The present dilemma with Malaysia's unit trust industry is that most Malaysians believe in the concept of "bigger is better". Malaysian investors generally buy into the idea that a fund will be top performing if it is managed by a large and well known fund house.
This data from Morningstar clearly indicates that the Unit Trust market share is dominated by a few fund houses.
 |
| Malaysia Fund Houses Market Share as of April 2016 |
While there is nothing wrong investing into large or popular fund houses, I believe that an investor can get better returns by investing into funds that are highly rated instead. The term highly rated in this context comes from a system of STAR rating provided by a neutral fund tracking website called Morningstar.
What is Morningstar?
Morningstar is a non bias website which tracks the performance of all unit trust funds in Malaysia. Morningstar also rates and categorizes unit trust funds using its own STAR rating system introduced in 1985. The best performing funds will be rated with the maximum of 5 STARs.
What are Morningstar's 5 STAR Rated Funds?
Based on the data extracted from Morningstar as of 5th June 2016, there are only 28 funds with overall 5 STAR rating. The list of 28 funds are as shown below:
Fund Name
|
Category
|
RHB
Smart Balanced
|
Blended
- Balanced
|
RHB
Growth & Income Focus
|
Blended
- Balanced
|
RHB
Dana Hazzem
|
Blended
- Balanced (Syariah)
|
Apex
Dana Al-Faiz-i Inc
|
Blended
- Balanced (Syariah)
|
Dana
Makmur Pheim
|
Blended
- Balanced (Syariah)
|
RHB
Smart Income
|
Blended
- Conservative
|
AmDynamic
Bond
|
Bonds
- Malaysia
|
AmDynamic
Sukuk
|
Bonds
- Malaysia (Syariah)
|
RHB
Islamic Bond
|
Bonds
- Malaysia (Syariah)
|
CIMB-Principal
Asia Pacific Dynamic Inc
|
Equity
- Asia Pacific ex-Japan
|
Affin
Hwang Select Asia (ex Jpn) Quantum
|
Equity
- Asia Pacific ex-Japan
|
CIMB-Principal
Global Titans
|
Equity
- Global
|
CIMB-Principal
Greater China Equity
|
Equity
- Greater China
|
Eastspring
Investments Equity Income
|
Equity
- Malaysia Income
|
AMB
Ethical Trust
|
Equity
- Malaysia Large-cap
|
CIMB-Principal
Equity
|
Equity
- Malaysia Large-cap
|
Manulife
Investment Regular Savings
|
Equity
- Malaysia Large-cap
|
Public
Ittikal Sequel
|
Equity
- Malaysia Large-cap (Syariah)
|
Eastspring
Investments Dana al-Ilham
|
Equity
- Malaysia Large-cap (Syariah)
|
Eastspring
Investments MY Focus
|
Equity
- Malaysia Mid/Small-cap
|
Kenanga
Growth
|
Equity
- Malaysia Mid/Small-cap
|
Eastspring
Investments Small-cap
|
Equity
- Malaysia Mid/Small-cap
|
RHB
Smart Treasure
|
Equity
- Malaysia Mid/Small-cap
|
Manulife
Investment Shariah Progress
|
Equity
- Malaysia Mid/Small-cap (Syariah)
|
KAF
Money Market
|
Money
Market - Malaysia
|
RHB
Cash Management
|
Money
Market - Malaysia
|
Libra
MoneyExtra Fund
|
Money
Market - Malaysia
|
Libra
Dana Safa
|
Money
Market - Malaysia (Syariah)
|
Breakdown of 5 STAR rated funds according to Fund Houses
The table below indicates the breakdown of 5 STAR funds according to fund management companies.
Fund House
|
No of Funds
|
Percentage
|
RHB Asset Management Sdn
Bhd
|
7
|
25.00%
|
Eastspring Investments
Berhad
|
4
|
14.29%
|
CIMB Principal Asset
Management Berhad
|
4
|
14.29%
|
AmFunds Management Berhad
|
2
|
7.14%
|
Manulife Asset Management
Services Berhad
|
2
|
7.14%
|
Libra Invest Berhad
|
2
|
7.14%
|
Pheim Unit Trusts Berhad
|
1
|
3.57%
|
Amanah Mutual Berhad
|
1
|
3.57%
|
KAF Fund Management Sdn
Bhd
|
1
|
3.57%
|
Public Mutual Berhad
|
1
|
3.57%
|
Kenanga Investors Berhad
|
1
|
3.57%
|
Apex Investment Services
Bhd
|
1
|
3.57%
|
Affin Hwang Asset
Management Berhad
|
1
|
3.57%
|
 |
| Percentage (%) of 5 STAR funds according to Fund Houses |
By comparing the data above with the earlier data on market share by fund companies, it clearly shows that funds companies with top rated funds are being overlooked by Malaysian investors. For example, RHB Asset Management Sdn Bhd has seven "5 STAR" rated funds yet only has a meager market share of 4.83%!
On the other hand, Public Mutual Berhad with the biggest market share of 57.41% (and 97 funds under management) has only one "5 STAR" rated fund! As a matter of fact, if you look at the growth of Public Mutual Berhad, the company has amazingly increase its market share from 56.67% in 2015 to 57.415 in 2016 despite not having many top performing funds.
The ignorance of Malaysian investors towards unit trust fund is the very reason why they are losing out on investing into funds that could provided better returns in the long run!
What are you losing out when you are not investing into these 5 STAR funds?
As mentioned earlier, Morningstar ratings are given according to the performance of each fund in terms of returns. A 5 STAR rated fund is normally one that is top performing in its respective category.
Now what I'm going to show you next are the annualized returns of these 28 funds in terms of 3 Yrs, 5 Yrs and 10 Yrs. Do take note that this is not a performance comparison between the 28 funds because each fund come from different categories with various risk level.
1) Fund performance in terms of 3 Yr Annualized Return
Fund Name
|
3 Yr Annualized Return (as of 2 June 16)
|
|
29.84%
|
YES
|
|
Eastspring Investments MY
Focus
|
20.26%
|
YES
|
16.87%
|
YES
|
|
15.90%
|
YES
|
|
CIMB-Principal Global
Titans
|
13.97%
|
NO
|
13.69%
|
YES
|
|
CIMB-Principal Greater
China Equity
|
12.87%
|
NO
|
RHB Growth & Income
Focus
|
12.30%
|
YES
|
Manulife Investment
Shariah Progress
|
11.93%
|
NO
|
11.56%
|
YES
|
|
11.19%
|
YES
|
|
11.09%
|
YES
|
|
Eastspring Investments
Equity Income
|
8.33%
|
YES
|
RHB Dana Hazzem
|
7.44%
|
YES
|
7.24%
|
YES
|
|
Manulife Investment
Regular Savings
|
7.08%
|
NO
|
Affin Hwang Select Asia
(ex Jpn) Quantum
|
6.70%
|
YES
|
RHB Islamic Bond
|
5.80%
|
YES
|
Apex Dana Al-Faiz-i Inc
|
5.62%
|
NO
|
AMB Ethical Trust
|
5.61%
|
YES
|
CIMB-Principal Equity
|
5.01%
|
NO
|
Public Ittikal Sequel
|
4.99%
|
NO
|
AmDynamic Sukuk
|
4.27%
|
YES
|
AmDynamic Bond
|
3.89%
|
YES
|
Libra Dana Safa
|
3.77%
|
NO
|
Libra MoneyExtra Fund
|
3.66%
|
NO
|
RHB Cash Management
|
3.49%
|
NO
|
KAF Money Market
|
3.36%
|
YES
|
2) Fund performance in terms of 5 Yr Annualized Return
Fund Name
|
5 Yr Annualized Return (as of 2 June 16)
|
|
17.08%
|
YES
|
|
15.69%
|
YES
|
|
Eastspring Investments MY
Focus
|
14.01%
|
YES
|
Manulife Investment
Shariah Progress
|
13.87%
|
NO
|
12.85%
|
YES
|
|
12.19%
|
YES
|
|
Affin Hwang Select Asia
(ex Jpn) Quantum
|
11.79%
|
YES
|
11.58%
|
YES
|
|
Eastspring Investments
Equity Income
|
11.38%
|
YES
|
11.04%
|
YES
|
|
RHB Growth & Income
Focus
|
10.19%
|
YES
|
CIMB-Principal Global
Titans
|
10.17%
|
NO
|
8.82%
|
YES
|
|
8.41%
|
YES
|
|
Manulife Investment
Regular Savings
|
7.76%
|
NO
|
RHB Islamic Bond
|
7.68%
|
YES
|
CIMB-Principal Equity
|
7.00%
|
NO
|
AMB Ethical Trust
|
6.85%
|
YES
|
Apex Dana Al-Faiz-i Inc
|
6.36%
|
NO
|
CIMB-Principal Greater
China Equity
|
5.98%
|
NO
|
AmDynamic Bond
|
5.57%
|
YES
|
Libra Dana Safa
|
3.63%
|
NO
|
Libra MoneyExtra Fund
|
3.53%
|
NO
|
KAF Money Market
|
3.37%
|
YES
|
RHB Cash Management
|
3.31%
|
NO
|
Note : 3 funds does not have a 5 Year performance track record yet.
3) Fund performance in terms of 10 Yr Annualized Return
Fund Name
|
10 Yr Annualized Return (as of 2 June 16)
|
|
16.73%
|
YES
|
|
15.95%
|
YES
|
|
15.68%
|
YES
|
|
14.79%
|
YES
|
|
RHB Growth & Income
Focus
|
13.96%
|
YES
|
Affin Hwang Select Asia
(ex Jpn) Quantum
|
13.73%
|
YES
|
AMB Ethical Trust
|
13.12%
|
YES
|
CIMB-Principal Equity
|
13.01%
|
NO
|
13.01%
|
YES
|
|
Apex Dana Al-Faiz-i Inc
|
11.47%
|
NO
|
Eastspring Investments
Equity Income
|
10.85%
|
YES
|
Manulife Investment
Regular Savings
|
10.82%
|
NO
|
8.85%
|
YES
|
|
8.37%
|
YES
|
|
AmDynamic Bond
|
7.61%
|
YES
|
RHB Islamic Bond
|
6.17%
|
YES
|
CIMB-Principal Global
Titans
|
4.07%
|
NO
|
Libra MoneyExtra Fund
|
3.33%
|
NO
|
Note : 10 funds does not have a 10 Year performance track record yet.
Summary
I must stress how important it is for every investor to include the Morningstar's star rating of a fund as a key criteria when it comes to selecting a fund to invest into. However the awareness about the use of star rating is extremely low among Malaysians investors.
Only if you are an investor that diligently searches for information about unit trust investment would mostly likely discover the star ratings of funds via the Morningstar website. If you're the type that depends on an agent or consultant for advisory, chances are you would probably never heard about Morningstar rating. In addition, most fund fact sheets does not display the Morningstar's star rating because only a limited number of funds (28 only) has the bragging rights to show off their 5 STAR rating.
Other funds have no reason to put the star rating because there is nothing to brag about. As a matter of fact, it could be counter productive for a fund to show off a 3 or 4 STAR rating which could possibly trigger an investor to ask is there a higher rated 5 STAR fund?
After all that is said above, I feel that putting up a post on the list of unit trust funds with 5 STAR ratings is justifiable and in line with my personal goal of raising awareness among Malaysian unit trust investors. It is my believe that an investor should be given the right to access to non bias information about unit trust fund as well as make comparison between unit trust funds easily. If you're reading this post now, do share it with your family and friends. Help educate those that are yet to be "enlightened" with knowledge and resource. Give those that you care for the option to make wiser and better choices when it comes to investing into unit trust!
Cheers and happy investing!
P.S :
- Are you already invested into unit trust? Why not let me check for you how your funds compare against that of the 5 STAR rated ones. Just drop me an email at shanesee03@gmail.com if you like me to do a check for you!
- 18 our of the 28 funds above can be invested online at very low sales charge. Find out how you can use eUnittrust to managed your own unit trust investment! Just click HERE
- 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
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