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 ::

I remember someone mentioning certain websites they don't 'compensate' their graphs after distribution. Unlike FSM.

In FSM, income distribution will not be reflected as abrupt jump. The graphs in FSM are reflective of actual gain.

This post has been edited by puchongite: Oct 29 2017, 10:11 AM

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.

But you were saying that after distribution the funds will jump back faster, didn't you ?

From bloomberg graph we know the dated when the distribution were given. According to your 'theory', we should then see sharper rise in FSM graph after those dates.

Were they reflected in the graph ?

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

Please re-read your own posts especially the part quoted by j.passing.by. post #9443.

This post has been edited by puchongite: Oct 29 2017, 10:35 AM

Done

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

Thanks for pointing this out. I didn't know it is an independent event.

For FSM investors (where income distribution is automatically re-invested), income distribution has no benefit except all the pains of sudden portfolio numbers going haywire - which leads to anxiety and agony.

On other platforms, where investor is given an option to select payout method, income distribution can be seen as a way to AUTOMATICALLY cash out a portion of return for cash flow purposes. This option does not exist for FSM.

This post has been edited by puchongite: Oct 30 2017, 10:30 AM

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

I read those previous posts, still dont understand how the fees works. Even some did quoted is not that obvious / not that important.
Do mind share with me the calculation?

Example:

https://www.fundsupermart.com.my/main/fundi...-USD-MYUOBGQEFU

UNITED GLOBAL QUALITY EQUITY FUND - USD



Says if I buy today:
NAV: USD 0.5847 (October 26, 2017)

Minimum Initial Investment USD 1,000

Sales charge 1.75%

Investment amount = USD 1,000/ 1.0175
= USD 982.80
Units = Net Investment Amount /NAV price
= USD 982,80 / USD 0.5847
= 1680.86 units

Then how this Annual management charge 1.8% calculated?
And Trustee Fee 0.06%

Is it means says 1 year later, my profit shall hit at least (1.75% sales charge+ 1.8% annual management fess+ 0.06% trestee fee= 3.55%) only I can break even my investment on this fund?

Excerpt from FSM website:

A:
Only bond funds with sales charges previously will incur the platform fees. Bond funds that are already at 0% sales charge will not incur the platform fees.

Question: The bond fund I bought was without sales charge. Why would I still being charged platform fees?

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 ::

(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

I believe it should be construed as
1. Only bond funds with sales charges previously --> has a sales charges of x% before 20 September 2013, will incur platform fees;
2. Bond funds that are already at 0% sales charges --> already selling at 0% before 20 September 2013, will not incur platform fees

I just billed for platform fee today. LOL