New to this thread although not new to Lowyat Forum!

Can I ask if a particular fund like RHB Islamic Bond Fund which uses profit sharing method as an alternative management fee, will the profit sharing portion for management be factored into the expense ratio? Using the following example:

RHB Islamic Bond Fund
Profit sharing of 15:85
Management fee = 0%
Expense ratio = 0.79

Libra Asnita Bond Fund
Management fee = 1.15%
Expense ratio = 1.14

I find that the two funds are really similar except for their expense ratio. How come the RHB Islamic Bond manage to have an expense ratio significantly lesser than its peers or Libra Asnita in this case by nearly half? Has the 0.79 taken into account of profit sharing which will be given to the management (fee)?

Thank you!

This post has been edited by wannabe1988: Sep 16 2018, 11:09 AM

Thank you for your reply! RHB Islamic is indeed bigger. That means economy of scale works in favour of RHB Islamic? I guess it makes sense given NAV of RHB is also twice bigger than Asnita. Given expense/NAV, with twice NAV size, expense ratio is also twice smaller? But is the profit sharing due to management considered as management fee since the factsheet said management fee is 0? Because in the financial statement, there is still management fee.

Finding hard time to decide between these two funds because Asnita has a slightly better Sharpe and risk-reward ratio although both funds have Sharpe & risk-reward ratio above 2 and 3 respectively if I remember correctly. But it seems like economy of scale enable RHB Islamic to gain better annualized returns and YOY returns. But Asnita will have better liquidity given the cheaper NAV although not sure if it matters for fund of this price range.

This post has been edited by wannabe1988: Sep 16 2018, 11:43 AM

Agree but that's why we buy mutual fund? It's diversified as long as there is no concentration whether in term of largest holding or sectors that the fund invest in. Bond duration matters but not sure where to get industry information on this. I supplement these by looking at three metrics collectively: Sharpe, risk-reward and volatility. Good thing Superfundmart actually provide industry avg for these. Then you know if a particular fund provides the basis to examine further if they can beat the industry avg.

Thank you to you two! Will look deeper into those links and info! by the way, just one quick question - profit sharing due to management is actually management fee, right? is it included in the expense ratio?

I think i am still trying to wrap my head around if it's worth it to invest in a bonds funds that pay similar to FD yet with all the risk. I am trying to balance my portfolio with 30% in bonds.

This post has been edited by wannabe1988: Sep 16 2018, 03:07 PM