Saham Amanah Sabah Unit Trust, From Crisis to Champion!

When The Edge-Lipper Award 2013 announced Saham Amanah Sabah as the winner for Category Equity Malaysia Diversified (3 Years and 5 Years), it came as quite a surprise to many investors. A relatively unknown fund made available only for Sabahan investors managed to win two awards knocking out competing funds from other famous fund houses. 

In this post, I'll attempt to find out more about Saham Amanah Sabah or in short SAS!

Background

Saham Sabah Berhad is wholly-owned by the State Government of Sabah. The Manager is a holder of a Capital Markets Services Licence for dealing in securities - unit trust products, issued under the Capital Markets and Services Act 2007. It has an authorised share capital of RM15,000,000 divided into 15,000,000 ordinary shares of RM1.00 each, of which 12,000,000 is issued and paid-up. It has been in operation since 1994.

Fund Information

• Name of Fund : Saham Amanah Sabah
• Fund Category : Equity Fund
• Fund Type : Income and Growth Fund
• Launch Date : 10 October 1994
• Approved Fund Size : 1.5 billion units
• Investment Objective : Produce a reasonable rate of return for Unit Holders over the medium to long term (3 years and above) without exposing their investment to undue risk through various types of investments
• Investment Strategy : Up to 97% of the Net Asset Value (NAV) may be invested in a diversified portfolio of equities, with up to 50% of the NAV in foreign equities. The Fund may also invest in fixed income instruments. 
• Initial Offer Price : RM1.00/unit
• Current Fund Price as of 17th April 2013 : RM0.3567/unit
• Total Units in Circulation as of 30 Jun 2012 : 1,235,798,000 units

Fund Performance

(based on Interim Report SAS - 30 June 2012)

Actual Annual Returns

Year	Actual Annual Returns
First 6 Months (as of 30 June 2012)	3.12%
2011	-4.64%
2010	21.38%
2009	30.37%
2008	-4.18%
2007	9.02%
2006	22.92%

Dividend Returns

Annualized Returns as of 31 Dec 2011 

(as of posting, SAS has yet to release thee annual report for 31 Dec 2012)

Period	Annualized Returns
1 Year	-4.64%
3 Years	28.61%
5 Years	22.14%
Since Inception 1994	8.35%

SAS Controversy

In 1997, the unit price of SAS crashed from RM1 to less then 20cents between the period of 1997-1998 causing about 55,000 investors to lose about RM400 million. Till today, SAS investors whom invested before the price crash have yet to recover their initial investment. Just compare offer price of RM1.00/unit to the current unit price of RM0.3567/unit.

More information about the controversy can be found here:

1) Call for management of SAS to explain RM400 million loss

2) SAS scandal : Angry businessman slams Sabah for implicating him

Due to the loss of RM400 million, the Sabah State Government decided to bail SAS by announcing a NAV restoration plan called "Skim Peningkatan Nilai Aset Bersih SAS" in which the state government invested RM200 million into the fund by purchasing units at 25 cents/unit (8 cents higher then the unit price of 17 cents/unit at that time). 

More about the bailout HERE

Summary

SAS being a state government backed fund was able to afford catastrophic losses and still continue to operate till today. Any other fund house that has suffer such a loss would have shut down their fund immediately. The RM200 million bail out was intended to provide liquidity for SAS to invest with hope that one day the NAV price will return to it's initial offering price of RM1.00/unit.

Presently, SAS has improved in terms of transparency of their annual report as well as proving themselves capable of generating returns above the benchmark. In fact during the economic crisis of 2008, SAS managed to minimize their losses to -4.18% while other funds made double digit losses. The epitome of SAS achievement was recognized when they won 2 awards from the Edge-Lipper 2013 Awards.

However, the 1997-98 SAS fiasco has caused many Sabahans to lose faith in investing into unit trust. With no clear explanation from SAS with regards to the fiasco, the controversial subject has also turned into a political agenda used against the current ruling state government overshadowing the improvements that SAS have made.

Cheers and Happy Investing!

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