Funds #6 & 7 were severely impacted. The fund managers have to answer for the concentration risk they did with such a significant portion of the funds' portfolio invested in the sukuk.

These are the risks investing in unit trusts, I don't think unitholders can claim back the money - there are no PIDM for unit trust funds.

Maybe can sue for damages if the fund managers & trustees violate their own trust deed/stated fund objectives by overconcentrating in one sukuk, but it is unlikely you can get your money back.

I no longer follow UT in Malaysia. But from the RHB Income Trust Fund 2 prospectus at https://studylib.net/doc/8658389/rhb-income-fund-2. The regulatory body is Securities Commission. So you can go and file a complaint there. In the prospectus (bottom of page 4 and top of page 5) you can contact RHBAM, SIDREC or SC for complains and dispute resolution.

The RHB Fund prospectus did not mention any mitigation for concentration risk, unlike the UT funds I was more familiar with, the Public Mutual funds - they have investment restrictions in clause 1.4 of the prospectus like the screen shot below where investment in any one issuer cannot exceed 10% of their NAV.




While it is not mentioned in the RHB prospectus, need to see whether the trust deed between RHB and HSBC Trustees mentioned the investment restriction or not (but I don't think RHBAM and HSBC Trustees will reveal incriminating evidence against themselves to you).

I am no expert, it's just some things I learn how to hold fund managers to their own rules stated in the prospectus and to exit the investment if fund manager violate their own rules.

This post has been edited by AbbyCom: Sep 19 2023, 12:01 PM


Attached File(s)
 PBSTGRF_Prospectus_Web_Version_compressed.pdf ( 438.02k ) Number of downloads: 15

Looking at the number of RHB funds impacted and the % of impact to their NAV, this looks like one fund manager is managing multiple RHB funds and is being lazy by just investing in the same sukuk/issuer for all the funds under the fund manager. This also happens with Public Mutual.

Bring this clause 1.7.7 to SIDREC or SC and see if you have grounds to file a complain and whether compensation is allowed. All the best, TS.

The clause seem to have a few loop holes to allow investment to exceed 20% or 30%. Let's see if the fund manager have any excuses/answers to SC to exceed that percentage.

Clause 1.7.7 say any one issuer cannot be more than 20% of the NAV to prevent concentration risk.

The NAV impact to two RHB funds as a result of zerorizing the sukuk value are above 20%, so fund manager 'allegedly' seems to have not followed the clause 1.7.7 in not letting any issuer be more than 20% of NAV.

But this being a legal document that we commoners do not quite understand, we raise this clause up to SIDREC/SC and see what is the reply, because there seem to be a few loophole for the fund manager to exceed the limit.

For example when fund manager bought the bonds, the NAV is below 20% but over time the bond value could have gone up or redemption to the unit trust fund have reduced the overall NAV such that this single issuer's NAV is >20%. The clause should then provide a time frame for the fund manager to reduce his exposure to below 20%.

Yep, UT no PIDM style protection, however TS has the right to seek explanation from FM or to find out if any risk mitigation SOP(s) were not followed.

Yes, for discussion's sake and to help TS have at least some avenues for redress instead of just accepting his fate. TS really at a loss what to do.

Also to put fund manager(s) on the spot so that if he/she really messed up, don't get away so easily. Or at least for TS to get a proper explanation rather than just take the NAV writedown like that.



BTW, you seem like someone quite well versed in these matters, any thing to advise TS?