Invest Made Easy - for Malaysian Only: April 2016

Short Term Unit Trust Investing

I'm putting up this blog post to summarize a recently concluded trial run for short term investing using Unit Trust fund. The trigger signal to buy (entry) and to sell (exit) for this trial will be determined by the signals triggered by my own self discovered indicator called "Country Equity Market Indicator".

A trial will be initiated each time a buy signal is triggered for a specific country indicator. As of time of writing (26 April 2016), two trials have been triggered. One is ongoing and the other has concluded. The trials are as listed below:

Trial (India Equity Market) - Posted on IME Facebook Notes (Ongoing)
Trial 2 (Japan Equity Market) - Posted on IME Facebook Notes (Completed)

Trial 2 (Japan Equity Market)
Amount Invested : RM5,000
Platform : eUnittrust
Sales Charge : 0% (specially requested)
Fund Name : Affin Hwang Japan Growth Fund
Expected Investment Period : Between 1 week to 18 months
Exit Strategy : When sell signal for “Japan Equity Market Indicator” triggers or when loss reaches 5% (whichever comes first)

Trigger Dates
Buy signal triggered : 12th April 2016
Sell signal triggered : 19th April 2016

Profit/Loss Results
From Date: April 12, 2016
To Date: April 19, 2016
Returns: +3.7 %

Findings for this trial

My problem here is the manual analysis that I have to carry out for the indicators. When I conduct my weekly analysis for the indicators on the 13th of April 2016 at night, I found out that the buy signal for Japan Equity Market was triggered on the 12th of April 2016.
Despite missing the buy signal on the 12th, I decided to continue with the trial run by investing into Affin Hwang Japan Growth Fund on the 14th of April 2016. The buy in price on that date was RM0.5890 per unit
The second problem for this trial was the sell signal triggered on the 19th April 2016. As I have mentioned earlier, I only conduct the my analysis on a weekly basis. This means that I discovered the sell signal a day later, on the 20th April 2016 at night. I conducted the sell transaction via eUnittrust the following day (21st April 2016), selling all units at RM0.5987
The actual buy and sell transactions for this trial are as shown below:

Summary

Ideally, the Country Equity Market Indicator was a success for this particular trial. If the buy and sell transaction were done on the 12th and 19th April, I would have reap RM185 (+3.7%) returns from an investment of RM5000.
Due to late entry and late exit as per explained in the "Findings for this trial" section, I made only RM5.94 (+0.12%) instead.
Realizing that in order to not miss the buy or sell signals, I have spent the last weekend automating the analysis using the Macro function available on Excel. Now I am able to obtain results for each country indicator at a click of a mouse. This allows me to check the indicators on a daily basis.
All trials are conducted using actual money in order to indicate my confidence towards the indicators.
Investing short term into unit trust requires each investment to start with 0% Sales Charge.
I intend to continue running trials to test the consistency of each Country Equity Market Indicator. However like all investing strategy, it is not 100% guaranteed to profit all the time. My end game is to achieve is overall positive annual returns for each country indicator.

That's all for now! Happy Investing!

P.S : If you have any questions, feel free to drop me an email at shanesee03@gmail.com

P.P.S : And don't forget to LIKE Invest Made Easy facebook by clicking HERE

P.P.P.S : I've recently launched an online learning platform called Unit Trust Made Easy to help Malaysians to kick start their own unit trust investment. For further details, check it out HERE.

The first quarter of 2016 (January - March 2016) has just ended and it is time we take a look at the how unit trust fund from various categories performed for the first three months of this year.

1st Quarter Performance Review by Fund Categories

Top 10 Best Performing Fund Categories - Ranked according to YTD (1st April 2016)

Top 10 Best Performing Fund Categories (1st Quarter 2016)

In addition to the top 10 best performing fund categories, I have also included the best performing fund for each of the category above:-

Blended - Aggressive : Libra TacticalExtra fund (+1.70%)
Bonds - Malaysia (Syariah) : RHB Islamic Bond fund (+2.59%)
Bonds - Malaysia : KAF Enhanced Bond fund (+4.52%)
Blended - Conservative : AMB Lifestyle Trust Today fund (+1.99%)
Equity - Malaysia Large-cap : KAF Core Income fund (+5.60%)
Money Market - Malaysia (Syariah) : Kenanga Islamic Income Fund Series 3 (+1.78%)
Money Market - Malaysia : Affin Hwang Wholesale I fund (+1.21%)
Bonds - Emerging Markets : KAF Advantage Gem Bond fund (+2.64%)
Property - Indirect Asia : AmAsia Pacific REITs fund (+1.88%)
Blended - Balanced : AMB Balanced Trust fund (+1.63%)

Top 10 Worst Performing Fund Categories - Ranked according to YTD (1st April 2016)

Top 10 Worst Performing Fund Categories (1st Quarter 2016)

As expected, the top spot for the worst performing fund category belongs to Equity - Greater China category. With the ongoing extreme volatility at the China equity market, it is of no surprise that this category sits at the top spot with an average loss of -13.19%. The spillover of China's poor performance can be seen affecting other categories such as Equity - Asia Pacific ex-Japan (Syariah), Equity Asia Pacific ex-Japan, Equity - ASEAN and Equity - Emerging Markets.

Another observation investors should take note is the current poor performance of Equity - Malaysia Large-cap (Syariah) category which averaged -3.04% loss in the first quarter. Despite the poor performance of this category, investors can see this as a short term opportunity for funds in this category to play catch up with the benchmark index (FTSE Bursa Malaysia EMAS Shariah TR MYR).

Take for example 5 Star Rated Equity - Malaysia Large-cap (Syariah) fund, Eastspring Dana Al-Ilham, Dana Al-Ilham's latest YTD is -2.26% vs the benchmark index of -0.44%. If there is anything to come by, this fund (along with a few others in this category) should outperform the benchmark index in the long run as shown in the historical performance graph below:

Long term performance of Dana al-Ilham vs Benchmark Index

Is this an opportunity for investors to take advantage of the current lag of funds in this category?

1st Quarter Performance Review of Individual Unit Trust Funds

The 10 Best Performing Unit Trust Funds - Ranked according to YTD (1st April 2016)

Top 10 Best Performing Unit Trust Funds (1st Quarter 2016)

For the first quarter, the two gold feeder type funds (only two are available for Malaysian investors) occupy the top two spots with +31.71% for AmPrecious Metal fund and +25.15% for RHB Gold and General fund. The other double digit returning fund (+14.93%) for the first quarter is a feeder fund by the name of AmAdvantage Brazil which invest into the Brazil equity market.

Another eye catching performance is by KAF Core Income fund which returned +5.60% for the first quarter. This fund has managed to outperformed the category Equity - Malaysia Large-cap average returns of +0.83%.

1st Quarter Performance Review of Individuals Funds in a Particular Category

1) Top 10 Best Performing Funds for Category Equity-Malaysia Large-cap - Ranked according to YTD (1st April 2016)

Top 10 Best Performing Equity-Malaysia Large-cap funds (1st Quarter 2016)

As mentioned earlier, the eye catching 1st Quarter performance of KAF Core Income Fund is certainly worth a mention here. Let us take a look at the top 5 stock holdings of this fund as of 29th February 2016:

KAF Core Income fund 5 largest stock holdings as of 29th Feb 2016

By looking at the top 5 stock holdings of this fund, we were able to figure out the reason for the outstanding performance of this fund.

Notice the 8.85% invested into Air Asia Bhd stock? Now let's check out the YTD performance of Air Asia Bhd stock below:

Air Asia Bhd YTD returns as of 1st April 2016

With a YTD of +41.86%, the performance of Air Asia stock is the sole reason why this fund was able to post better than average return for the 1st Quarter of 2016!

2) Top 10 Best Performing Funds for Category Equity-Malaysia Large-cap (Syariah) - Ranked according to YTD (1st April 2016)

Top 10 Best Performing Equity-Malaysia Large-cap (Syariah) funds (1st Quarter 2016)

Also mentioned earlier in the Top 10 Worst Performing Fund Categories review, top performing and award winnings fund in this category such as Eastspring Dana Al-Ilham is currently lagging behind the benchmark index. Investing in the long run into this fund would eventually see it outperformed the benchmark index if historical track record is proven right. Other than that, there's nothing outstanding or worth mentioning in this category for the 1st Quarter of 2016.

3) Top 10 Best Performing Funds for Category Equity-Malaysia Mid/Small-cap - Ranked according to YTD (1st April 2016)

Top 10 Best Performing Equity-Malaysia Mid/Small-cap funds (1st Quarter 2016)

There's an interesting finding here in which I hope readers would pay attention to.

On the 20th of February 2016, I posted an article entitled "Portfolio Cash Allocation" strategy. In this post I highlighted funds from this category with the best YTD as well as their cash holdings as of 31st January 2016. Check out the table below:

Mid/Small-cap fund with best YTD as of 31 Jan 2016 and respective cash holdings as of 31 Dec 2015

From the table above, there are four funds highlighted in green (cash holdings larger than 20% as of 31 Dec 2015). Out of the four, funds (Kenanga Premier, Kenanga Growth Opportunities and Libra Equity Extra Fund) are currently sitting in the Top 10 ranking for the 1st Quarter of 2016. This goes to show the effectiveness of utilizing the Portfolio Cash Allocation strategy (after a market drop) to select the best fund for short term investment.

4) Top 10 Best Performing Funds for Category Equity-Malaysia Mid/Small-cap (Syariah) - Ranked according to YTD (1st April 2016)

Top 10 Best Performing Equity-Malaysia Mid/Small-cap (Syariah) funds (1st Quarter 2016)

This category was also part of the case study for the "Portfolio Cash Allocation" strategy in which two funds with cash holding of 20% of more as of 31 Dec 2015 were highlighted as shown in the table below:

Mid/Small-cap (Syariah) fund with best YTD as of 31 Jan 2016 and respective cash holdings as of 31 Dec 2015

Libra Amanah Saham Wanita and Kenanga Islamic both finished in the Top 10 best performing fund for 1st Quarter 2016 with Libra Amanah Saham Wanita returning +1.55% YTD while Kenanga Islamic is at -0.11% YTD. In terms of period gain between 31 Jan 2016 till 1st April 2016, Libra Amanah Saham Wanita managed to amassed +1.68% while Kenanga Islamic added +2.15%.

Summary

For the remainder of 2016, I choose to remain bearish towards the equity market. In other words, I am advising lump sum investors to consider having minimal exposure to the equity market. If you feel the need to invest, do be selective on the category or sector to invest into. By looking at the pure economic indicators, there's potential for investors to consider investing into India and Australia.

On the other hand, dollar cost averaging investors may continue to make small amount of investments into local equity funds to accumulate more units. Remember, long term dollar cost averaging investment can only work as long as you continue to accumulate units regardless of market condition.

That's all for IME's Unit Trust Performance Review for 1st Quarter 2016!

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P.S. : You might find this review complicated and difficult to understand if you are new to unit trust investing. Fret not as Invest Made Easy has recently launched an online learning platform called "Unit Trust Made Easy". This platform will help you to learn about unit trust as well as guide you on how to get kick start your own unit trust investment. For more information, check out Unit Trust Made Easy facebook page at https://www.facebook.com/unittrustmadeeasy/

P.P.S : If you have further questions or would like to request for a personal coaching on unit trust investment, feel free to drop me an email at shanesee03@gmail.com

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