The Hunt for RED OCTOBER!

For unit trust investors invested into equity related funds, the past one week should see your gains reduced in parallel with the minor drop of the Kuala Lumpur Stock Exchange from high of 1801.83 points on the 20th of September 2013 to 1776.16 points as of 27th of September 2013 (last Friday).

Downside Volatility KLSE

Further downside is seen in the local Bursa today (30th September 2013), shedding -10.33 points as of 10.54am.

Red Monday

This drop today was largely triggered by news released yesterday that the US Government might shutdown come Tuesday night due to Democrats and Republican at loggerheads about the following issue:

Politicians at Loggerheads!

Once again political disagreement rears its ugly head in the US Senate as the resulting deadlock of the above mentioned issue will create further instability to the economies and stock markets worldwide. 

What to Expect?

The KLSE for the coming week is expected to be worst if there is no conclusion to the US Government Shutdown Agenda. The Dow Jones tonight should see a sizable drop as US investors exit the stock market for temporary safer investment haven while waiting for the issue to be resolved. 

With Budget 2014 to be announced by the end of October 2013, we should expect spending cuts by the Government (no more gula-gula for the rakyat) and the introduction of GST to address the debt issue faced by our Government. 

Pening...hutang banyak!

All in all, I'm expecting a so called "RED OCTOBER" for our local stock market. For those whom have invested in unit trust, here's my recommendation:

Recommendation According To Strategy Used:

1) Existing Dollar Cost Averaging Investor - to continue the strategy and possible entry of additional investment after Budget 2014 to purchase more units at lower price.

2) Existing Lump Sump Investor - this is a sticky situation as it depends on the investment horizon. If are already making gains of now, perhaps you might want to consider realizing your profits. This can be reinvested after Budget 2014. For those whom are in the red, you can consider averaging down your unit price by making additional investment.

3) New Investor - be patient and wait for the opportunity to start your investment after Budget 2014.

Disclaimer!

The above recommendations are general guides for long term unit trust investors. Do take them as a reference in decision making. Different investors have different investment goals and purpose, therefore there's no one right/correct/suitable recommendation for everyone. Do seek respective unit trust consultant for their views and decide what's best for your investment portfolio.

Summary

For every downside of an investment, there lies an opportunity for one to profit. One can never eliminate risk from investing, however one can also take advantage of risk and turn it into an advantage. 

Cheers and Happy "Red October"!

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Malaysia Retirement Survey 2013, Surprise Surprise!

Today I came across this interesting survey report by HSBC Insurance Holding Limited, London titled "The Future of Retirement, Life after Work?". The survey represented views of more than 16,000 people in 15 countries (including Malaysia) taken between July 2012 and April 2013. However I intend to show survey views and responses coming from Malaysia only. Now let's take a look at what's surprising about this survey!

Survey Question 1: Do you expect to move from working full time into semi-retirement before you retire fully?

Target Survey Group: Not Fully Retired

Survey Outcome:

Click to Enlarge

Explanation: 

‘Semi-retirement’ involves a reduction in working hours but a continuation of some paid employment as one approaches or reaches retirement age.

Semi-retirement was an option for the majority of today’s retirees: 

• 57% were given the opportunity to and, of these, 55% took it up.
• Over half of those not fully retired either plan to semi-retire (54%) or are already semi-retired (5%). 
• Moreover, a third (33%) of 55-64 year olds are already semi-retired.

My Comments: The key highlight here is the age group of 55-64 years old. I believe many Malaysians would prefer to fully retire at this age and be allowed the freedom to pursue other priorities. Yet 33% in this age group are still working for specifics reasons which we shall discover in Survey Question 2!

Survey Question 2: What do you expect to move or why have you already moved from working full-time into semi-retirement?

Target Survey Group: Not Fully Retired

Survey Outcome:

Click to Enlarge

Explanation: 

Of those who plan to semi-retire, many have positive reasons for doing so: 

• 47% because they would like to keep active 
• 37% aspire to keep working in some capacity 
• 35% want to ease their transition into retirement.

Key concerns are for reasons highlighted in the the red boxes:

• 26% could not retire fully 
• 24% are still paying off other debts past retirement age
• 24% needed to bridge a shortfall in retirement income

My comments: The figures key concerns could even be higher knowing that Malaysians are shy to admit their own fallacy even if this is a survey.

Survey Question 3: Overall, financially do you think that you prepared adequately for a comfortable retirement?

Target Survey Group: Fully Retired

Survey Outcome:

Click to Enlarge

Explanation: 

• About a fifth (22%) of today’s retirees say they failed to prepare adequately (21%) or at all (1%) for a comfortable retirement.
• Amongst this group of retirees, less than two-fifths (39%) realised that their preparations were insufficient before retiring.
• Comparatively, over half (53%) of today’s working age people say that financially they are not preparing adequately or at all for a comfortable retirement.

My comments: This is indeed worrying especially the last point where 53% of Working Age People are not preparing adequately for a comfortable retirement. With rising cost of living, inflation and high household debt ratio for Malaysian today, the possibility of Gen X, Gen Y and Gen Z facing a difficult retirement life in the future could be much more higher then what the Baby Boomers are facing now!

Survey Question 4: People sometimes say ‘If only I knew then what I know now’. Which, if any, of the following would you say is the best financial advice you have ever received?

Target Survey Group: Fully Retired

Survey Outcome: 

Click to Enlarge

Explanation: 

Given that a lack of adequate preparation can be an obstacle to realising retirement aspirations, we asked retirees to look back at the best financial advice they have ever received.

• ‘Start saving at an early age’ was the most popular piece of advice (chosen by 63%)
• ‘Buy only what you need’ (52%)
• ‘Develop a financial plan for the future (52%).

My comments:

The elders have spoken! Need I say more?

Summary

Now that the facts are there for everyone to see, I believe it is time for you to start grabbing hold of your personal financial leash. Start by having a control over your unnecessary wild horse spending. Reign in your finances and start with basic of just saving your money in a fixed deposit account. If you've been doing that, consider looking for alternatives of investing that could generate higher returns. The current retired generation has shared their biggest regret, why let the same regret be passed on to you when you've got the capacity to make a change?

P.s :The four survey questions in this post are just some of the interesting responses of this survey. If you like to read the full survey, feel free to look it up HERE. 

P.p.s : The survey result in this post is Reproduced with permission from The Future of Retirement, published in 2013 by HSBC Insurance Holdings Limited, London.’

Cheers and Happy Saving!

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Personal Ranting

If I were to present the outcome of this survey using my capacity as a financial consultant, some might perceive this as a scare tactics being deployed in order to coax one to invest. In fact some of my previous blog posts have also received some criticisms as well as receiving a few email queries asking if I am a consultant trying to promote certain products.

Yet this was never the intention when I created Invest Made Easy. It is a blog to capture my personal journey of financial education and allowing others to benefit from reading it. Offering my services is an option I leave for readers that have decided that it is worthwhile to seek advisory. Rest assured it is my greatest pleasure to have rendered my service for friends, readers and colleagues whom have met me personally or corresponded via email. For that I can only say THANK YOU!

Top 10 Best Performing Unit Trust Funds As of 13th September 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):

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

Fund Name	YTD as of 7th Aug 2013	YTD as of 13th Sept 2013	4 Weeks Gain / Loss (%)	4 Weeks Gain/ Loss Rankings	Previous 4 Weeks Gain/Loss Rankings
Kenanga Growth Fund	16	14.88	-1.12	4	7
Phillip Master Equity Growth Fund	26.48	24.97	-1.51	5	2
MAAKL-HDBS Flexi Fund	12.4	11.41	-0.99	3	10
Kenanga Syariah Growth Fund	15.12	14.65	-0.47	2	5
CIMB-Principal Wholesale Equity Fund	18.24	14.52	-3.72	9	1
CIMB-Principal Equity Fund	16.04	14.19	-1.85	7	3
Hwang AIIMAN Growth	17.66	15.7	-1.96	8	6
AMB Dividend Trust Fund	8.39	8.03	-0.36	1	4
MAAKL Dividend Fund	12.71	11.15	-1.56	6	8
MAAKL-CM Shariah Flexi Fund	Newcomer	15.33	N/A	N/A	N/A
AVERAGE 4 WEEKS GAIN/LOSS (%)			-1.50

Review of Equity Malaysia Funds

Performance Comparison Against the Kuala Lumpur Stock Exchange Index

The KLSE Index lost -0.48% over the 1 month period from 7th August - 13th September 2013. In comparison with the Average 4 Weeks Gain/Loss, the Top 10 Equity Malaysia Fund underperformed the index, losing -1.50% over the same period.

In terms of individual fund performance, AMB Dividend Trust Fund as well as Kenanga Syariah Growth Fund performed better then the KLSE Index, shedding -0.36% and -0.47% respectively. Both funds are Syariah based fund and were least affected by the losses from non syariah stocks such as the banking sector over this period.

Another key point to highlight is rise of  Kenanga Growth Fund and Phillip Master Equity Fund to the number 1 and 2 ranking, displacing MAAKL-HDBS Flexi Fund. Kenanga Growth Fund's return currently annualized at 20.53% over a 5 year period. 

General Outlook

I'm expecting further losses to Malaysia Equity in the upcoming months as we prepared for the announcement of Budget 2014. The fuel hike recently managed to pacify rating agencies for the time being and prevented further drop in the equity market. 

Further volatility is also expected to the equity Malaysia category as who will be leader of the country will be determined by the upcoming UMNO election. Stocks that have benefited from political power of those whom are in power will be effected if there are changes in the leadership of UMNO.

I am confident that fund manager are already preparing to face the upcoming volatility by freeing up cash (profit taken from rise in stocks after the May GE13) in anticipation of opportunity buying in the upcoming months. Shown below is the Asset Allocation of the No. 1 ranked fund in the Equity Malaysia Category (Kenanga Growth Fund) as of 31 July 2013. As you can see, cash holding for this fund has risen from 10.41% in May to approximately 1/4 of the total fund's NAV.

Review

Fund Category : Asia excluding Japan 

Top 10 Best Performing Fund for Category Asia excluding Japan (ranked according to 5 Years Annualized Performance):

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

Fund Name	YTD as of 7th Aug 2013	YTD as of 13th Sept 2013	4 Weeks Gain / Loss (%)	4 Weeks Gain/ Loss Rankings	Previous 4 Weeks Gain/Loss Rankings
Public Islamic Asia Dividend Fund	1.3	3.73	2.43	7	5
Public Asia Ittikal Fund	0.59	2.7	2.11	8	4
Pheim Asia Ex-Japan Islamic	8.31	12.85	4.54	3	7
PB Islamic Asia Equity Fund	-0.27	2.26	2.53	6	3
Public Regional Sector Fund	11.13	16.65	5.52	2	N/A
Eastspring Investments Asia Pacific Shariah Equity Fund	-1.13	0.95	2.08	9	9
CIMB Islamic Asia Pacific Equity Fund	-1	5.36	6.36	1	2
Namaa' Asia-Pacific Equity Growth Fund	Newcomer	-1.68	N/A	N/A	N/A
MAAKL Shariah Asia-Pacific Fund	-7.12	-2.7	4.42	4	6
MAAKL Pacific Fund	0.91	4.71	3.8	5	1
AVERAGE 4 WEEKS GAIN/LOSS (%)			3.75

Review of Asia Excluding Japan Funds

Performance Comparison Against the MSCI Asia Excluding Japan Index

The benchmark MSCI Asia Excluding Japan registered 4.44% gain between 7th Aug till 13 Sept 2013. The Average 4 Weeks Gain/Loss of the Top 10 Funds only managed to gain 3.75%, performing below the benchmark value.

In terms of individual funds, only 3 funds outperformed the benchmark index as shown in the table. Top gainer is CIMB Islamic Asia Pacific Equity Fund at +6.36% followed by Public Regional Select Sector Fund at +5.52%.

The Asia Pacific Equity Market has benefited greatly from China's positive economic data since July. Despite the concerns of India and Indonesia facing slow growth and high inflation, other emerging Asian markets have managed to survived the negative impact caused by billion of dollars of foreign outflow.

Fundamentally the Asia Pacific market still has room to grow for the next 3 years. Investing lump sum is an option for funds in this category only if one has additional cash in hand and would like to diversify. However investors are advised to follow closely the economic changes and execute profit taking when a target is met.

Review

Fund Category : Greater China

Top 10 Best Performing Fund for Category Greater China (ranked according to 5 Years Annualized Performance): 

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

Fund Name	YTD as of 7th Aug 2013	YTD as of 13th Sept 2013	4 Weeks Gain / Loss (%)	4 Weeks Gain/ Loss Rankings	Previous 4 Weeks Gain/Loss Rankings
CIMB-Principal Greater China Equity Fund	0.23	7.98	7.75	1	1
CIMB-Principal Greater China Equity Fund	0.23	7.98	7.75	1	1
PB China Titans Fund	0.65	6.28	5.63	4	8
PB China Pacific Equity Fund	3.71	11	7.29	2	3
Public China Ittikal Fund	3.28	7.57	4.29	7	4
Public China Select Fund	5.8	11.03	5.23	6	6
AmIslamic Greater China	-3.87	-2.16	1.71	9	9
Eastspring Investments Dinasti Equity Fund	2.6	7.86	5.26	5	2
Hwang China Select Fund	14.47	16.87	2.4	8	5
MAAKL Greater China Fund	-2.54	4.27	6.81	3	7
AVERAGE 4 WEEKS GAIN/LOSS (%)			5.41

Review of Greater China Fund

Performance Comparison Against the Shanghai Stock Exchange Composite Index

The Shanghai Stock Exchange CI posted 9.26% gain between 7th August to 13th September 2013. The benchmark clearly outperformed the Average 4 Weeks  Gain/Loss of the top 10 Funds by an additional 3.85%. This is a clear indication that the overall equity market has benefited from vastly from the positive economic figures released over the past one month. Growth stocks in China help boosted the SSE CI for the past one month.

Many might be asking why China Unit Trust Funds are not performing above the benchmark set by SSI. Well one reason I can think of is that fund managers managing China funds have for the past few years been selecting stocks that are more fundamentally strong and defensive in nature. This is a wise choice to prevent big losses in a volatile market such as China. Despite not meeting the benchmark values, China unit trust funds for the past one month have reaped reasonable gains lead by CIMB-Principal Greater China Equity Fund, gaining 7.75%.

Economic Outlook

Many economist are claiming that the slowdown in China's economy has finally bottomed out. Economic data released for the past 2 months have shown signs that China's path of recovery has started.

Key positive factors include:

1. Low and steady inflation rate of 2.6% in August 2013.

2. The narrowing of Producer Price Index (PPI) deflation is a good sign of recovery.

3. GDP quarterly growth of 7.5% is seen as a reasonable, sustainable and stable growth for China.

4. Purchasing Managers Index (PMI) rose to 50.1 from 47.7 in August. PMI above 50 indicates economic expansion.

If China's path towards recovery has started with stronger fundamentals to back the economic growth, we are looking at a great potential here. Prior to the crash of China stock market in 2008, the SSE index managed to hit an all time 5903 points. Within a period of one year (2008), the SSE then crashed to an all time low 1729 points as shown below:

The crash in 2008 was one that many considered as unsustainable. Hence the aftermath of this has lead to proper economic reforms by the China government. 5 years of prudent spending and building a stronger economic foundation since 2008 has seen the SSE Index hovered at the 2000-3000 points zone. Could it be now is the time for the Dragon to rise again? 

That's all for this month's review!

Cheers and Happy Investing!

P/s : If you like to invest into the best unit trust funds be it Malaysia, Asia Pacific or China, feel free to drop me an email at shanesee03@gmail.com

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