to external factors?

With a single mutual fund, one can continue making regular purchases into it.

With a single stock, would anyone be brave (or stupid) enough to keep putting money into it?

Phrases like "beware of catching the falling knive" is very approprate in the stock market. But it is not equally applicable in mutual funds.

Sorry that I can't clarify further, apart of saying that you should read the previous post again.

Also I have made it a point (a long time ago) NOT to hold any lengthy conversations with posters who seems to be trolling with one liners and yet stingy in spending time to write longer posts in sharing any of their personal experince, knowledge and/or opinions.

Bye.

Let's get this correct. Nobody make any buying/selling/switching decision based on the nav price.

UT fund is not like gold or land where the gold price or price per sq ft is tracked.

Nobody keep track and chart the nav prices. What was tracked, monitored, and charted was the fund's performance growth in %.

Similarly, when we look at today's fund prices, it is the daily change in % that we should look at.

If you're looking at the right chart, you will not see any dips due to fund distribution.

The dips are due to market prices.

So if we want to time the purchases and buy the dips, we are looking at the percentage drop, not the nav price.

There's 2 more days to go, and yet this month is among the better months of the year.

Since the previous post on the YTD returns of all funds, the list of funds having at least 20% has grown to 3 pages.

http://my.morningstar.com/ap/FundSelect/re...ce&Type=YTDBest

Anyway, while you're laughing all the way to the bank, stop a second & let's talk about other things... just to indulge those who have missed the boat.

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PS. I support local businesses. If the local community goes out of their way to avoid shopping at the neighbourhood shop, 99 speedmart won't be opening its 1000th shop.

Income distribution is good and beneficial because it gives the investor more units?

Betul ka?

The ut funds we are talking in this thread are not fixed price funds that are priced at RM1.

They are priced every business day. Every gain and lost is calculated at the end of day, and is reflected in the nav price.

Hence there is no dividends or interest to be paid when you withdraw or sell the fund.

What there is is income distribution.

Income distribution is a mechanism to distribute income to investors.

Let's say the fund has grown, and the fund manager elected to give out 8% to all investors.

Now, the investors have 2 options, either to take it or not.

Most investors would choose not to. Since any gains are already priced into the nav price everyday, and they can sell any amount they like and at any time they like.

Overall, it makes no difference whether there is income distribution or not.

When the logic is not there, whatever numbers are used to prove it will be misleading, and a scam.

According to your logic, the best time to buy any fund is just before any income distribution, as you will get more units.

Btw compounding is related to growth, not units.

If the growth is happening everyday, compounding is happening everyday.

I ignore this type of charts. It leads to confused minds thinking that since there is a sharp dip in the nav price, it is the best time to buy.

Nav price is only part of the equation. The other part of the equation is "units". When one only sees part of the equation, whether nav price or units, then flaw logic and reasoning is formed.

Don't forget that "nav price" in full is "nav price per unit".

To see the whole equation, both the nav price and the number of units must be seen together.

Allow me to expand the above post further...

What I am talking here is "compounding growth". Of course la compounding is related to growth.

Just like seeing part of the equation as mentioned above, we could also be seeing part of the equation when we said "compounding" without saying it in full and leave out 'growth".

Well, what is growth?

Growth is the difference between 2 numbers.

So what are the numbers? It can't be "nav price" or "units". They are only parts of the equation. To see the whole equation, we have to look at the "value".

And, "value" is equal to "nav price x total number of units".

In other words, growth is the difference between the current value and the previous value.

Hence whenever we are talking about growth (or lost), or about returns of any ut fund in this thread, we are comparing its current value against its previous value.

We are talking about the whole equation, as it is meaningless to talk about parts of the equation.

Talking about having more units, lower nav price, buying at lower nav price to get more units, etc. etc. leads to nowhere, except to mislead and misinform.

Now, how to get compound growth? (Definitely not by having more units! See the whole equation, not part of it! )

Let's say a fund is growing 0.04% every day. When we look at the real numbers, that is the incremental value of the fund, we will see that increment is getting bigger and bigger each day.

$10,000.0000 x 0.04% = $4.0000
$10,004.0000 x 0.04% = $4.0016
$10,008.0016 x 0.04% = $4.0032
$10,012.0048 x 0.04% = $4.0048
$10,016.0096 x 0.04% = $4.0064

As can be seen in the above numbers, the increment is getting bigger and bigger each day eventhough it is increasing at the same percentage. It is "compounding growth". Or in other words, the growth is compounded.

Of course la you don't see it in very small values as in the above example since the value (or ringgit amount) is rounded. But what you don't see, does not means it is not there.

This post has been edited by j.passing.by: Oct 29 2017, 11:38 AM

(This is about income distribution, nav price drops and market rebounds.)

It is an "independent event" because it is a fake drop.

This fake drop is not related to market movement.

Want to see the fake drops? Wait till Thursday (2 Nov) and Friday, and look into the prices of Public Mutual.

You will get the 1st Nov prices on Thursday. There will be some funds with sharp drops in its daily price changes %.
If you go to its performance chart, you will also see the sharp drop.

(Or you can also look into the e-cash deposti funds with monthly income distributions.)

On Friday, look again the performance chart. The fake drop will be adjusted and disappeared. If you have the chart to show the performance between 31/10/2017 and 1/11/2017, it will show the actual daily change due to market movement.

This post has been edited by j.passing.by: Oct 30 2017, 02:45 PM

If "tomorow" is replaced with "in the future, far far away"...

Total 100% lost... only possible if the whole country got nuke, or if it is a regional fund, the whole region got nuke... everything got burnt down, everybody dies. Then who cares how much is the value of your ut fund...

Total 100% profit... can happen, possible, more than possible since the future is so bright.

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The future's so bright, I gotta wear shades.

This news item may be out of topic, but in line of my "future's so bright" optimism which is necessary for any investments to happen... here's a outstanding business news on local soil.

"In September 2017, Broadcom opened its global distribution warehouse at Batu Kawan Industrial Park in Penang with plans to invest RM4.1bil to expand its entire supply chain operations in Malaysia over the next 10 years."

Read more here https://www.thestar.com.my/business/busines...locating-to-us/

As for UT allocation, I would still be sticking to the Greater China region for the time being... here's a good perspective on China, a bit different from the usual westerner journalist/analyst's take on China.

https://www.bloomberg.com/news/articles/201...conomist-argues

Too many analysts approach China from a Western perspective, using frameworks that don’t fit and misread the effects of unique domestic conditions, argues Huang, who is also author of the book, “Cracking the China Conundrum: Why Conventional Economic Wisdom Is Wrong.”

As a result, he says, conventional wisdom about China overstates risks related to debt levels and property prices, while underestimating distortions produced by efforts to control the migration of rural residents into cities using the so-called hukou system of household registration.

Summary: It is not simple and easy to fully understand China, there might be more economic growth and development yet to emerge.

Please don't speak nonsense, and take your racism elsewhere.

Thank you.

Why would you want to do that? Transferring from one equity fund to another equity fund? From a fund with better returns to another fund with lesser returns?

Do you meant to say that the better fund, which could be different from the other fund in terms of region or other categories, will be giving lower returns/performance than the other fund? This is the reason behind the 're-balancing'?

If it is based on the assumption that the latter fund will have a better performance, why buy 2 different funds in the first place? Since we already assumed and speculated that one fund will have better returns, why not be brave and make the decision accordingly and have only the better fund?

Why so timid to transfer only 5% and let the other 95% face the downfall?

For clarity, I would say that you are following a sort of Value Averaging strategy in your purchases.

Re-balancing is for older retired folks who no longer put in fresh money into their matured portfolio. They re-balance the portfolio's equity/bond ratio so that the ratio is back in line with their expected or perceived risk that they (and their weaker and older hearts) can bear in event of any sharp fall in the market(s).

It depends on who you are... 3rd stage with matured portfolio or 1st stage which is the accumulation stage.

At the accumulation stage, as pointed by voyage23, you buy more of the other funds, while letting the fund grows on its own. The main objective (always remember the investment objective) is to have growth. And more importantly, compounded growth. If the growth is always trimmed, there will be no compounding.

You could also be buying more of the same fund... especially when the investment strategy is DCA. In VA, you buy more when it dips.

At the 3rd stage, it is as explained. The nest egg is already reached. Don't have to take the risk, and should trim back. At this stage conservative returns (for passive income either from income distribution or by selling some units) has a higher priority than having growth.

If you are between these 2 stages, then it is up to us to value how far we want to chase performance growth, how greedy we want to be, how many years left for us to remedy and correct any shortfalls... etc. etc. Only we ourselves can truly knows what is the right balance that we should have.


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To youngsters,

Take the risk when you are young, while you still have the time to take the risk. Take the risk for future growth.

When you are still in the accumulation stage of adding and investing more money into the portfolio (of several funds or a single fund), you can ride out any fall by investing further. Since it is a good fund, and you still have faith in it.

As said a previous post many moons ago, by making regular purchases, it is a 'diversifying' strategy in itself even if the portfolio is a single fund. By making regular purchases, you have had diversified the purchases by entering at various points.

Go for growth!

The only speed bump you could encounter is when you suddenly lost you job and no longer 'rich enough' to invest more.



This post has been edited by j.passing.by: Nov 13 2017, 05:50 PM

Hold a sec here... it looks like you have a different interpretation of what I was saying. There is no contradiction.

I was on "transferring' as in restructuring or balancing the portfolio by moving from one equtiy fund to another.

By "top up", this is making a new purchase. 2 different stories. 2 different methods in readjusting the portfolio.

In the latter method of making new purchases, there is no trimming of profits. Hope this is clear by now.

We do asset allocatiion of having 2 or more funds in the portfolio because the selected funds are all having similar growth potentials. If they have similar risks, we would more or less have them in equal portions. And we adjust the portions if we perceived that their risks is not similar to each other.

Usually, the allocation is higher on the more conservative fund with lesser risk. Higher risk, smaller portion. And if the funds are in different regions, like Greater China and Asean regions, or different categories, like large cap dividend fund and small-cap fund, their growth cycles won't be in tandem to each other.

If the investment strategy is sort of VA method, then we sort of make new purchases or in other words, top up the funds that are in the slower growth cycle.

Thus in a long term investment, the portfolio is not likely to go lopsided in a big way very quickly.

If it does, then it is because you have purposely go very heavily into an agressive fund - like almost sailang into the fund. And this usually happens when the investment is short term.

Then of course, you better take profit. Take the money and run!

You make the bet and you wins. What are you waiting for? Did the objective change to a longer term objective and now you are more greedy and want more?



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Above is the reason why I advocate only one fund if you are a newbie. Begin with just one fund. keep it simple.

Get the fund that you think will have the greatest potential in the long term, and invest in it whenever you are feeling rich and have the spareinvestment money to spend.

Throw out of the window, the above diversification nonsense of which fund to top up.

Not sure whether you are trolling or pulling my leg... anyway, I'm pleased that you acknowledge that there is no contradiction to my thoughts; as I have tried to be as consistent as possible. When there is no consistency, it means I'm wavering without any concrete opinion.

"... .I find it very and hard to find the answers to the below post by puchongnite,"

If the question is a hyperbolel what-if scenario, why would you try to find a common sense answer to it? First of all, do you understand what the scenario implies? A 20% sector or fund(s) that grew to 60% means it had grown 300%, if the size of the pie (portfolio) remains constant.

There would be many and various reasons to re-balance it, restructure it, trim it, etc etc. There will also be many reasons not to do so.

What you should do... depends on who you are (OMG, I'm repeating myself!). What is your investment objective? What do you think the market will be like in the near future? How old are you? Do you have a stable job with a stable income?

Who you are as an investor... for the sake of easier understanding, the investor is stereotype into 3 categories, the 1st, 2nd and 3rd stage.

For a sector or fund(s) to grow 300% in several years, the investor would be at the 2nd stage on the verge of stepping into the 3rd stage. He wouldn't be in stage 1.

If the investor is at the 1st stage, the acumulation stage of making regular purchses, the portfolio would not go out of whack. The portfolio is kept in shape by the regular purchases.


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I repeat... for further clarity...

The 3rd stage is where you are selling units and/or the distribution income is pay-out to fund or suplement your retirement.

At the 2nd stage, you are preparing and getting ready for the 3rd stage of getting passive income out of the portfolio.

Depending on what is the current portfolio, the overhaul could be a major or minor adjustment. The agressive growth funds can be restructure to more conservative dividend funds or can also be bond/money-market/income funds. Or can also be both types.

How will you do it? See the previous post, " then it is up to us to value how far we want to chase performance growth, how greedy we want to be, how many years left for us to remedy and correct any shortfalls... etc. etc. Only we ourselves can truly knows what is the right balance that we should have."

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"...then in the 2nd post........ "Usually, the allocation is higher on the more conservative fund with lesser risk. Higher risk, smaller portion."

Recall back what is core funds and secondary funds. Secondary funds is like play money for short term growth - like buying IDS. How much would you dare to hold? If each core fund is about 10%, for a cautious investor, it would be about 3-5%.

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"how long should this newbie hold that 1 fund and at what criteria will he be "promoted" so as to be able to venture into another fund?"

Until he/she feels scared and worried! Then add in another fund to hedge the gamble... err, I meant risk.


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Please bear in mind that the above thoughts and opinions are formed from long term investment objective - to be more precise, to supplement retirement income.

If the investmnent objective is short term, then take short term measures. As said, take the money and run when the winnings is good!

Very often, we have both short term and long term objectives in the portfolio. To be clear on how we should act and take measures, it would helps to separate the portfolio into 2. One for short term, another for long term.

Do you meant that you have jumped directly into stage 2 with a lump sum investment on a full blown portfolio of several funds? As I could not see any other way this scenario is possible.

Then over the years, you have let it grown wild without trimming it or repotting it as you like its wild risky adventurous nature. And currently, looking at it with trepidation and fear that it will shrivel and die.

Whether it is a short term or long term investment, and if you have reached the objective, then take appropriate actions as you sees fit.

Time to harvest what you have sown.

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BTW The initial post to woonsc was written because I sensed some herd mentalily was forming in this forum. One say rebalancing, then another followed and repeat it without much further thoughts, as if it is some sort of formula that will applies to all situations.

Same with 'diversification'. Suddenly, it's like becoming a popular phrase. Any queries on what to do... diversification is the ready answer.

And lately, it is "managed portfolio".

If popularity is the ready answer regardless of who is asking, who is the investor... then we better conduct a poll.

Which is the popular fund, which managed port has the most subscription, which bond/equity ratio is most common... all your investoment headaches solved!

If KLCI is taken as the sample, then it dropping for the past 2 months, while HSI is still climbing since January.

A 100% portfolio in North Asia or Asia Pacific could still be in positive territory since 1st November eventhough the major indices has dropped 5 straight days. The recent drops just trimmed the gains made in the first week.

Buy the dips. If still gready for more and want to chase more short term growth, cut the local funds and switch them to North Asia region.

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Edit: Total positive gains were made in the 1st week.



This post has been edited by j.passing.by: Nov 16 2017, 02:13 PM