It has been a while since I’ve posted something about the top performing funds available in the Malaysian market. So I took a quick peek at the latest issue of Personal Money and found my way to the Lipper Tables which list the funds with the best results as of 29 February 2008. Since there are hundreds of funds in Malaysia, I’ve decided to just pick out the Top 12% (arbitrary % decided by me :) ) of funds in their asset class as follows:
- Mixed Assets
- Guaranteed Returns
- Investment-linked Insurance
It’s important to note that this list is for your information only, and of course does not represent a recommendation to purchase. Note also that the usual caveats apply, for perfomance tables i.e. that past performance is no indicator of future performance. Some of the top funds of 6 months ago are languishing close to the bottom of their asset class….so beware when picking funds just based on their past returns. In your fund-selection decision, you should consider not just returns but also other performance indicators, such as:
- consistency of the fund’s returns
- the rate of risk or volatility (i.e. some top performing funds have a high volatility rate, which means when you could just as easily fluctuate to a loss position)
- the risk-adjusted rate of return, in essence a combination of the two preceding items
- capital preservation ratio – a measurement of the fund’s historical loss avoidance relative to other funds
- track record of the fund manager
- sales charges and annual management fees
Mutual funds are a mid to long-term investment vehicle so be prepared to hold your investment for at least 3-5 years before selling out or switching to other funds. Sales charges typically range from 5%-6% for equity funds and 1-2% for bond funds. You will usually also incur admin charges for switching between funds (around RM25). Because of these charges, I’m generally not an advocate of buying mutual funds for the short-term, or for investors to pursue a trading strategy for mutual funds i.e. buy and sell with the aim of making quick gains.
The funds range from conservative to medium to aggressive or high risk so understanding the nature of the funds that you are buying into goes a long way towards helping you in your decisions to buy, hold or sell during uncertain times.
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