Top 10 Best Performing Unit Trust Funds As of 15th Jan 2013

I bring you the Top 10 Best Performing Unit Trust Fund as of 15th January 2013. Funds are grouped according to 4 Major Categories consisting of:

1. Equity Malaysia

2. Asia Excluding Japan

3. Greater China

4. Fixed Income (Malaysia)

All funds are ranked according to their Average 5 Year Returns (Annualized). 

Starting today, I'll be introducing a simple system to track the movement of the Top 10 funds in comparison to their previous ranking. Therefore the Top 10 funds for 15th January 2012 are compared with the fund previous ranking (1st January 2012). Funds movement are indicated based on the legend shown below:

Category : Equity Malaysia (Click Picture to Enlarge)

Overview for Equity Malaysia:

1. The usual suspects of MAAKL-HDBS Fixed Fund, AMB Dividend Trust Fund and Kenanga Growth Fund occupy the top three position of the best performing Equity Malaysia Fund once again. The big three as I would like to term them have also average more then 11% returns annualized over the 5 year period making them the choice of investment for many unit trust investors.

2. Impressive 1 year returns from Philip Master Equity Growth Fund and MAAKL Al-Fauzan helped raised respective Average 5 Year Returns.

Funds to watch :

1. MAAKL Al-Fauzan

2. Public Focus Select Fund

3. Hwang AIIMAN Growth (there is a similar fund offered by Hwang Management Sdn. Bhd. for PRS investment, click HERE to read more)

Category : Asia excluding Japan (Click Picture to Enlarge)

Overview for Asia excluding Japan

1. The top 5 of Asia excluding Japan funds have posted double digit returns for the past one year. A good sign that the Asia market is recovering. I've read several articles which are also expecting better performance of the Asia economy for 2013. Recommended to buy only as a diversification of your portfolio.

2. We also see the entry of MAAKL Pacific Fund into the top 10 list in place of PB Islamic Asia Strategic Sector Fund.. The rise of MAAKL Pacific Fund is due to the 13.06% returns for the one year period (3rd best ranked fund over the one year period).

Funds to watch:

1. MAAKL Pacific Fund

2. Hong Leong Asia-Pacific Dividend Fund

3. PB Islamic Asia Equity Fund

Category : Greater China (Click Picture to Enlarge)

Overview for Greater China

1. The top 10 funds remain unchanged in terms of ranking. As I have mentioned previously, buying Greater China funds is an option if your intend to diversify your portfolio. 

2. One year performance of all the funds are encouraging especially funds from CIMB.

Funds to watch:

1. CIMB-Principal Greater China Equity Fund

2. PB China Pacific Equity Fund

3. Hwang China Select Fund

Category : Fixed Income - Malaysia (Click Picture to Enlarge)

Overview Fixed Income - Malaysia

1. AmDynamic Bond remains the best performing Fixed Income - Malaysia fund. Not surprising with the average of 8.59% returns over 5 years. 

2. KAF Bond Fund rises from 4th to 3rd rank although their 1 year performance have not been encouraging. I believe the past couple of years, KAF Bond Fund should be averaging quite a high figure only to see a drop in ranking recently due to poor performance. Good news for all as KAF Bond Fund can now be purchased at eUnittrust!

Funds to watch:

1. RHB Golden Life Today

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Private Retirement Scheme (PRS), Enjoying The Benefits of Tax Relief - Part 3

The major selling point of the PRS is non other then the RM3,000 tax relief given. For investors who are have invested into PRS funds, they are eligible to a maximum of RM3,000 tax relief per year. Due to that reason alone, many investors have rushed to make the cut off date for PRS submission before the end 2012 in order to enjoy the tax relief for Year 2012. Do take note that the tax relief for investing in PRS is only available for 10 years starting from Year 2012 to Year 2021.

How does this Tax Relief Works?

I'll try to make it easy to understand by making a case study of three individuals. 

Mr. A, Mr. B and Mr. C intends to invest into PRS for 2013. Mr. A decides to invest RM350/month into a PRS Fund, Mr. B only wants to invest RM250/month and Mr. C decides that RM100/month is what he can afford.

Total Amount Invested into PRS by Mr. A for Year 2013

: RM350/month x 12 months : RM4,200

Total Amount Invested into PRS by Mr. B for Year 2013

: RM100/month x 12 months : RM3,000

Total Amount Invested into PRS by Mr. C for Year 2013 

: RM100/month x 12 months : RM1,200

According to the Tax Relief incentive from investing in PRS, an individual whom invest in PRS is eligible for Tax Relief up to a maximum of RM3000. Therefore the eligibility of Tax Relief for Mr. A, Mr. B and Mr. C are:

PRS Tax Relief for Mr. A : RM3,000 (even though Mr. A has invested a total of RM4200 for 2013)

PRS Tax Relief for Mr. B : RM3,000

PRS Tax Relief for Mr. C : RM1,200

How much can I save from paying tax if I invest in PRS?

To illustrate this point, I need to use Mr. A, Mr. B and Mr. C again. The calculation will be divided into 3 sections. Section a) is to calculate tax to be paid without PRS tax relief, Section b) is the tax to be paid after PRS tax relief and Section c) is the savings.

a) Calculating Tax to be paid by Mr. A, Mr. B and Mr. C without PRS Tax Relief

Now we are going to assume that Mr. A, Mr. B and Mr. C have same total taxable amount* of RM78,000 at the end of 2013. (*Total taxable amount = Total income minus other reliefs such as EPF contribution, personal insurance, books, broadband, etc).

Next up is for us to refer to the Tax Schedule from LHDN (2011) as shown below:

Based on the Tax Schedule above, the amount of tax to be paid by Mr. A, B or C (not including PRS Tax Relief) is calculated as:

Total taxable amount for Mr. A, B and C is RM78,000/each person

1) Tax for first RM70,000 = RM7,125

2) Tax for the remaining RM8,000 (24% of RM8,000) = RM1,920

2013 Total Tax to be paid by Mr. A, B and C : RM7,125 + RM1,920 = RM9,045/each person

b) Calculating Tax to be paid by Mr. A, Mr. B and Mr. C after deducting PRS Tax Relief

Since Mr. A, B and C have invested in PRS, they are eligible for Tax Relief according to the amount they have invested. In this case both Mr. A and Mr. B will enjoy a relief of RM3,000 while Mr. C is only eligible for RM1,200 relief.

We can now calculate the total tax amount for Mr. A, B and C for 2013!

Total taxable amount for Mr. A and Mr. B : RM78,000 - RM3,000 = RM75,000/each person
Tax to be paid by Mr. A or Mr. B after deducting PRS Tax Relief 

1) Tax for first RM70,000 = RM7,125

2) Tax for the remaining RM5,000 (24% of RM5,000) = RM1,200

2013 Total Tax to be paid by Mr. A and Mr. B is : RM8,325/each person

Total taxable amount for Mr. C : RM78,000 - RM1,200 = RM76,800

Tax to be paid by Mr. C after deducting PRS Tax Relief

1) Tax for first RM70,000 = RM7,125

2) Tax for the remaining RM6,800 (24% of RM6,800) = RM1,632

2013 Total Tax to be paid by Mr. C is : RM8,757

c) Savings from PRS Tax Relief

Savings from paying tax for Mr. A and Mr. B : RM9,045 - RM8,325 = RM720

Savings from paying tax for Mr. C : RM9,045 - RM8,757 = RM288

I believe you can use the method above to calculate your own expected tax savings from investing in PRS. As a rough guideline, you can also refer to the table below to approximate how much you can save based on  your annual income range and that you qualify for the maximum value of RM3,000 PRS tax relief.

What can you do with that savings from the tax relief?

Let's take the case of Mr. B who have contributed RM 3,000 per annum into a PRS Fund. Savings of RM720 ringgit can be used by him to reimburse:

1. The sales charge fee of 3% 

2. The RM10 fee for opening of a PPA Account

3. The additional charges such as opening account fee with a PRS Provider

Well that's all for part 3 on the series of articles about PRS, I hope you've enjoyed reading the write-up on PRS.

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Read Part 1 : Private Retirement Scheme (PRS), What's In Store For Investors?

Read Part 2 : Private Retirement Scheme (PRS), What Is The Expected Performance?

Private Retirement Scheme (PRS), What Is The Expected Performance? - Part 2

In Part 1 of the PRS series, I blogged about the basics of PRS and how it acts as an alternative retirement investment option. For Part 2, I'm taking four PRS funds offered by Hwang Management Sdn. Bhd. as a case study in an attempt to predict the performance of PRS funds. 

The four funds are:

1. Hwang PRS Growth Fund

2. Hwang PRS Moderate Fund

3. Hwang PRS Conservative Fund

4. Hwang AIIMAN PRS Shariah Growth Fund

Fund no.1 to no.3 are categorized under Core Fund while fund no.4 is categorized as Non-Core Fund. While many PRS Providers have launched their PRS Funds, I chose to look into PRS funds from Hwang Management Sdn. Bhd. due to the following reasonss:

1. Ease of obtaining the information for these funds.

2. Funds from Hwang Management Sdn. Bhd. have always perform better then the majority of their peers/competitors.

Now let's begin our review with:

What is the expected performance of Hwang PRS Growth & Moderate Funds? 

Both these funds are part of the trio of Core Funds. For Hwang's Growth and Moderate Funds, the investment target is at Asia countries excluding Japan. Growth Fund allocates at least 70% into equity while the remaining 30% into fixed income investments. Moderate Fund on the other hand allocates at least 60% into equity and remaining 40% into fixed income investments.

Simply said, the Growth fund is exposed to 70% equity related risk while the Moderate fund has 60% equity risk.

There are no equivalent funds from Hwang Investment which I can use as a reference to determine the expected performance of both Growth and Moderate funds. However I can summarize in general that funds investing into Asia excluding Japan have not been performing reasonably well for the past couple of years. Only for recently (2012) have funds from this category posted profitable returns as shown in the table below:

Without any track record, the performance of both PRS Growth Fund and PRS Moderate Fund are yet to be seen. However both funds are expected to produce returns equivalent or higher then EPF's 5.5% average annual returns

What is the expected performance of Hwang PRS Conservative Fund?

This fund is also part of the trio of Core Funds offered by Hwang Management Sdn. Bhd. The fund's main objective is preservation of capital. Therefore as stated in the prospectus, this fund would allocate a minimum of 80% of its Net Asset Value (NAV) into fixed income instruments such as bonds, private debts, securities, etc. 

Although I am quite doubtful that this fund is able to match EPF's 5.5% average annual returns, it is still too early to pass any judgement. I shall review the performance of this fund again in the future and I believe it might just pop a surprise or two.

What is the expected performance of Hwang AIIMAN PRS Shariah Growth Fund?

This is the only Non-Core PRS fund offered by Hwang Management Sdn. Bhd. Like the 3 Core funds discussed earlier, this fund also has no historical record of performance. Luckliy, we can still gauge the performance of this PRS fund by referring to existing Hwang AIIMAN Growth Fund (AGF).

Why refer to AGF?

Both funds are similar in terms :

1. Investment nature - Equity Malaysia

2. Risk profile - Will invest between 70% - 99% in Shariah compliant equities

3. Shariah Compliant - Both funds are Shariah compliant

4. Fund Manager - Both are managed by the same fund manager which is Mr. David Ng Kong Cheong.

In fact it is stated in the Hwang AIIMAN PRS prospectus that this fund will be "invested in a single collective investment scheme, namely the Hwang AIIMAN Growth Fund (AGF)".

Performance of AGF?

1. Cumulative Returns as of 31 Aug 2012

	1 Year (1 Sept 2011 – 31 Aug 2012)	3 Years (1 Sept 2009 – 31 Aug 2012)	5 Years (1 Sept 2007 – 31 Aug 2012)	Since Commencement (29 Oct 2012 – 31 Aug 2012)
Fund	22.14%	52.21%	64.08%	287.39%

2. Annual Averaged Returns as of 31 Aug 2012

	1 Year (1 Sept 2011 – 31 Aug 2012)	3 Years (1 Sept 2009 – 31 Aug 2012)	5 Years (1 Sept 2007 – 31 Aug 2012)	Since Commencement (29 Oct 2012 – 31 Aug 2012)
Fund	22.14%	15.02%	10.40%	14.74%

3. Actual Annual Performance by Year as of 31 Aug 2012

	FY2012 (1 Sept 2011 – 31 Aug 2012)	FY2011 (1 Sept 2010 – 31 Aug 2011)	FY2010 (1 Sept 2009 – 31 Aug 2010)	FY2009 (1 Sept 2008 – 31 Aug 2009)	FY2008 (1 Sept 2007 – 31 Aug 2008)
Fund	22.14%	12.28%	10.99%	23.21%	-12.51%

The tables above clearly indicates that AGF is capable to generate an average of 10% or more per year. Word of caution that the fund has dropped -12.51% for Financial Year 2008 indicating that in future during an economy downturn, the fund could suffer another double digit loss. On the overall, AGF is still considered as one of the top 10 funds in the Malaysia Equity section.

With AGF as the reference point, I believe that the Hwang AIIMAN PRS Shariah Growth Fund performance should mirror that of AGF in the coming future.

Download Hwang Management Sdn Bhd's PRS Prospectus HERE

Summary

What was written above is based entirely on my own personal opinions and views. It is by no means a recommendation for you to buy or not to buy. All I ask is for oneself to do your own homework, research and reading before investing. The case studies above is just one of the many ways for you to predict the performance of PRS fund. While we can't predict the future, we can learn to expect all possibilities. Like what Benjamin Franklin once quoted; "An Investment In Knowledge Always Pays the Best Interest"!

In Part 3 of the PRS series, I intend to explain about the Tax Relief incentive offered to those investing in PRS.

If you like this article, please do the following:
1. Share it on your Facebook!
2. Like my Facebook Page
3. Subscribe to me. See the "FOLLOW ME TO FINANCIAL FREEDOM" section located at the top left? Just key in your email and click Submit.

Cheers and Happy Investing!

Read Part 1 : Private Retirement Scheme (PRS), What's In Store For Investors?

Read Part 3 : Private Retirement Scheme (PRS), Enjoying The Benefits of Tax Relief