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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Simple Guide On How To Start Your Own Child Education Plan

One key request many Malaysian make when engaging a financial planner is setting up a child education plan for them. Starting up a child education plan as early as possible is the best basket of savings one can have especially when the plan is executed early. The sooner one puts the plan in action, the easier it is for one to ensure sufficient funding when the need arises.

The Dilemma

I spoke to a mother of a brilliant child yesterday and the result of that conversation drove me to dwell further about child education plan. To simplify the entire conversation with this lady, I will state the main key points of the conversation:

1. The lady is in her fifties and while her husband is a retiree living on government pension.

2. Both lady and her husband have no EPF savings

3. The son obtained entry to a prestigious university in UK and the fees for the degree is 24,000 pounds per year (approximately RM124,000)

4. The 4 year degree would cost the lady and her husband approximately RM496,000 (excluding living expenses)

5. The son is very interested in obtaining this degree that was offered to him. As proud parents, both the lady and her husband would do their very best to ensure that their son obtain the best possible education despite knowing that the tuition fees would burn a deep hole in their retirement savings.

6. PTPTN does not offer loan for overseas degree course.

7. The lady and husband are considering to remortgage their home as their last resort if their son fails to obtain a scholarship.

From that conversation, I wish to point out the following:
1. The lady and her husband were unprepared to face a situation where their son was offered a degree overseas. I believe the couple would have set aside certain savings plan sufficient to pay for a local degree only.

2. With no EPF contribution, the couple has no alternative fund to withdraw from. Even if they do have EPF to withdraw from, the amount might not be sufficient as the average EPF savings for Malaysian at age 55 is approximately RM115,000 (RM230,000 for husband and wife)

3. Remortgage their home which they have both slogged 20-30 years to complete the payment adds an additional burden to their retirement monthly expenses.

In all honestly, I believe many parents are facing similar problems today. Child Education could be a bane for many whom failed to plan early. The consequences ranges from bearing additional loans during retirement years, living an uncomfortable retirement or to a certain extent sacrificing their child's potential to have a proper education. These are norms faced by many mid and lower income families at present and not surprising, the future too.

What exactly is the Cost of Education in Malaysia?
Let's take a look at the present cost of education in Malaysia based on figures from "Malaysia Handbook (7th International Edition)" published 2007.

1) Pre University Education

2) Bachelor's Degree Program
    2.1) 3+0 Degree Program at Private Colleges /Private Universities

    2.2) Bachelor's Degree at Foreign University Branch Campuses located in Malaysia

    2.3) Bachelor's Degree at Malaysian Private Universities

3) Twinning Degree Program

Creating A Simple Education Plan
Now that we have a list of estimated tuition fees for pre-university and bachelor degree in Malaysia for year 2007, let's create a simple education plan.

Step 1 : Start by Identifying the Total Cost for Pre-University and Bachelor Degree (take the highest value from the range given)

Sample :

	Type	Cost
Foundation	GCE 'A' Level, UK	MYR 25,000.00
Degree	Engineering (3+0 Degree Program at Private Colleges /Private Universities)	MYR 65,000.00
	Total Cost	MYR 90,000.00*

*Cost of Sample Foundation and Degree in 2007.

Step 2 : Calculate Cost as of Present Year (2013)
Since the cost given in the sample above is for year 2007, we need to find out the present cost for the same foundation and degree above.

Assuming Inflation is 3% per year, the present Cost of Education (2013) can be calculated using a Savings Calculator as shown below:

Note:
"Initial Balance or deposit" is treated as "cost of education in 2007"
"Returns on Savings (Interest Rate)" is treated as inflation per year
"Number of years" is treated as the number of years from 2007 to 2013 (6 years)

Cost of Education for 2013 (present) after factoring in inflation : RM107,464.71

Step 3 : Projecting Into The Future

Assuming that your child is 5 years old now. He or she will be attending pre-university at the age of 18. With 13 years to go, we will use the present value of RM107,464.71 to project the cost of education 13 years into the future.

Inflation is the key culprit leading to the increase in the cost increase. Therefore we will be using 3% per year inflation for this calculation,

Using the same Savings Calculator, the projected value would be:

Cost of Education in 2026 : RM157,815.55

Step 4 : Start Your Savings/Investment Child Education Plan 
After completing Step 1 to Step 3, you now know the objective/goal is to:

"Accumulate RM157,815.55 within a period of 13 years in order to provide an A-levels pre-university education and an Bachelor's Degree in Engineering from a Private University for your 5 year old child."

In the context of accumulating RM157,815.55 within a period of 13 years, we intend to find out the monthly contribution via available passive options of savings or investment.

Scenario 1 (Saving/Investing via Bank Fixed Deposit Rate)
Target : RM157,815.55
Fixed Deposit Rate : 4% per annum
Initial Starting Amount : RM1,000
Period of Investment : 13 years
Monthly Contribution : ?

Using the "Save A Million Calculator", we can determine the monthly contribution as shown below:

To shorten the calculation, I've taken the initiative to summarized into a simple table the available passive savings/investment options, the expected monthly contribution as well as the risk level taken in order to achieve the above mentioned goal:

Type of Passive Investment	Expected Returns Per Annum	Expected Monthly Contribution	Risk Level
Equity Based Unit Trust	13.00%	MYR 377.88	HIGH
Balanced Unit Trust	10.00%	MYR 484.87	MODERATE
Amanah Saham Bumiputera	9.00%	MYR 525.15	MODERATE-LOW
Fixed Deposit	4.00%	MYR 764.72	LOW
Savings Account	1.00%	MYR 940.89	LOW

Summary

As what many financial planners would repeatedly advise, creating a child education plan is easy, sticking to the plan is what many families fail to do. In addition, selecting an investment option for your child education could also be a challenge in terms of exposure to risk related to the investment. If you are serious about utilizing unit trust as your investment option, I would recommend that you read the following article "Dollar Cost Averaging in Unit Trust, Is it Practicable". 

Cheers and Happy Planning!

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3. Like me to set up your Child's Education Fund via Unit Trust? Drop me an email at shanesee03@gmail.com

Related Post : Planning Your Child's Higher Education Fund...Even If You Are Not Married

Fuel Hike! An Act of Appeasing The Higher Authority!

The recent fuel hike of RM0.20/litre for RON95 and Diesel spark a furor among many Malaysians. Most of us voiced our displeasure and criticism via our Facebook and Tweeter accounts. Then there are, also parodies about the price hike, false promises, BR1M criticism and many more being circulated around the internet. As much as we wish for things to be better and cheaper, deep down we are forced to accept that the recent fuel hike is just the start of many more in the near future. 

Today, TheStar published an article with the following headline:

"M'sia needs to do more to alter negative rating outlook"

In this article, our fuel hike is purely caused by the pressure being imposed on us by international rating agency, Fitch. Fitch having downgraded our country's sovereign rating a month ago from Stable to Negative is threatening further rating downgrades if no action is being taken to prevent our debt level from worsening.

Similar to putting up a show, the quickest way for the Government to appease Fitch is through fuel hike. According to estimates, the 20 cent fuel hike could save about RM3.3 billion annual in terms of subsidy. What the Government fail...or intentionally fail to realize is the avalanche impact upon "rakyat" caused by a 10.5% hike in fuel prices. For sure prices of goods and services are expected to rise over the next few months. Mid level as well as lower income families will be cutting down on their spending which would discourage healthy GDP growth. Easily said, the lesser the "rakyat" is willing to spend, the slower our country's economic growth would be. 

So in an act of appeasing Fitch, the Government indirectly created a bigger negative effect upon our slowing economy growth. Not forgetting with increased price of goods and services, inflation is bound to go up in the upcoming months. Read "Indonesia's Inflation Crisis...Malaysians should learn from it!

What amuses me most is that even Fitch is not impressed with the fuel hike measure as clearly stated in this article from TheStar:

Opps..plan backfired dear PM.

Since the fuel hike, our dailies are reporting claims of increase in price of goods, services as well as property. Among the headlines reported are:
1. New property price to increase by 10% due to rise in cost of raw materials used for construction
2. Price for public transportation to increase by 5% - 30%
3. Food price to increase by 0.1% despite assurance by Domestic Trade, Cooperatives and Consumerism

That aside, another point that I would like to point out is the use of savings from the fuel hike to support BR1M scheme. What good is an extra RM500 or even RM1000 per year when the additional expenditure cause by price increase in petrol, food and services are going to exceed that amount in just a few months? How about abolishing BR1M instead to create some savings for the country?

I do not how many more of such hikes/subsidy cuts will be imposed in the future. For sure, such an action can only temporary appease "certain parties", yet it won't address the fiscal issue in the long run. Money saved from subsidy reduction is not considered income if the money is taken from the rakyat. After all it is the rakyat whom have generously loaned the RM500+ billion to you in the first place!

Instead, proper reforms to reduce the debt should be rolled out to encourage economic growth. Effective measures must be introduced to generate external income especially from foreign investment. Be more transparent on how the recouped money is utilized to boost the economy. Bottom line, the end must justify the means for measures taken.

Cheers!

P/s : Despite my blog's title is Invest Made Easy, I've been writing more about our country's economy over the past few months. Some readers whom are searching for investment tips might be put off when greeted with many articles related to the economic situation of our country. The reason I've been placing much emphasis on understanding on our country's economy and finances is because these factors inter relate with investing. Figures such as inflation, GDP, debt level and sovereign ratings should be our key references when it comes to deciding where we should invest our money. Take for example that if the property price increases by an additional 10% because of the fuel hike and you know there might be further hikes in the future, would you still invest into a property?

Understanding and then writing about the economy via this blog has been a wonderful learning experience for me. I hope that you too find awareness, knowledge as well as wisdom that could assist you in making better decisions when it comes to personal finance and investing!

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