This is 2nd part of the post Best Performing Funds as of 29 February 2008 – Equities. Click here to read part 1, which gives an overview of the topic and also my general observations about equity fund investments.

I know why it took me so long to post thie best performing fund review since my last one in 2006

- maaan, it’s hard work and tedious. Researching and cross-checking. Some of the fund companies don’t necessarily do a good job of making their information accessible and/or available. A few posted up the financial performance of the funds but then require you to have a login before being able to access the info. What’s the point – if I haven’t yet become a customer, but want to find out more about the fund first, I would not be able to access. Whatever!

Here then are the Best Performing Small and Mid Cap Malaysian Equities:

Table C – Best Performing Funds: Small and Mid cap Malaysian equities – Non-Islamic

 

Fund Name

Indices

5 years

3 years

1 year
 

 

        
 

Non-Islamic

        
1) Public Small Cap LL2 160.91% 72.75% 29.40%
2) MAAKL Progress LL4 152.98% 79.97% 26.31%
  Special mention:        
  OSK-UOB Emerging Opportunity LL1 - 86.24% 43.12%
           
  Average return   103.83% 40.39% 15.32%
  No of funds 16 9 16 16

 

Public Mutual again?! Public Small Cap is tops in this category of 16 funds. Small Cap refers to companies whose market capitalization is below RM1.25 billion.

Public Small Cap’s prospectus states its objective as to achieve high capital growth through investments in companies with a market capitalization of RM1.25 billion and below with special focus on growth stocks. In this context, its top 5 stockholdings as at 29 February 2008 were VADS, Cement Industries of Malaysia, PIE Industrial, Hong Leong Industries and Manulife Insurance, making up 24% of its total NAV.

Its return over 5 years was 160.91% (32.18% pa) and distribution yield for the FY ended 31 August 2007 was 11% which came to 9 sen per unit. The fund was the winner of the Edge-Lipper Equity Malaysia Small and Mid Caps – 5 years award for 2008. Not too shabby!

MAAKL Progress deserves mention for its outstanding LL4 achievement.

There are not many funds in this category, compared to the large cap category reviewed in part 1 of this post. It’s interesting to note also that over the 5 year period to 29 February 2008, the best performers of the small and mid caps have not been able to do better than the best performers of the large caps.

As a group however, their overall average returns are higher i.e. 103.83% over 5 years compared to 100.67% achieved by the Malaysia Equity Non-Islamic group.  Small caps appear to have had a good past 1 year with an average return of 15.32%.

Table D – Best Performing Funds: Small and Mid cap Malaysian equities – Islamic

 

Fund Name

Indices

5 years

3 years

1 year
 

 

        
 

Islamic

        
1) NA – no fund > 5 years        
  Special mention:        
  CIMB Islamic Small Cap 221 - 10.62% 16.21%
           
  Average return   - 10.62% 19.15%
  No of funds 2 0 1 2

 

There are no funds with a performance of over 5 years. Howver the top performer in the 3 year category was the CIMB Islamic Small Cap fund.

 

Table E – Best Performing Funds: Foreign – Miscellaneous categories

Fund Name

1 year

 

  

Non-Islamic (NI) /Islamic (I)

  
   
Equity Asia-Pacific
Public Far East Select (NI) 28.20%
PB Islamic Asia Equity (I) 16.39%
   
Equity Asia-Pacific Ex-Japan  
TA South East Asia Equity (NI) 21.64%
Pheim Asia Ex-Japan Islamic (I) 5.84%
   
Equity Emerging Markets Global  
Hwang DBS Global Emerging Markets (NI) 15.05%
   
Equity Europe  
AmSchroder European Equity Alpha -7.29%
(NI)  
   
Equity Global  
PRUglobal Basics (NI) 12.01%
AmOasis Global Islamic Equity (I) -4.37%

 

When it comes to funds that invest in overseas markets with a track record, there’s not much of a choice. Many of these funds were under a year old as of 29 February 2008. Recall that Bank Negara allowed local fund managers to open up and invest in markets outside Malaysia sometime in late 2006. And 2007 saw a flurry of foreign fund launches in Malaysia. For Asia-Pacific region, the two best performing funds were Public Mutual’s Public Far East Select and TA’s TA South East Asia Equity, with a performance of 28.20% and 21.64% respectively over the 1 year period in review. Both funds are non-Islamic funds.

In the Emerging Markets category, Hwang DBS Global Emerging Markets was tops with a return of 15.05%. However it wasn’t a good year for funds that invested in the European and Global markets. As you can see from the table above, some of the “best-performing” funds here suffered losses.  This attests to what I said earlier, about foreign funds being more risky and volatile as there are more variables at play to take cognizance of such as exchange rate fluctuations, political and economic factors of the the markets invested and additional fees involved since the fund manager typically doesn’t invest directly, but through other funds.

Given the short time-frame of 1 year and the lack of funds within each of the foreign funds category, the Lipper listings did not provide the comparison index for Returns, Consistency and Preservation. So again, we need to be very careful not to look at these tables alone in our decision-making. To be safe, I would put in a small amount first and practise dollar cost averaging. I know some pent-up investors desperate for a slice of the foreign market action were quick to dump in big bucks at these fund launches last year, especially funds that invested in China. If this is your style of investing, then you must be prepared to ride the volatility and the ups and downs. Always bear in mind the risks, and remember the FUNDAMENTALS taught elsewhere in this blog, when investing.