Me started in 2008...2010-2011 seeing deep red...end 2011 only seeing black

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Added on June 13, 2012, 10:38 amMalaysia boleh short sell meh

This post has been edited by Pink Spider: Jun 13 2012, 10:38 AM

Most likely China/Emerging Market equity funds...had I not dumped my holdings during 2010 and switched all to income funds...I'd still be in the red

This post has been edited by Pink Spider: Jun 14 2012, 10:44 AM

1 - Understand what is NAV
NAV = Net Asset Value
In finance language, net asset = capital
E.g. u invest RM10,000 in ABC Fund, RM10,000 is your CAPITAL INVESTED

2 - Understand what is income
Income = Revenue LESS Expenses
In investment/finance, there are 2 types of income:
(1) Realised incomes - dividend income, interest income, net gain from sales/disposals
(2) Unrealised incomes - gain from increase of market value of investments i.e. "paper gain"
Usually, UTs distribute income from (1). However, there are chances that losses from (2) exceed incomes from (1).

For discussion purposes, let's assume (2) = zero
If u know your finance, when a stock distributes dividend, THEORETICALLY its stock price would go down.
What determines a stock price (other than market forces)? Total Assets - Total Liabilities = Net Asset

Let's say XYZ Berhad,
Total Assets including cash = RM100M
Total Liabilities = RM20M
Net Asset = RM80M
Shares in circulation = 80M shares so NAV per share is RM1

Now it pays dividend of RM10M to its shareholders
What will happen to its Balance Sheet?
Total Assets including cash = RM100M - RM10M = RM90M
Total Liabilities = RM20M
Net Asset = RM70M
Shares in circulation = 80M shares so NAV per share is RM0.875

Let's say Mr Wong Sifu is the SOLE SHAREHOLDER of XYZ Berhad...

Mr Wong Sifu's portfolio
Before dividend:
Value of shares = RM80M
Cash on hand = RM0.00
Total = RM80M

After dividend:
Value of shares = RM70M
Cash on hand = RM10M
Total = RM80M

See the "magic"?

Applying this to Unit Trust...

A fund CAN give u income distributions EVEN IF its underlying assets' market value keep dropping ("paper loss") if they get enough dividends and interest incomes ("realised incomes")

As such, PLEASE READ THE FUND REPORTS AND PROSPECTUS CAREFULLY

Regular income distributions don't make unitholders richer
It is capital gains that make them richer

This post has been edited by Pink Spider: Jun 14 2012, 01:17 PM

Aiyo name the funds lar...it's not like revealing the fund names we can steal your units

calling PM agents...got an unhappy customer here

Why u buy Energy and Gold fund...

Come come I share my "pie" with u

Aiyo kenot attach Excel file ka

26.6% AmDynamic Bond
6.1% Eastspring Investments Global Emerging Markets Fund
6.5% Eastspring Investments Global Leaders MY Fund
13.9% OSK-UOB Emerging Markets Bond Fund
4.3% OSK-UOB Global Equity Yield Fund
13.4% Hwang Global Financial Institutions Fund
29.4% Hwang Select Income Fund

Now topping up on monthly basis...to maintain 60% in bonds 40% in equities

In b4 Pinky never likes Malaysian equity funds

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Added on June 14, 2012, 6:55 pmREITs?

Maybe Eastspring Investments Equity Income Fund would be good for u...as it invests in high-yielding equities...it also got quite high REIT exposure

This post has been edited by Pink Spider: Jun 14 2012, 06:55 PM

My favourite Money Market Fund (though FSM classify it as Fixed Income) - AmIncome Plus
Its benchmark is Maybank 1-Month FD, though in the past few years it has consistently beaten 12-Months FD

AmInvestment is not well known for its equity funds...the last time I study FSM funds, not even one from AmInvestment managed to get into my shortlist.

Don't need to switch AmDynamic Bond lar...when u feel that bond is peaking/equities are very attractive, stop topping up and divert all your ammo to equity funds lor...this is my approach

OSK-UOB...plenty of good choices:
50% MYR 50% Asia Ex-Japan - Equity Trust
100% MYR (Dividend) - Malaysia Dividend Fund
100% MYR (Growth) - Smart Treasure (last time award winner...but recently not so good. Maybe due to its relatively heavy weighting on small cap stocks )
Emerging Markets Bond Fund
Global Equity Yield (yea its track record is not superb, but I believe in diversification )

I know it's a cliche...but still...

Try fundsupermart.com

Agreed. Maybe a performance-driven management fee structure?

PLEASE DON'T MISLEAD UNINFORMED INVESTORS

Dividends will NEVER increase investors' wealth

please go read kparam's blog, u are going to lead your clients to holland if u persist with this thinking

Agent oh agent, >50% of my net worth is in various unit trusts, of course I know how it works.

But dividends DO NOT increase the value of my portfolio, gains in NAV price do. Please do not mislead people here.

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Added on June 26, 2012, 6:42 pmoi where is kparam and wongmunkeong when we need them the most?

This post has been edited by Pink Spider: Jun 26 2012, 06:42 PM

it's u who started to get overly defensive when criticised

average cost per unit is reduced when there is dividend, yes

E.g.
Buy~ RM1000 / 1000 units = RM1 per unit
Dividend/unit split~ RM1000 / 2000 units = RM0.50 per unit
yea cost per unit is reduced when there is dividend/unit split

BUT, so will the market price/NAV of the fund. At the end, it's back to square one.

Sorry if u felt offended, but too many investors who do not know the mechanism of UT valuation are mislead into thinking that more dividends = more profit. But in reality, dividends eat up into investors profits because of taxes and other administrative expenses involved.

This post has been edited by Pink Spider: Jun 26 2012, 07:39 PM

I just did a very long-winded illustration but my itchy hand accidentally deleted the whole thing

Now I'd just keep it short

This is a practical situation and a practical illusion

U said it above, "now let say the current PRICE UP..."
Dividends (or should we use sifu wongmunkeong's word, "distribution"? ) do not change your financial position AT ALL (perhaps maybe throw some taxes and expenses at you). ONLY movements in NAV price do.

Chronology of a fund making distribution:
1. Cum-distribution (distribution is declared)
2. Ex-distribution (here is when the fund NAV kaboom drop down a lot)
3. Distribution is paid/reinvested

Between 2 and 3, it usually takes from a week to maybe a month. During that period, that amount of distribution would go "missing" from unitholder's account. If u print your portfolio statement during that period, u will see that fund in deep red probably.

And during that period, the fund is still "in business", speculating, trading, etc, and value of its holdings be it shares or bonds would still be fluctuating on daily basis.

Then 3 comes, your holdings would go back up as the distribution is reinvested for you. The difference between value of your holdings on 1 (cum-distribution day) and value of your holdings on 3 (the day distributions are reinvested) are due to:
(1) Taxes on distribution
(2) Expenses and fees
(3) Market fluctuations

Just think of a fund as a "company", and we unitholders are the "shareholders" of the fund. The fund is solely in the business of investing in shares and/or bonds with some cash as liquidity buffer.

(From the fund's perspective)
A fund gets its income from - dividends from shares, coupon payments from bonds, interest from cash placements (A)
A fund gets its capital gains from - increases in market value of the shares and/or bonds it holds (B)

(From unitholder's perspective)
Unitholders get "income" when the fund declares distributions, and distributions can only be declared from (A)
Unitholders get "capital gain" when NAV price of the fund goes up, and it can be due to (A) or (B) or BOTH

Can u tell the difference between red and blue

This post has been edited by Pink Spider: Jun 26 2012, 10:36 PM

whether u hv 100 units@RM1.00 per unit or 1000 units@RM0.10 per unit, ur holding is STILL RM100. I just dun understand the hype about dividends distributions

an unit is just a DENOMINATION, it's not like more units = more "soldiers" to fight for u!

Please re-read my post...

E.g.

u invest RM1K today

then tomolo declare distribution, the fund goes ex-dividend, u see in your statement, RM900 (RM100 "gone"? )

then 2 weeks later, distribution credited into your account, your statement shows, RM1,010. Is the additional RM10 the result of the "dividend"?

Answer - See blue bold above. During the 2 weeks, the fund is still in business, the market value of its investments fluctuating on daily basis. It's NOT the effects of dividend, it's market value movements.

This post has been edited by Pink Spider: Jun 28 2012, 09:48 AM

give u a simple analogy to understand the whole process...

- Imagine the fund as a piece of cake
- The fund manager (FM) declares 1/4 of the cake as "dividend" on Day 2 ("cum-dividend")
- On Day 4, the FM cuts the cake into 4 portions
- 3 portions remain untouched, the FM takes 1 portion to another table to be cut into smaller portions to DISTRIBUTE (here's the dividend administration, "ex-dividend")
- Day 20, the 1 portion is returned to the kitchen table (REINVESTED, credited back into investors' account)

Focus on the days between Day 4 and Day 20, in between those days, the 3 portions are "working" to earn income, while 1 portion is temporarily "removed" for administration.

From Day 20 onwards, the whole "cake" is "working" again.

Do u get the idea

This post has been edited by Pink Spider: Jun 28 2012, 10:27 AM

Ok, well said.

Now shall we consider this topic settled and closed?