Saturday, 26 December 2015

Top 20 Best Performing Unit Trust Funds for 2015 plus Three Unit Trust Investing Tips for 2016.

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2016 is just 5 days away! As we approach the end of 2015, let us take a look at the best performing unit trust funds for this year.

Apart from finding out the best funds, we will also share a few tips on unit trust investing.

Interesting Facts About The Top 20 Best Performing Unit Trust Funds for 2015

The Top 20 Funds all generated 20% or more returns:

No of Funds
Returns : 30% and above
Returns : 20.00% - 29.99%

The Top 20 Funds come from 7 different fund categories/sectors:
Top 20 Unit Trust Funds for 2015
Click to Enlarge

Majority of the Top 20 Funds have a small fund size:

Fund Size
No of Funds
< RM50 million
RM50 million - RM200 million
RM200 million - RM500 million
>RM500 million

Top 20 Best Performing Unit Trust Funds of 2015 
Here's the Top 20 ranked according to Year To Date (YTD) performance:

Top 20 Unit Trust Funds for 2015
Click to Enlarge
Tips on Unit Trust Investing
Tip 1 : Popular does not equal to being the best
This is one misconception that many Malaysians have when it comes to investing into unit trust funds. Just because a fund house/company is the biggest in terms of managed funds does not make them the best performing. 
Take a sample advertisement from Public Mutual which declares itself as the No.1 Unit Trust company in Malaysia. Despite being the most popular name among Malaysians, none of the funds from Public Mutual made it to the top 20 for 2015. Therefore if you intend to invest for maximum returns, selecting the most popular fund might not be wisest choice to make.

This disparity between investing in a popular fund vs investing in a performing fund was also highlighted by Nazaruddin Othman, CEO of FIMM, 

"Investors need to know about all the other SC-approved funds in the market in order to make informed decision to invest"

However, Mr Nazaruddin also added that investors can now turn to other channels such as Institutional Unit Trust Advisers (IUTA) and Corporate Unit Trust Advisers (CUTA) for a wider selection of funds. One such IUTA which IME has been actively promoting is eUnittrust. For more details about eUnittrust, just click HERE.

Tip 2 : Size matters
Yeap, the size of a fund does contribute to the performance of the fund. Just take a look at the top 20 table. Ten out of the 20 funds in the list have a fund size of RM50 million or lesser. This goes to say that smaller size funds tend to perform better then bigger funds.

In other words, a fund that is small in size is akin to a mouse, quick and fast to react. Larger funds (RM500 million and above) are similar to an elephant, slow to react and generally struggle to generate higher returns.

An example I would like to share on the potential growth of a top performing small fund is Kenanga Growth Fund. 4 Years ago, Kenanga Growth Fund had a fund size of only RM 53.63 million (31 January 2012). The fund was a rising star performer under the Category Equity Malaysia. Over the next 4 years the fund grew in popularity, seeing it garner 7 Lippers Awards between 2013 to 2015.

The present Kenanga Growth Fund is now 10 times its 2012 fund size! At RM574.01 million, the fund is the largest in the top 20 list yet it is still considered small when compared to other funds that have ballooned to RM1 billion or more.

At Invest Made Easy, Kenanga Growth Fund is still part of our Recommended Funds list due to its outstanding fund manager as well as excellent investment philosophy. 

Tip 3 : Diversify your investment but don't over diversify.
Yes, the evergreen advice of "Don't put all your eggs in a single basket" is still a philosophy held in high regards by smart investors.

Stock investors for example practice diversification by selecting stocks from various industries. Unit Trust investors on the other hand diversify through different categories or sectors. As a matter of fact, the top 20 funds come from seven different categories/sectors as shown below:

No of Funds
Equity - Malaysia Mid/Small-cap
Equity - Malaysia Mid/Small-cap (Syariah)
Equity - Country Focus (Europe)
Property - Indirect Non-Asia
Blended - Balanced
Blended - Flexible
Bonds - Asia
Equity - Asia Pacific ex-Japan (Syariah)
Equity - Sector Focus (Technology)

Diversifying your investments into different categories and sectors help to create a balanced portfolio that can offer you protection in the event that a particular category/sector fail to perform. I will not go into details on how to diversify your unit trust portfolio in this post. Instead if you like to learn how to create your own portfolio of unit trust funds, just check out this post "Unit Trust Portfolio Diversification".

On the other end of the spectrum, there's also the problem of over diversification. This tend to happen to investors whom are not aware of the funds they are investing in. A simple example is via the Top 20 list above. Some investors tend to have in their portfolio several fund from the same category or sector. The problems starts when a downturn occurs to a particular category or sector This will result to losses to multiple funds which you own. Hence when you build your investment portfolio, make sure you're not making the mistake of "over diversifying". Always try to select the best fund from each category instead of several top funds from the same category.

These are the top 3 tips which you can apply for your unit trust investment come 2016. Always remember, spending time into learning and researching will definitely help you to make wiser and better investment decisions.

Here are some additional recommended reads from us:
Cheers and happy investing from Invest Made Easy!

1 comment:

  1. Hey, good post man I thoroughly enjoy reading it. one question why did you said that Kenanga growth fund has a good investing philosophy? What I notice is that their turnover ratio is relatively high around 0.85, which I do not prefer.