Approximately 7 months ago (specifically on the 6th of January 2014), I posted an article on Unit Trust Portfolio Diversification. The concept of diversification was to cater to large lump sum cash investors who do not believe in placing all their money into a single basket, in this case a single fund.
With that in mind, I proposed a portfolio diversified fund that consisted of multiple funds invested in various sectors and geographical locations. The objective of the diversification was to spread the risk to a wider range of market. Never the less, when diversifying one's investment, one will also lose out on higher profit if a specific fund performs outstandingly. I'm pretty sure there are many whom are strong advocates of portfolio diversification as well as an equal number of "place all your money in a single basket to maximize your return" advocates.
Well, I ain't gonna go into the argument on which is the better strategy! Instead, today I'm going to review the performance our very own Invest Made Easy's Diversified Unit Trust Portfolio.
Recap of our post dated 6th Jan 2014
In my post on the 6th of Jan 2014 entitled "Starting Your Own Unit Trust Investment Portfolio", I propose for the lump sum investor to have a mix basket of funds with various risk levels.
The % to be allocated to for each funds are determined via a combination of reference table (for low and mid risk) and percentages (for higher risk). You can find out more by reading that post in detailed.
In short, the recommended diversified portfolio is as shown below:
Category
|
% Allocation
| |
Bond Fund or Balanced Fund
|
X
| |
World Equity
|
6.00% of Y
| |
US Equity
|
6.00% of Y
| |
Europe Inc UK
|
5.50% of Y
| |
Asia Pac Excluding Japan
|
7.50% of Y
| |
Asia Pac Exc Japan (Small & Mid Cap)
|
10.00% of Y
| |
Asian Market
|
7.50% of Y
| |
China
|
12.00% of Y
| |
Malaysia Equity
|
20.00% of Y
| |
Malaysia Small & Mid Cap
|
8.00% of Y
| |
Gold & Precious Metals
|
10.00% of Y
| |
Global REITS
|
7.50% of Y
| |
What is X and Y?
X = Value calculated using % from "Table for Low or Medium Risk Unit Trust Fund"
Y = Remaining investment amount to be allocated according to the percentages of each Category
What I did not reveal in the older post were my recommended funds for each category. I wanted only readers whom are truly interested, have read the post fully and understood the risk of lump sum investing to contact me directly via email in order get the names of funds.
Surprisingly many did email for the list of fund which I gladly furnish without any charges.
Performance Review of Invest Made Easy's Diversified Unit Trust Portfolio
Performance Period : 6th Jan 2014 till 25 July 2014 (200 days)
Scope of Review : I will only be reviewing the performance of the higher risk fund which consist of all funds making up the 100% of Y as shown above in the recap section.
a) Performance Table
Initial Investment Amount : RM50,000
Category
|
% Portfolio Allocation
|
(RM) Portfolio
Allocation*
(A) |
% Returns (B)
|
(RM) Profit
(A) x (B) |
World Equity
|
6.00%
|
2,941.18
|
9.51%
|
279.71
|
Europe Equity
|
5.50%
|
2,696.08
|
1.02%
|
27.50
|
Asia Pac X Japan
|
7.50%
|
3,676.47
|
10.76%
|
395.59
|
Msia Small Cap
|
8.00%
|
3,921.57
|
28.79%
|
1,129.02
|
ASEAN
|
7.50%
|
3,676.47
|
15.61%
|
573.90
|
Global REITS
|
7.50%
|
3,676.47
|
9.39%
|
345.22
|
Msia Equity
|
20.00%
|
9,803.92
|
18.26%
|
1,790.20
|
Asia Pac X Japan Small Cap
|
10.00%
|
4,901.96
|
14.22%
|
697.06
|
China
|
12.00%
|
5,882.35
|
0.41%
|
24.12
|
Gold
|
10.00%
|
4,901.96
|
15.48%
|
758.82
|
US Equity
|
6.00%
|
2,941.18
|
2.46%
|
72.35
|
*After minus 2% Sales
Charge
|
NET RETURNS
|
6,093.48
|
||
TOTAL INVESTMENT VALUE AS
OF 25 July 2014 (RM)
|
55,113.09
|
|||
TOTAL (%) RETURN UPON
INVESTED AMOUNT
|
10.23%
|
|||
Once again, I shall not divulge the specific names of the recommended funds. However, the performance of each fund under respective category are indicated in percentage under the "% Returns (B)" column.
On the other hand, the profit in RM for each category are indicated under the "(RM) Profit (A) x (B)" column.
b) 2% Sales Charge Reflected In This Calculation To Display Actual Invested Amount
The 2% Sales Charge which have been deducted from the investment amount in each category to reflect the true amount that actually goes into investment.
For example, under the Malaysia Equity Category, 20% of RM50,000 (or RM10,000) will be invested. However, out of the RM10,000, a 2% Sales Charge will be deducted leaving only RM9,803.92 to be actually invested. The exact same concept applies to money allocated for all other funds.
Under most cases, the sales charge incurred directly with agents/consultants ranges from 5% to 6% for cash investments. However, if you like to enjoy lower sales charge (2%) for your investments, feel free to contact me to find out more.
c) Summarizing The Total Performance
Now that I've got sales charge aside, we can see now observe the overall performance of the IME Diversified Portfolio.
Over a period of 200 days if you have invested RM50,000 as your initial investment amount into this portfolio, your current gain would be RM6,903.48 or in percentage wise, +10.23%.
For a passive investment that requires almost zero monitoring, a return of +10.23% (after deduction of service charge) is indeed an impressive figure if you compare it with returns from other "passive" investment available in the market.
WHAT'S NEXT?
a) Our recommendation for the next 6 months
We at Invest Made Easy would continue to recommend this portfolio in terms of:
1. The percentage allocation according to category remains the sames.
2. The recommended funds in each category remains the same.
b) Conduct a portfolio balancing
Considering that some categories are performing better then others, a portfolio balancing is required to move profits from performing categories to categories which are not performing.
Category
|
(RM) Current Value of
Investment
(25 July 14) |
Current % Portfolio
Allocation
(25 July 14) |
Portfolio Balancing (%)
|
Portfolio Balancing (RM)
|
World Equity
|
3,220.88
|
5.84%
|
0.16%
|
85.90
|
Europe Equity
|
2,723.58
|
4.94%
|
0.56%
|
307.64
|
Asia Pac X Japan
|
4,072.06
|
7.39%
|
0.11%
|
61.42
|
Msia Small Cap
|
5,050.59
|
9.16%
|
-1.16%
|
-641.54
|
ASEAN
|
4,250.37
|
7.71%
|
-0.21%
|
-116.89
|
Global REITS
|
4,021.69
|
7.30%
|
0.20%
|
111.79
|
Msia Equity
|
11,594.12
|
21.04%
|
-1.04%
|
-571.50
|
Asia Pac X Japan Small Cap
|
5,599.02
|
10.16%
|
-0.16%
|
-87.71
|
China
|
5,906.47
|
10.72%
|
1.28%
|
707.10
|
Gold
|
5,660.78
|
10.27%
|
-0.27%
|
-149.48
|
US Equity
|
3,013.53
|
5.47%
|
0.53%
|
293.26
|
TOTAL
|
55,113.09
|
Profits highlighted in yellow will be redeemed and the redeemed cash will be used to buy into categories highlighted in blue. The actual amount is to redeem and buy in are also indicated under the "Portfolio Balancing (RM)" column.
Portfolio Balancing
|
RM
|
Amount Taken Out From Profitable Funds
|
-1,567.11
|
Amount Buy In After Deducting 2% Service Charge
|
1,536.39
|
Investment Lost Due To 2% Service Charge
|
-30.73
|
c) Final Diversified Portfolio after Portfolio Balancing
Category
|
(RM) Value of Investment
After Portfolio Balancing
|
% Portfolio Allocation
After Portfolio Balancing |
World Equity
|
3,305.10
|
6.00%
|
Europe Equity
|
3,025.19
|
5.49%
|
Asia Pac X Japan
|
4,132.28
|
7.50%
|
Msia Small Cap
|
4,409.05
|
8.00%
|
ASEAN
|
4,133.48
|
7.50%
|
Global REITS
|
4,131.29
|
7.50%
|
Msia Equity
|
11,022.62
|
20.01%
|
Asia Pac X Japan Small Cap
|
5,511.31
|
10.01%
|
China
|
6,599.71
|
11.98%
|
Gold
|
5,511.31
|
10.01%
|
US Equity
|
3,301.04
|
5.99%
|
TOTAL AMOUNT
|
55,082.36
|
SUMMARY
I'm pleased that the recommended Invest Made Easy's Diversified Unit Trust Portfolio has managed to gain +10.23% within 200 days. Despite a full year cycle has yet to end, I expect that the portfolio would continue to generate positive returns.
A key contributing factor for the outstanding gains of this portfolio is the low sales charges to invest into the funds. With just 2% sales charges as compared to 5%-6% sales charge, an investor has already saved an additional 3% to 4% right from the beginning.
In terms of portfolio percentage allocation and categories under this portfolio, there will be no changes until the next review (probably 6 months from now). I foresee the equity market to remain strong for the next 6 months and poor performers such China and Europe funds to bounce back with better gains.
Last but not least, I must stress that this post/review is not a call for one to invest blindly their hard earn money. Remember that there will always be risk involved when it comes to investing in high risk funds. Practice due diligence, seek advice, do your homework and lastly invest an amount that you're comfortable with.
Cheers and Happy Investing!
***********************
Like to manage your own Unit Trust Portfolio?
Want to find out what are the funds in our Diversified Unit Trust Portfolio?
or perhaps you would like to SAVE via Lower Sales Charge (2%)?
Then feel free to contact shanesee03@gmail.com for further information.
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