In Part 1 of the PRS series, I blogged about the basics of PRS and how it acts as an alternative retirement investment option. For Part 2, I'm taking four PRS funds offered by Hwang Management Sdn. Bhd. as a case study in an attempt to predict the performance of PRS funds.
The four funds are:
1. Hwang PRS Growth Fund
2. Hwang PRS Moderate Fund
3. Hwang PRS Conservative Fund
4. Hwang AIIMAN PRS Shariah Growth Fund
Fund no.1 to no.3 are categorized under Core Fund while fund no.4 is categorized as Non-Core Fund. While many PRS Providers have launched their PRS Funds, I chose to look into PRS funds from Hwang Management Sdn. Bhd. due to the following reasonss:
1. Ease of obtaining the information for these funds.
2. Funds from Hwang Management Sdn. Bhd. have always perform better then the majority of their peers/competitors.
Now let's begin our review with:
What is the expected performance of Hwang PRS Growth & Moderate Funds?
Both these funds are part of the trio of Core Funds. For Hwang's Growth and Moderate Funds, the investment target is at Asia countries excluding Japan. Growth Fund allocates at least 70% into equity while the remaining 30% into fixed income investments. Moderate Fund on the other hand allocates at least 60% into equity and remaining 40% into fixed income investments.
Simply said, the Growth fund is exposed to 70% equity related risk while the Moderate fund has 60% equity risk.
There are no equivalent funds from Hwang Investment which I can use as a reference to determine the expected performance of both Growth and Moderate funds. However I can summarize in general that funds investing into Asia excluding Japan have not been performing reasonably well for the past couple of years. Only for recently (2012) have funds from this category posted profitable returns as shown in the table below:
Without any track record, the performance of both PRS Growth Fund and PRS Moderate Fund are yet to be seen. However both funds are expected to produce returns equivalent or higher then EPF's 5.5% average annual returns
What is the expected performance of Hwang PRS Conservative Fund?
This fund is also part of the trio of Core Funds offered by Hwang Management Sdn. Bhd. The fund's main objective is preservation of capital. Therefore as stated in the prospectus, this fund would allocate a minimum of 80% of its Net Asset Value (NAV) into fixed income instruments such as bonds, private debts, securities, etc.
Although I am quite doubtful that this fund is able to match EPF's 5.5% average annual returns, it is still too early to pass any judgement. I shall review the performance of this fund again in the future and I believe it might just pop a surprise or two.
What is the expected performance of Hwang AIIMAN PRS Shariah Growth Fund?
This is the only Non-Core PRS fund offered by Hwang Management Sdn. Bhd. Like the 3 Core funds discussed earlier, this fund also has no historical record of performance. Luckliy, we can still gauge the performance of this PRS fund by referring to existing Hwang AIIMAN Growth Fund (AGF).
Why refer to AGF?
Both funds are similar in terms :
1. Investment nature - Equity Malaysia
2. Risk profile - Will invest between 70% - 99% in Shariah compliant equities
3. Shariah Compliant - Both funds are Shariah compliant
4. Fund Manager - Both are managed by the same fund manager which is Mr. David Ng Kong Cheong.
In fact it is stated in the Hwang AIIMAN PRS prospectus that this fund will be "invested in a single collective investment scheme, namely the Hwang AIIMAN Growth Fund (AGF)".
Performance of AGF?
1. Cumulative Returns as of 31 Aug 2012
1 Year
(1 Sept 2011 – 31 Aug 2012)
|
3 Years
(1 Sept 2009 – 31 Aug 2012)
|
5 Years
(1 Sept 2007 – 31 Aug 2012)
|
Since Commencement (29 Oct 2012 – 31 Aug
2012)
| |
Fund
|
22.14%
|
52.21%
|
64.08%
|
287.39%
|
2. Annual Averaged Returns as of 31 Aug 2012
1 Year
(1 Sept 2011 – 31 Aug 2012)
|
3 Years
(1 Sept 2009 – 31 Aug 2012)
|
5 Years
(1 Sept 2007 – 31 Aug 2012)
|
Since Commencement (29 Oct 2012 – 31 Aug
2012)
|
|
Fund
|
22.14%
|
15.02%
|
10.40%
|
14.74%
|
3. Actual Annual Performance by Year as of 31 Aug 2012
FY2012
(1 Sept 2011 – 31 Aug 2012)
|
FY2011
(1 Sept 2010 – 31 Aug 2011)
|
FY2010
(1 Sept 2009 – 31 Aug 2010)
|
FY2009
(1 Sept 2008 – 31 Aug 2009)
|
FY2008
(1 Sept 2007 – 31 Aug 2008)
|
|
Fund
|
22.14%
|
12.28%
|
10.99%
|
23.21%
|
-12.51%
|
The tables above clearly indicates that AGF is capable to generate an average of 10% or more per year. Word of caution that the fund has dropped -12.51% for Financial Year 2008 indicating that in future during an economy downturn, the fund could suffer another double digit loss. On the overall, AGF is still considered as one of the top 10 funds in the Malaysia Equity section.
With AGF as the reference point, I believe that the Hwang AIIMAN PRS Shariah Growth Fund performance should mirror that of AGF in the coming future.
Download Hwang Management Sdn Bhd's PRS Prospectus HERE
Summary
What was written above is based entirely on my own personal opinions and views. It is by no means a recommendation for you to buy or not to buy. All I ask is for oneself to do your own homework, research and reading before investing. The case studies above is just one of the many ways for you to predict the performance of PRS fund. While we can't predict the future, we can learn to expect all possibilities. Like what Benjamin Franklin once quoted; "An Investment In Knowledge Always Pays the Best Interest"!
In Part 3 of the PRS series, I intend to explain about the Tax Relief incentive offered to those investing in PRS.
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