EPF investment performance y.e. 31.12.05 Monday, Jul 31 2006 

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Since Employees Provident Fund (EPF) contributors have a choice whether to leave their money to accumulate with the EPF or to withdraw the money for investment in mutual funds, I feel it’s really important to keep track of the returns given by the EPF.

The Star (18 July 2006) reported that the EPF’s gross income rose by 11.7% to RM13.2bil, and asset size by 9.8% to RM263.8bil, for the financial year ended Dec 31.   I visited the EPF’s website and was able to have a look at the 2005 Annual Report. It gives the EPF’s  investments as at 31 December 2005 as follows:

Value (RM Million)          %
MGS 97,768 37.6%
Loans & Bonds 94,347 36.3%
Equity 49,602 19.1%
Money Market Instruments 16,577 6.4%
Property 1,591 0.6%
TOTAL 259,885 100.0%

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First steps in investing Thursday, Jul 27 2006 

I just came across a neat little guide to investing on the Boston Funds Direct (offshore mutual funds company coming to Malaysia shortly) website.logo.gif

The first step in the investment process as with everything else in life is goal-setting. This is one of the most crucial factors to successful investing. These may be long-term goals like saving for children’s education and retirement planning or something less distant like saving for one’s wedding or buying a car.

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Yippee! CFP! Tuesday, Jul 25 2006 

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Just wanted to share the news that I’ve passed my CFP (Certified Financial Planner) exams — and am officially certified!!

It’s been a great learning experience and will definitely miss the sharing of ideas with all my course mates, and brainstorming on assignments.

Will be posting some exam tips for future Module 6 candidates. Stay tuned!

(Girl in pic is my niece Melina :))

Best mutual funds in Malaysia (part 4) Monday, Jul 24 2006 

The conclusions that can be drawn from the comparisons done are as follows:

  1. In the equity/balanced funds category, the best performing mutual and investment-linked funds in Malaysia achieved average annual returns of at least 20% over the last 5 year period
  2. In the bond/money market category, the top mutual funds achieved an average annual return of at least 11% over the last 3 years
  3. The best capital guaranteed funds achieved an average annual return of approximately 4 % and above over the last 3 years
  4. There is much hoo-hah about capital guaranteed funds being in demand and popular because the capital is guaranteed. However it seems to me that from the relatively low returns in the past, and the fact that there are charges and usually a lock-in period (usually 3 years), one would be better off just leaving one’s funds in a fixed deposit account, especially with interest rates on the rise (approx. 4% for 12 months).

Other notes:

The investment-linked (IL) funds’ info is contained in a separate table in Personal Money (supplied by Normandy Perkasa). There is no ranking information provided on the returns consistency and capital preservation of these IL funds, unlike their unit trust counterparts. So, I can only make my conclusion on their returns consistency based on whether return these funds appear in my “best of” list for all my categories i.e. 1-year, 3-year and 5-years.

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Best mutual funds in Malaysia (part 3) Monday, Jul 24 2006 

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 Bonds/Money Market Funds 

These are the Bonds/Money Market funds that topped my list based on the criterion of at least 5% average annual returns over 3 years/1 year period. There are very few bond funds that have been around for 5 years and more, which is why I used 3 years as a benchmark. The results revealed that RHB‘s bond funds were the top performers, taking 1st and 2nd place and Pheim‘s bond fund came in a close 3rd. Public Mutual‘s Bond Fund, although in 4th place, was the only fund in the lot that achieved Lipper leader certification for both consistent performance and capital preservation.

Two Investment-linked (IL) insurance funds from Great Eastern also made the cut. Its Dana Sejati earned a credible 18.95% over the 3-year period.

Co 5-year return 3-year return 1-year return Other info Cons Ret Cap pre  Syariah
1 RHB Bond Fund 0.00% 34.44% 12.75% BO
2 RHB Islamic Bond Fund 0.00% 32.23% 12.80% BO Y
3 PHEIM Income Fund PIF 0.00% 29.86% 8.57% BO L
4 Public Islamic Bond 0.00% 19.07% 6.50% BO Y
5 Great Eastern Dana Sejati 0.00% 18.95% 6.34% BO IL
6 Public Bond Fund 48.22% 17.55% 5.02% BO L L
7 Avenue BondEXTRA Fund 0.00% 17.33% 4.86% BO L
8 PB Fixed Income Fund 0.00% 17.27% 5.19% BO
9 Great Eastern Lion Fixed Income 38.56% 16.12% 5.73% BO IL

BO-Bond, IL-insurance-linked, L-Lipper leader (top 20% within its asset class)

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Returns: consistency is key! Friday, Jul 21 2006 

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A bunch of equity/balanced funds achieved superb returns over either 5 years or 3 years but then failed my criterion of minimum 12% over 1 year so I’ve excluded them from my list of top performers (read my earlier post “Best Mutual Funds in Malaysia”). One investment-linked (IL) fund even showed a negative return of -13.06%. When investing, I feel that it is so important to go for funds that are able to show consistent results, and not funds that show a terrific performance one year and then dismal results the next. Ultimately, beware of those companies that market funds based on absolute returns achieved over a 1 year period!!

Anyway, for the sake of completeness, I list down below the equity/balanced funds that didn’t make my “Best of” list. The list also includes 4 funds that achieved returns of above 10% (these are marked with *), which may be considered as still a pretty decent return. 

(Fund Name, 5-year/3-year/1-year returns):

  1. Allianz Life Managed (IL)      119.05%/55.47%/-13.06%
  2. Hwang-DBS Dana Izdihar     0.00%/53.86%/not in PM list
  3. OSK-UOB KLCI Tracker Fund 80.01%/51.97%/8.13%
  4. MAA Balanced                      86.63%/51.05%/4.56%
  5. MAAKL Balanced Fund (IL)     86.63%/51.05%/4.56%
  6. *PB Balanced Fund              88.07%/50.97%/10.75%
  7. ING Equity (IL)                    117.01%/48.68%/7.36%
  8. *Great Eastern Lion Progressive (IL)  0.00%/48.18%/11.71%
  9. *Avenue VersatileEXTRA Fund    0.00%/47.79%/11.07%
  10. *CMS Premier Fund                84.07%/46.94%/11.41%

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Best mutual funds in Malaysia (part 2) Friday, Jul 21 2006 

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My definition of which are the “best mutual funds” would be funds that satisfy the following conditions:

  1. achieved the highest total returns
  2. with consistent performance over at least the medium term (i.e. 3-5 years) and
  3. have a relatively high “capital preservation” factor

Also they should also have the lowest management expense ratios…which I’ve found can really eat into your returns in a big way.

My starting point is the Top Performing Funds tables published by Personal Money magazine in conjunction with Lipper (fund rating agency). These tables narrow down the 300+ funds in the Malaysia mutual fund universe to the best performing funds over a 1-year, 3-year and 5-year period under various categories like Equity-growth, Equity-income, Mixed Asset-Growth etc etc.

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Best mutual funds in Malaysia(part 1) Friday, Jul 21 2006 

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As of April 2006, there are some 35 mutual fund companies registered with the Securities Commission. These manage a total of 361 funds. Now this may not sound like a lot of funds compared to the 10,000+ funds that are available in the US alone or the hundreds of thousands of funds in the mutual fund universe. However it is still mind-boggling array of choice for the unitiated.

How do you know the fund is any good??

Based on what the salesperson or bank rep tells you? Duh!!! I don’t think so. They earn a commission/bonus to push whatever fund that their company is setting a target for.

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Addicted to wealth! Tuesday, Jul 4 2006 

Who isn’t here in Malaysia right? Judging by the “trappings” of wealth that you see everywhere from the Merce’s to the Beemer’s to how quickly RM1m plus condos in KL are snapped up during their launch, people just love to show off what money they have (or don’t have, in many cases!). But this blog is not about how to get rich quick! I believe everyone can be wealthy if they raise their financial IQ, exercise some discipline (and patience!) and follow through….

Who am I? I am not a multi-millionaire or financial guru or anything like that. Just someone who’s spent a lot of time figuring out this wealth thing, and thought I would share it. I noticed that there are not that many personal finance websites or blogs written in a Malaysian context. So, hopefully this is a start to filling that void….