Sunday, 22 December 2013

Warm Wishes!


A Merry Christmas and A Happy New 2014 Year from Invest Made Easy

We hope all your financial goals will be achieved and all investments turn fruitful!

Wednesday, 18 December 2013

Wednesday, 11 December 2013

Electricity Tariff Hike! Is TNB To Be Blamed?

Ever since the announcement of the recent Electricity Tariff Hike by 0.0499/kWhour, there's been mass displeasure by many Malaysian towards TNB as a company. Such was the furor generated by the hike that many Malaysians including the Youth Chief of a certain ruling party joined in to lambaste the utility company, alleging them of hiking the tariff to increase profit.

Meanwhile on the internet, you can find also find open criticism of the Tariff Hike such as from this Facebook group created with the name "Anti TNB Naikkan Harga".


The funny thing about the group is that members are now posting advertisement marketing products instead of discussing on how to manage the tariff hike.

Not forgetting anti-TNB propaganda images such as this:


or this


While all the above served to illicit further hate among Malaysians towards the utility company, it does make me wonder if this recent tariff hike was meant for the benefit of the utility company?

Now if we look at things logically, for TNB to push through a tariff hike proposal through the Parliament, they would require an extremely strong justification for it to be debated. While the general perception of the society is that the tariff hike will increase the company's profit, would that reasoning be used as a logical justification after a series of hikes ranging from petrol to sugar pricing recently.

While I myself dislike the fact I might have to pay more for my electricity consumption, I believe we need to further understand the real reason behind the tariff hike. It sounds ridiculous to jump into the bandwagon of people screaming for blood and slandering a company that has continuously ensure reliable electricity supply to our homes. 

Actual Reasons for Tariff Hike:
1) Hike needed to cater for capital expenditure



Despite the misleading headlines reported by TheStaron the 7th of December 2013, the contents of the article state the following:


As stated in the article, with TNB's capital expenditure (money spent on building assets such as power stations, transmission towers, substations, etc) reaching RM7 billion in 2012, the net profit of RM4.2 billion seems rather insufficient for a so called "profitable" company. With profits proving insufficient to cover the expenditure of improving electricity supply, what else can any company do apart from turning to loans in order to cater the deficit. 

Year by year, consumers continue to seek for zero interruption of electricity supply yet demanding to pay the same tariff amount. However, can any utility company be able to meet to such demands without incurring expenditure on maintenance, expansion, upgrading and replacing old asset? 

2) The money from the Tariff Hike does not go to TNB alone.
A peek at TNB's company website indicates the following:


The point being that the biggest reason for the Tariff Hike is due to the Government's Subsidy Rationalization Program. You might or might not know that the fuel supplied by Petronas to TNB in order to generate electricity is largely subsidized by the Government in an effort to ensure low tariff over the years. 

Similar to the reason behind the petrol price increase, the subsidy for fuel has taken its toll with the present Government debt standing at exceeding RM500 billion. Reduction on fuel subsidy was first witnessed by Malaysians through petrol prices increase of 20cents/liter a few months ago. The reduction of subsidy on fuel used by TNB to generate electricity is all but another part of the Government initiative to reduce on its expenditure. 

However, TNB being the only entity providing electrical supply to consumers was used as many would term as a scapegoat by Malaysians. The fact is from the 0.0499/kWhour hike, 82% of that income goes to the Government while the remaining 18% (0.009/kWhour) is for TNB to supplement its capital expenditure.

Despite the tariff hike, the current Government is still subsidizing approximately 14billion per year on fuel. 


Summary
Some readers might see this post as pro TNB or pro Government, which I am not. The entire purpose of this post is to discover the truth behind the tariff hike and eliminate the misconception many have towards  a company that has served us faithfully throughout the years.

Obviously there will be the occasional black out here and there which is a norm for any utility company in any country. Yet I choose to believe that TNB as a whole will continuously improve on their service delivery for Malaysians. 

On the other hand, let us not forget that as paying consumers, we have every right to demand for fast response when there's an interruption or when we need a new meter installed.

Cheers and Happy Investing!

P.s : If a certain Youth Chief is criticizing the tariff hike which was initiated by his own ruling party..it certainly tells us a lot huh...

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Monday, 9 December 2013

HLA Cash Promise, What's All The Fuss About?

Most recently, a blog reader of mine highlighted this product by the name of Hong Leong Assurance (HLA) Cash Promise. This product has generated quite a buzz over the past 1-2 years due to its annual guaranteed cash benefits, paid on the first year of subscription. In addition the policy subscriber is only required to deposit a fix amount over a period of 6 years to enjoy the annual guaranteed cash benefit  payout (approximately 20% of the annual fix amount deposited) for 25 years. 

In fact the HLA Cash Promise is intensely debated in a thread at LowYet.net as shared below:


Despite the heated discussion of the product as well as the occasional sharing of experience related to unscrupulous agent trying promoting the product blindly, there's still not much that can be concluded from the product.

I tried searching Hong Leong Assurance website only to find the product disclosure sheet which still lack certain information such as the how the annual guaranteed cash benefit is calculated or how the dividend is calculated.

Google searched the product only to discover a few blogs created by representative/agents of this product. Luckily I manage to locate the brochure for the product from one of the blog. Despite the limited information, I'll try my best to review this product to the best of my understanding. 

Now let us take a look at what are the key points of HLA Cash Promise:

Key Points of HLA Cash Promise
  • This is an Insurance Saving Plan (another common name is Insurance Endowment Plan)
  • This is a 25-year participating endowment plan with Guaranteed Yearly Income. 
  • The Guaranteed Yearly Income is payable from end of 1st policy year up to maturity. 
  • The premium payment term of this plan is limited to 6 years only. 
  • The plan provides coverage for Death and Total Permanent Disability*
  • Upon maturity you will enjoy the following:
    • Guaranteed Maturity Benefit
    • Accumulated Guaranteed Yearly Income (if any)
    • Accumulated Non-Guaranteed Annual Cash Dividend (if any)
    • Terminal Dividend (if any)
*I will not elaborate much on the insurance coverage of this product as I believe many are into this plan due to the attractiveness of the annual guaranteed cash benefit and maturity amount. 

What will you get on a yearly basis?
  • Guaranteed Yearly Income
  • Non-Guaranteed Annual Cash Dividend

Descriptions of the above is shown in the product brochure below:


About Guaranteed Yearly Income
A guaranteed amount paid yearly for 25 years.

Both the brochure and the product disclosure sheet does not indicate how the guaranteed amount paid is calculated. However from blogs providing calculation samples, I believe the rate used to calculated Guaranteed Yearly Income is 20% of the annual amount deposited.

For example;
If you subscribe to this plan and you're depositing RM50,000 per year over 6 years, the Guaranteed Yearly Income is
= 20% of RM50,000
= RM10,000 (paid out yearly to you over a period of 25 years)

You are also given flexibility to do the following with your Guaranteed Yearly Income:

  1. Cash out the yearly cash for immediate usage
  2. Save the cash by depositing with Hong Leong Assurance and let your cash grow with interest over 25 years. (The interest offered by HLA for saving your Guaranteed Yearly Income according to one of blog is 5.25%)

About Non-Guaranteed Annual Cash Dividend
A non guaranteed amount that is declarable annually on survival of the life assured at the end of each policy year beginning from year 1 until maturity.

Once again, both brochure and the product disclosure sheet does not indicate the (%) of the cash dividend as well as based on what principal amount will the cash dividend be calculated.

Referring to blogs providing calculation samples, I conclude that the Non-Guaranteed Annual Cash Dividend is 2% of the annual amount deposited.

For example;
If you subscribe to this plan and you're depositing RM50,000 per year over 6 years, the Non-Guaranteed Annual Cash Dividend is
= 2% of RM50,000
= RM1,000

The same flexibility is given for Non-Guaranteed Annual Cash Dividend, allowing the policy holder to cash out or save the cash.

Total Amount Approximately Obtained from Yearly Income
This is a sample approximate based on the following scenario:

  • RM50,000 per year deposit over 6 years
  • 20% on Guaranteed Yearly Income
  • 2% on Non-Guaranteed Annual Cash Dividend
  • No withdrawal of cash over 25 years, saving it with HLA at 5.25% per annum interest

Calculation of the Sum of Yearly Income over 25 years as shown in the table below:


What will you get when policy matures?
Upon maturity you will enjoy the following:
    • Guaranteed Maturity Benefit
    • Accumulated Guaranteed Yearly Income (if any)
    • Accumulated Non-Guaranteed Annual Cash Dividend (if any)
    • Non-Guaranteed Terminal Dividend (if any)

About Guaranteed Maturity Benefit
One of the blog promoting this product wrongly misinterpret the Guaranteed Maturity Benefit to be the return of the total cash deposited over 6 years. In truth, the Guaranteed Maturity Benefit is paid according to the Entry Age of the policy holder whereby the amount is calculated using a multiplier value of the Guaranteed Yearly Income.

See table below for details of Guaranteed Maturity Benefit calculation


For example;
If you subscribe to this plan at the age of 30, depositing RM50,000 per year over 6 years and the Guaranteed Yearly Income is RM10,000, 
The Guaranteed Maturity Benefit upon Maturity is 
= 12.5 x Guaranteed Yearly Income
= 12.5 x RM10,000
= RM125,000

About Non Guaranteed Terminal Dividend
The value of this dividend is unknown to anyone except HLA. Therefore this dividend will be omitted from any calculation.

What is the IRR of HLA Cash Promise?
In order to calculate the Internal Rate of Return (IRR), the total payout upon maturity of the policy need to be determined.

The table below summarizes the total payout*:


With this, we can now determine the IRR for HLA Cash Promise as shown below:

IRR = 3.62%
Summary
Based on the calculated of IRR for HLA Cash Promise of 3.62% (disputable if you do not agree), we see that the rate is almost similar to you keeping your money in a fixed deposit account. This is a huge contrast to the exaggeration written by certain blogs promoting this product.

Do take note that I have excluded the Non-Guaranteed Terminal Dividend which could make a significant difference to the IRR calculation if the value given is big.

In all honesty, the product is considered a great instrument for saving up your money (not investing) and at the same time enjoy the insurance protection. Never the less, if you intend to sign up for this plan, do remember to verify and check on the charges incurred.

Cheers and Happy Investing!

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Friday, 6 December 2013

EPF Posts RM10.11 Billion Investment Income For Q3 2013 - Q3 2013 Income Up 44%

Taken from KWSP Website:

The Employees Provident Fund (EPF) generated investment income of RM10.11 billion for the third quarter ending 30 September 2013 (Q3 2013), representing a healthy year-on-year growth of 44.00% compared with RM7.02 billion investment income generated in the corresponding quarter in 2012.

In a statement issued today on its unaudited investment results for the third quarter of 2013 (Q3 2013), EPF Chief Executive Officer Datuk Shahril Ridza Ridzuan said, “The performance is primarily driven by a more robust equity market on both domestic and foreign fronts, coupled with a significant rise in trading volume in the third quarter. We have also benefited from higher dividend payouts from listed companies due to improved earnings.”

Equities continued to generate a higher proportion of investment income in Q3 2013 amounting to RM5.71 billion or an increase of RM3.37 billion compared with RM2.34 billion recorded in the corresponding period in 2012. Meanwhile, investment income derived from Real Estate and Infrastructure assets surged from RM54.62 million in Q3 2012 to RM429.16 million in Q3 2013, continuing the growth in performance since Q1 2013. 

The higher income from Equities helped offset a fall in income from Loans and Bonds, which was lower at RM2.28 billion compared with RM3.06 billion in the Q3 2012. This was reflective of the overall fall in yields for maturing assets that were reinvested. The higher Q3 2012 income was also due to one-off capital market transactions which were not repeated in Q3 2013. 

Malaysian Government Securities and Equivalents in Q3 2013 posted RM1.55 billion in income, reflecting a nominal increase of 0.18 per cent compared with Q3 2012 while Money Market Instruments contributed RM145.23 million for Q3 2013 income.

“The EPF continues to diversify its investments across markets, sectors and asset classes to provide optimal sustainable returns in the long term. Our global investments offer stable returns on a long-term basis, befitting our risk-return appetite as a retirement fund. We are also able to find opportunities from, and reduce the risk of, asymmetric market movements, such as the improvement in global developed economies and the selldown in emerging market currencies,” Datuk Shahril said.

As at Q3 2013, the EPF’s total overseas exposure constituted 20.39 per cent of its total investment assets based on book value, registering a rise from 18.97 per cent in Q2 2013. During the quarter under review, an additional USD2.50 billion of overseas investments were made and of the total, USD2.25 billion had been channelled into global equity mandates and the balance invested in global bonds, infrastructure and private equities. 

During the same quarter, the EPF also outsourced a further RM1 billion for domestic fixed income mandates.

Datuk Shahril added, “Currently, more than one third of EPF’s total investment assets are shariah compliant. The growth in Islamic finance assets globally presents us with the opportunity to further expand our investments into this space. This is also in line with the Fund’s diversification programme to continuously rebalance our portfolios according to our risk-return profile.

“Our efforts in shaping the Islamic finance industry have led us to be awarded the Best Institutional Solutions Provider in the Islamic Finance News (IFN) Islamic Investor Poll 2013. This is the second year in a row that EPF has received a major award in the Islamic Finance space.”

As at 30 September 2013, EPF’s investment assets increased by RM57.85 billion to RM568.04 billion from RM510.19 billion in Q3 2012. Total contributions of RM12.76 billion received in Q3 2013 exceeded the total amount withdrawn of RM8.85 billion, resulting in RM3.91 billion net inflows of funds for the quarter under review.

On the global economic outlook, Datuk Shahril said, “Even though we see signs of the global economy gradually improving, we remain concerned that the recovery is fragile, given ongoing policy and economic risks in the United States, Europe and China. The recently announced Budget 2014 is positive for the Malaysian economy and fiscal position as it clearly sets the agenda to restructure taxes and subsidies for long-term structural benefits and competitiveness. The EPF will continue with its policy of targeting real returns via prudent asset allocation and investment strategies.”

Thursday, 28 November 2013

How Amanah Saham Bumiputera (ASB) Calculates Dividend and Bonus

Once GST is implemented in 2015, many are expecting the inflation rate for Malaysia to increase. With that in mind, many Malaysians are searching for passive investment that could generate returns that are equal or higher then the inflation rate in order preserve the value of their savings. 

One of the popular "near" guaranteed passive investment available in Malaysia is Amanah Saham Bumiputera. Amanah Saham Bumiputera or ASB in short is one of the most seek after passive investment by Malaysian Bumiputera due to its consistent dividend and bonus. See historical dividend and bonus for ASB below:

Historical Dividend courtesy of 1-Million-Dollar-Blog
Due to ASB's popularity, most financial/investing/personal finance blog including this one would have written extensively about ASB. In some of my older articles about ASB, I wrote with the perception that dividend and bonus from ASB can be summed into a single value in order to calculate the annual return.


A BIG MISTAKE Indeed! 
(Rest  assured I've made the necessary amendments to my older articles)

Now if we look at dividend and bonus from a logical point of view, the fact that ASB declares dividend and bonus separately should have raised some doubts. If both are the same, why not just declare everything as dividend only! 

This severe lack of understanding on the difference between dividend and bonus has lead many ASB investors to have the following misperceptions:
  • Annual return is calculated based on the summation of dividend + bonus
  • Dividend and bonus are calculated based on the balance in ASB account as of 31st Dec for each year
If the above are incorrect, then how exactly does ASB calculate their dividend and bonus for investors? Let's take a look...

Understanding & Calculating ASB Dividend and Bonus
ASB Dividend
Key Points About ASB Dividend:

  • ASB Dividend and ASB Bonus are calculated differently and separately from one another. 
  • Dividend is calculated on a monthly basis over the duration of the year dividend is declared. We term the monthly dividend calculation as Monthly Dividend Amount.
  • Total Dividend Paid for the year is the Sum of calculated Monthly Dividend Amount from Jan till Dec.
  • To calculate the Monthly Dividend Amount for each month, the Lowest Account Balance for each month is used.
  • Lowest Account Balance for a month is defined as the lowest value of your ASB account for that particular month. Let's see Example 1 to 3 below:
     Lowest Account Balance (Example 1): 

  • On 1st Jan 2013, your account balance in ASB is RM5000
  • You withdraw RM1000 on the 3rd of Jan 2013
  • You then Redeposit RM2000 into your ASB on the 10th of Jan 2013. 
  • What is your Lowest Account Balance for Jan 2013? 
  • Answer is RM4000.00

     Lowest Account Balance (Example 2):

  • On 1st Jan 2013, your account balance in ASB is RM5000
  • You deposit RM1000 on the 3rd of Jan 2013
  • You then withdraw RM2000 from your ASB on the 10th of Jan 2013. 
  • What is your Lowest Account Balance for Jan 2013? 
  • Answer is RM4000.00

     Lowest Account Balance (Example 3):

  • On 1st Jan 2013, your account balance in ASB is RM5000
  • You deposit RM1000 on the 3rd of Jan 2013
  • You then withdraw RM500 from your ASB on the 10th of Jan 2013. 
  • What is your Lowest Account Balance for Jan 2013? 
  • Answer is RM5000.00 

Formula for ASB Dividend Calculation:
Monthly Dividend Amount calculation:


By obtaining the Monthly Dividend Amount from Jan till Dec,

Total Dividend Paid is then calculated using this formula:


ASB Bonus
Key Points About ASB Bonus

  • Bonus is also calculated on a monthly basis which we term it as Monthly Bonus Amount.
  • The significant difference between Bonus and Dividend is that Total Bonus Paid by ASB is the Sum of Monthly Bonus Amount calculated from the number of months you've stayed invested in ASB. However this is subjected to a maximum of 120 months or 10 years from bonus declaration year. 
  • In other words, ASB Bonus is calculated based on all the months over a period of 10 years starting from the year bonus is declared. 
  • To calculate the Monthly Bonus Amount for each month, ASB also uses the Lowest Account Balance as part of the calculation.
  • Let's take a look at examples below:
     
     No. of Months eligible for Total Bonus Calculation (Sample 1)
  • You have invested into ASB since 1st Jan 2010
  • ASB Bonus of 2% is declared for 2013
  • How many months will be taken into consideration for Monthly Bonus Amount calculation?
  • Answer : 48 months (Jan 2010 till Dec 2013)
     
     No. of Months eligible for Total Bonus Calculation (Sample 2)
  • You have invested into ASB since 1 Jan 1990
  • ASB Bonus of 2% is declared for 2013
  • How many months will be taken into consideration for Monthly Bonus Amount calculation?
  • Answer : 120 months (Jan 2004 till Dec 2013)* 
*Bonus calculation will not include the months from Jan 1990 till Dec 2003 as the bonus is set to a maximum of 120 months or 10 years from the year bonus is declared.

Formula for ASB Bonus Calculation:
Monthly Bonus Amount calculation:



By obtaining the Monthly Bonus Amount over a period of 120 months from the year bonus is declared,

Total Bonus Paid is then calculated using this formula:


Sample Calculations
Case Study 1 :
Invest Lump Sum of RM50,000 starting Jan 2012
ASB declared the following for 2012:
Dividend 2012 = 7.75%
Bonus 2012 = 1.15%

What is the Total Dividend Paid, Total Bonus Paid and Actual Annual Rate of Return for 2012?

Calculation:


Observation:
As you can see, the Lowest Account Balance for Jan 2012 is RM0.00 because this investment started in Jan 2012. If you've started in Dec 2011, then the Lowest Account Balance for Jan 2012 should be RM50,000.

Despite Dividend declared is 7.75% and Bonus at 1.15%, which many tend to sum up as 8.90%, we see that the Actual ASB Annual Rate of Return for 2012 is only 7.21%.

Case Study 2 :
Invest Lump Sum of RM50,000 starting Jan 2011
ASB declared the following for 2011:
Dividend 2011 = 7.65%
Bonus 2011 = 1.15%

ASB declared the following for 2012:
Dividend 2012 = 7.75%
Bonus 2012 = 1.15%

What is the Total Dividend Paid, Total Bonus Paid and Actual Annual Rate of Return for 2011?
What is the Total Dividend Paid, Total Bonus Paid and Actual Annual Rate of Return for 2012?

Calculation for 2011:


Calculation for 2012:


Case Study 3 :
Invest RM500 monthly starting Jan 2012
ASB declared the following for 2012:
Dividend 2012 = 7.75%
Bonus 2012 = 1.15%

What is the Total Dividend Paid, Total Bonus Paid and Actual Annual Rate of Return for 2012?

Calculation:


Summary
Finding out how ASB calculates Dividend and Bonus has been a real eye opener for me. This changes my perception on ASB and hopefully assist others to make better decisions when it comes to investing into ASB. A clear cut example for ASB investors is maximized the Dividend and Bonus for ASB through Lump Sum investing instead of monthly. In addition, knowing how the calculation works helps you to chart your financial goals more accurately.

With that I bid all of you Cheers and Happy Investing!


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Sunday, 17 November 2013

OCBC - MaxEdu Choice Plan (Finding out the % Return)

Most recently, I realized that there's a growing trend of Malaysian who are planning or have already invested into an insurance savings plan / child education savings plan. Such a plan also commonly known as annuities scheme requires the participant to pay a certain amount of cash for a fixed period of time. After which that participant will receive periodic payments over an extended period of time, followed by a lump sum payment return upon maturity of the plan.   

In this post, I will be looking at a child education savings plan by OCBC Bank called MaxEdu Choice. 

Key Characteristics of MaxEdu Choice
1. Pay only 5 years of Premium
2. Receive or accumulate cash payouts in the policy year when your child turns 17.
3. Policy matures in the policy year when your child turns 21
4. Includes insurance cover for death, terminal illness, or total and permanent disability for your child

How does MaxEdu Choice work?
Sample scenario as provided by this plan:

OCBC MaxEdu Choice - Click to Enlarge
How much Mr. Tan has to pay for this plan?
Premium : RM6,712.20 per year (RM559.35 per month)
Total years of premium payment : 5 years
Total premium paid after 5 years : RM33,561


What will Mr. Tan will obtain in return:
  • Insurance cover of RM30,000 for death, total and permanent disability (TPD) and terminal illness coverage for his son, Brandon till the age of 21. (please correct me if I am wrong)
  • Two payouts when Brandon turns 17 and 18. Amount paid is equivalent to 5% of the sum insured. That would be RM1,500 per year.
  • Another two payouts when Brandon turns 19 and 20. Amount paid is equivalent to 30% of the sum insured. That would be RM9,000 per year.
  • When Brandon turns 21, the policy matures and Mr. Tan will receive a guaranteed amount equivalent to 30% of the sum assured (RM9,000) and a non-guaranteed amount of RM18,016. This would total up to RM27,016 received by Mr. Tan upon maturity.
The diagram below illustrates how the payout of the policy looks like:

Click to Enlarge
What is the percentage (%) annual returns of MaxEdu plan?
The returns of this plan is not a straightforward calculation due to the following reasons:
  1. When Mr. Tan contributed a total of RM33,561 over 5 years, there was no annual interest earned.
  2. From the 6th to the 10th year of this plan (another 5 years), the RM33,561 placed by Mr. Tan also earned zero annual interest.
  3. Only from the 11th year onwards will Mr. Tan earn 5% of the sum assured (2 years), 30% of the assured (another 2 years) and finally receive a lump sum cash payment upon maturity. 
Therefore to determine the percentage (%) annual returns of this plan, we have to calculate the returns using the Internal Rate of Return (IRR) formula.

Internal Rate of Return based on MaxEdu Guaranteed Returns only:
Amount Invested : RM33,561
Guaranteed Returns : (RM1500 x 2) + (RM9000 x 2) + RM9000 = RM30,000
Internal Rate of Return : 

Internal Rate of Return based on MaxEdu Guaranteed + Non Guaranteed Returns:
Amont Invested : RM33,561
Total Returns : (RM1500 x 2) + (RM9000 x 2) + RM27,016 = RM48,016
Internal Rate of Return :


Summary:
Through identifying the IRR of this plan, you can now determine the worthiness of investing in this plan. 
Is there a need to have insurance protection for your kid? Perhaps saving up and getting the best returns for you child education fund is the main priority?  Could there be better investment plans around? 

Cheers and Happy Planning!

P.s : I just realized that OCBC MaxEdu plan is only available at Singapore! Never the less, by finding out what's on offer from our closest neighbor, I realize that the insurance savings plan offered in Malaysia is so much better then Singapore in terms of IRR.  .

Related Post:

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Tuesday, 12 November 2013

Top 10 Best Performing Unit Trust Funds As of 8th November 2013

If this is your first time reading this review, I would highly recommend that you read "A Guide Towards Understanding Unit Trust Performance Table"before proceeding.

Review
Fund Category : Equity Malaysia
Top 10 Best Performing Fund for Category Equity Malaysia (click Image to Enlarge):

Top 10 Best Performing Unit Trust Fund (Equity Malaysia)
5 Years Annualised Ranked 1 (Equity) - Phillip Master Equity Growth Fund 

5 Years Annualised Ranked 1 (Islamic Equity) - MAAKL-HDBS Flexi Fund 

4 Weeks Gain/Loss Ranking Table for Category Equity Malaysia Funds:

Fund Name
YTD as of
9th Oct 2013
YTD as of
8th Nov 2013
4 Weeks
Gain / Loss (%)
4 Weeks Gain/
Loss Rankings
Previous
4 Weeks Gain/Loss Rankings
Phillip Master Equity Growth Fund
27.64
32.1
4.46
1
1
Kenanga Growth Fund
16.21
18.98
2.77
3
7
CIMB-Principal Wholesale Equity Fund
16.05
20.5
4.45
2
5
MAAKL-HDBS Flexi Fund
13.27
15.13
1.86
5
4
CIMB-Principal Equity Fund
16.25
18.52
2.27
4
2
Kenanga Syariah Growth Fund
15.99
17.7
1.71
6
6
Hwang AIIMAN Growth
17.63
20.4
2.77
3
3
Public Focus Select Fund
Newcomer
7.91
N/A
N/A
N/A
Public Islamic Opportunities Fund
Newcomer
24.58
N/A
N/A
N/A
Public Regular Savings Fund
Newcomer
12.78
N/A
N/A
N/A
AVERAGE 4 WEEKS GAIN/LOSS (%)
2.90
Top Performing Fund over 4 weeks period: 
Phillip Master Equity Growth Fund (+4.46%)

Worst Performing Fund 4 weeks period:
Kenanga Syariah Growth Fund (+1.71%)

Newcomers:
Public Focus Select Fund
Public Islamic Opportunities Fund
Public Regular Savings Fund

Performance Comparison with the KLSE Index between 10 Oct 2013 to 8 Nov 2013


KLSE Index (%) Gain/Loss : +1.61%
Average Top 10 Unit Trust Equity (%) Gain/Loss : +2.90% (Out performed the KLSE Index)

Summary
Despite many investors anticipating a big drop for the KLSE after Budget 2014 (myself included), our Prime Minister managed to roll out a rather fair budget allocation that kept the sentiment positive for investors. Sectors benefiting from Budget 2014 such as Telecommunication, Energy and Plantation kept the local Bursa stable and above the 1800 points level.

The announcement of Budget 2014 also created opportunities for fund managers to cherry pick companies from these key sectors. Once again the Average Top 10 Unit Trust Equity (%) gains of +2.90% outperformed that of the  KLSE Index (+1.61%) over the same period.

In terms of individual unit trust fund performance, once again Phillip Master Equity Growth Fund (PMEGF) is the star performer by adding +4.40% to its Yield To Date (YTD). This marks the 2nd consecutive time that PMEGF retains the spot of top performing fund over a 4 week period. Despite being the lesser known fund, PMEGF, as I have mentioned as far back as my April 2013 review will be the fund to watch in terms of performance.

Review
Fund Category : Asia excluding Japan
Top 10 Best Performing Fund for Category Asia Exc Japan (click Image to Enlarge):


5 Years Annualised Ranked 1 (Equity) - Public Regional Sector Fund

5 Years Annualised Ranked 1 (Islamic Equity) - Public Islamic Asia Dividend Fund 

4 Weeks Gain/Loss Ranking Table for Category Asia Exc Japan Funds:


Fund Name
YTD as of
9th Oct 2013
YTD as of
8th Nov 2013
4 Weeks
Gain / Loss (%)
4 Weeks Gain/
Loss Rankings
Previous
4 Weeks Gain/Loss Rankings
Public Islamic Asia Dividend Fund
3.15
3.76
0.61
3
3
Pheim Asia Ex-Japan Islamic
13.47
14.35
0.88
2
1
Public Asia Ittikal Fund
1.88
2.12
0.24
7
5
Public Regional Sector Fund
15.26
15.36
0.1
9
7
PB Islamic Asia Equity Fund
1.46
1.91
0.45
5
4
Eastspring Investments Asia Pacific Shariah Equity Fund
-0.25
-0.07
0.18
8
6
Pheim Asia Ex-Japan
2.67
3.22
0.55
4
N/A
CIMB Islamic Asia Pacific Equity Fund
3.15
4.56
1.41
1
8
MAAKL Pacific Fund
4.21
4.59
0.38
6
2
Public Far-East Select Fund
9.36
8.67
-0.69
10
N/A
AVERAGE 4 WEEKS GAIN/LOSS (%)
0.41

Top Performing Fund over 4 weeks period: 
CIMB Islamic Asia Pacific Equity Fund (+1.41%)

Worst Performing Fund over 4 weeks period:
Public Far-East Select Fund (-0.69%)

Newcomers:
-None-

Performance Comparison with the MSCI Asia Excluding Japan Index between 10 Oct 2013 to 8 Nov 2013


MSCI Asia Exc Japan Index (%) Gain/Loss : -0.55%
Average Top 10 Unit Trust (%) Gain.Loss : +0.41% (Out performed the MSCI Index)

Summary
The MSCI Asia Excluding Japan Index had a rough 4 weeks as seen from the chart above. Gains and losses interchanged over the 4 week period from Oct 10th, 2013 to Nov 8th, 2013. The index dip on news that US Feds might start tapering of their stimulus program earlier then expected only to see recovery from positive economic data coming from China. A mixture of negative US tapering news and positive China economic data has created much volatility to the MSCI Asia Exc Japan index.

China and South Korea outperformed, while India and Indonesia lagged. Chinese equities advanced on the hope that the economy had bottomed, while South Korea recovered from tensions with the North that had impacted in the second quarter. Unit Trust Funds that have considerable allocation into Philippines stocks should see lesser gains as the aftermath of Typhoon Haiyan shaved 1.4% of the Philippines stock market today (11th Nov 2013). 

Despite the MSCI index volatility, top performing fund over the 4 weeks period, CIMB Islamic Asia Pacific Equity Fund (CIAPEF) managed to gain +1.41%. Another fund worth considering is Pheim Asia Ex-Japan Islamic Fund (PAEJIF) which is known for its consistency in generating returns.

Review
Fund Category : Greater China
Top 10 Best Performing Fund for Category Greater China (click Image to Enlarge):


5 Years Annualised Ranked 1 (Equity) - CIMB-Principal Greater China Equity Fund

5 Years Annualised Ranked 1 (Islamic Equity) - Public China Ittikal Fund 

4 Weeks Gain/Loss Ranking Table for Category Greater China Funds:

Fund Name
YTD as of
9th Oct 2013
YTD as of
8th Nov 2013
4 Weeks
Gain / Loss (%)
4 Weeks Gain/
Loss Rankings
Previous
4 Weeks Gain/Loss Rankings
CIMB-Principal Greater China Equity Fund
7.73
7.02
-0.71
4
2
PB China Pacific Equity Fund
9.3
8.26
-1.04
7
6
Public China Ittikal Fund
6.57
6.18
-0.39
1
5
Public China Select Fund
10.08
9.12
-0.96
5
4
PB China Titans Fund
4.53
3.88
-0.65
3
8
MAAKL Greater China Fund
2.54
1.55
-0.99
6
7
AmIslamic Greater China
-2.67
-3.31
-0.64
2
3
Eastspring Investments Dinasti Equity Fund
5.69
3.8
-1.89
8
9
Hwang China Select Fund
17.91
15.43
-2.48
9
1
Manulife Investment - China Value Fund
Newcomer
7.61
N/A
N/A
N/A
AVERAGE 4 WEEKS GAIN/LOSS (%)
-1.08

Top Performing Fund over 4 weeks period: 
Public China Ittikal Fund (-0.39%)

Worst Performing Fund over 4 weeks period:
Hwang China Select Fund (-2.48%)

Newcomers:
Manulife Investment - China Value Fund

Performance Comparison with the Shanghai Stock Exchange (SSE) Index between 
10 Oct 2013 to 8 Nov 2013


SSE Index (%) Gain/Loss : -3.87%
Average Top 10 Unit Trust Equity (%) Gain.Loss : -1.08% (Out performed the SSE Index)

Summary
Historical "Average 4 Weeks Gain/Loss (%)" for Greater China funds over the past 4 months are as shown below:
  • 10th July - 4th August : +6.22%
  • 7th August - 13th Sept : +5.41%
  • 13th Sept - 9th Oct : -0.93%
  • 9th Oct - 8th Nov : -1.08%
Despite two consecutive losses over the past 8 weeks, the Top 10 Funds in this category managed to outperformed (in terms of minimizing losses) the Shanghai Stock Exchange Index. 

In terms of economic outlook, I am rather optimistic about the long term recovery of China's economy based on the following reasons:

1. Industrial output rose a more-than-estimated 10.3 percent from a year earlier in October and manufacturing investment strengthened.

2. Customs data showed overseas sales rebounded by more than forecast.

3. President Xi Jinping and top Communist leaders conclude a four-day gathering to map out an economic blueprint to sustain growth and drive the urbanization of hundreds of millions of rural residents.

4. Standard Chartered last month raised its estimate for China’s 2013 economic growth to 7.6 percent from 7.5 percent and revised next year’s forecast to 7.4 percent from 7.2 percent. 

With the recent uncertainty of when the US Fed will start tapering their stimulus program (which resulted in the see-saw effects on the Asia Exc Japan Funds), I believe investors should consider China based funds as an alternate investment option. In addition, the recent minor losses of China based Funds has created an opportunity for investors to buy in a lower unit price. 

That's all for this review folks!

Cheers and Happy Investing!

P/s : The announcement of Goods and Services Tax (GST) has been fiercely criticize by many especially over Facebook. Once it is implemented in 2015, prices of goods and services are bound to rise, leading to higher inflation rate. 

Instead of complaining and voicing out to deaf ears about your displeasure over GST, why not channel your energy into preparing for a better future through proper financial planning and starting your own investment plan to keep up with the inflation rate? Saving up money is one thing but not letting your money work harder for you is pure ignorance.


P.p/s : Want to invest in Top Performing Funds such as Phillip Master Equity or CIMB-Principal Greater China? Feel free to contact me at shanesee03@gmail.com for a proper advisory and recommendation.

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