i'm a muslim and i'm looking at syariah compliant products
today i looked at
public mutual's site
here

the public ittikal fund has a total return of 54.47% from 22-jun-2006 to 21-jun-2007
the public islamic bond has a total return of 5.92 % for the same period
the public islamic equity fund as a total return of 54.12% for the same period
the public asia ittikal fund has a total return of 28.67% for the same period
i know that past performance is no indication of future performance
my question is

as a layman, if the performance level are like this for say 1 year
and i put say 1k in any one of these funds, i mean put 1k and forget about it,
and sell everything after that,
at the end of one year, what would be my net profit,
would i even have a profit?
is 1k even allowable minimum value?

after deducting this fee and that fee and tax and all that

anybody know why the bond return is so low?

absolute begginer here.

This post has been edited by ttwangsa: Jun 23 2007, 11:41 AM

if you invest 1K, first it will be deducted of the service charge. it varies from 5%-7% depending on which fund. lets assume that this fund's charge is 7%. so first is 1k minus 7% = RM930 which will be invested into the fund.

so 1 year it performs 54.47% = RM930 + 54.47% = RM1,436.57

and the annual management fee = 1.5% +
management expense ratio = 1.56% +
annual trustee fee = 0.07%
= 3.13%

lets assume that the performance indication is not after deducting the annual fees (because some other funds houses' performance indication is after deducting the annual fees, not sure about public mutual's).

therefore RM 1,436.57 - 3.13% = RM1,391.605

and if they give out dividend for the year, it is already been taxed at source. which means the fund house paid the tax to the government at 28% (or was it 27% not sure). but you can claim your money back if you are not eligible for tax or less tax by calculating your tax and submitting your tax form and original tax voucher to IRB.

This post has been edited by ivmaniacvi: Jun 23 2007, 01:10 PM

ivmaniacvi, your calculation is wrong.

Initial investment for most funds is 1k for public mutual.

Management Expense Ratio is inclusive of Annual Management fee, annual trustee fee + miscellaneous fee.

The public ittikal fund return of 54.47% is in NAV value and already reflected the Management Expense Ratio.

Supposed you invested RM 1000 with 6.5% service charge. So it would be approx RM 935 NAV at the beginning.
At end of 1 year, it grows 54.47% and becomes RM 1444.29 (RM 935 * 154.47%).

So your net profit would be RM 444.29 which translate to about 44.43%.

Keep in mind that the Public Itikal is a moderate risk fund. You cannot compare it directly to islamic bond fund as they are 2 different things.

Regarding the Islamic bond fund, its service charge is only 0.25% and belong to conservative investment. So the net profit for islamic bond is still 5%+, well above the FD rate.

Bond is just like a loan. The companies borrow money from the investors instead of banks and pay the interest rate as per contract. As long as the company doesn't go bankcrupt, it pays you the interest.

Even if the company goes bankcrupt, it will sell off its property and pay to the bondholders before distribute the remaining to shareholders. A bondholder might still get full $ back from a bankcrupted company, but a shareholder cant for sure. If a company performs well, shareholders enjoys higher return in terms of share prices, but bondholders still gain the same yield as per contract. Basically its the risk and return.

Tax wise, captial gain (as in NAV raise value) doesnt subject to tax. Distribution (dividend) is taxable.

Hope it solves your doubt.

so basically if i put in 1k, AND IF, a BIG IF, the return rate is 54.47%, I can sell it and get a net profit of 444.29. but what about the dividends? as you mentioned the dividends are taxed so we get the after-tax dividends, if any

also the funds with lower risks have lower return rate. i get that.
but according to public mutual's page


Public Asia Ittikal Fund is high risk
but return rate is 28.6 %

while
Public Ittikal Fund is Moderate
return rate is 54.47%

what's high risk/ moderate/ agresive anyways?

Normally the distribution of the fund is calculated into the total return percentage. So there would be no more than that. PIttikal is a quite old fund which maybe the bought a lot of stocks before the bullish market, just take a few counters as example: Digi, Genting, Maxis and so on. Of course the return would be more. As for PAIF, it was launched not so long ago, it is consider a good return around 28.6% within a year.

High risk/aggressive means the portfolio is focus on growth stocks, blue chips, and so on. Maybe fund thrown into stocks only will >90%. As for moderate one, it is up to 75%.(I guess)

This post has been edited by shih: Jun 23 2007, 08:55 PM

don't forget to include your dividends in your income tax submission to claim your tax credits!