Invest Made Easy
How Did Unit Trust Funds Perform Pre and Post Election?
Shane My
Publish date: Mon, 20 May 2013, 07:28 PM
Shane My
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Like many of us, we seek for financial security and ultimately financial freedom. This blog is intended to act as a journal of investment as I journey towards that dream. At the same time, I hope that the articles written here would also benefit many others who share the same vision as me.
In my previous article dated 28th April 2013, I wrote about the possible outcome of the 13th General Election. Out of the 5 scenarios of possible outcome of the election, Scenario 2 : BN Wins with a Slim Majority and Forms the Federal Government was the outcome to be. When the Bursa Malaysia opens its trading doors the following Monday after the election, it shot up to a historical high of 1750 points. The index has been going up since 6th of May 2013 with occasional minor corrections due to profit taking as seen in the 1 month KLCI chart as shown below:
The positive sentiment among investors both local and foreign have kept the index above the 1700 points region for the past 2 weeks. For stock investors, some are still pounding their head against the wall for selling their holdings before the election while some are laughing their heads off after making a killing for holding their stocks.
I'm not the kind to predict the timing for entry or exit of the stock market, but what intrigues me most is how Equity Malaysia unit trust funds have performed for the last 3 months (pre and post election). Were the fund managers able to predict the timing of entry and exit? Or perhaps the fundamental philosophy of some fund managers to hold on to good quality stocks were greatly rewarded by the gains made after GE13?
In another post I wrote before the election, Election 2013! How Are Malaysia Equity Funds Reacting To It?, popular funds such as syariah compliant Eastspring Dana Al-Ilham and Hwang AIIMAN Growth Fund as well as conventional Kenanga Growth Fund were holding cash of about 13% - 26% of their entire fund size in preparation of buying opportunities. Did they make the most out of it?
Let's take a look at how these funds have performed post GE as shown in the table below:
| Fund Name | Past 3 Months Performance (% Gain) | 5 Years Annualized Returns (%) |
| Kenanga Growth Fund | 14.69 | 16.78 |
| AMB Dividend Trust Fund | 9.62 | 15.08 |
| Areca Equity Trust Fund | 16.49 | 14.87 |
| Kenanga Syariah Growth Fund | 13.51 | 14.59 |
| OSK-UOB Malaysia Dividend Fund | 12.66 | 14.53 |
| Hwang AIIMAN Growth Fund | 16.77 | 14.36 |
| Eastspring Dana Al-Ilham | 10.92 | 10.73 |
Comparing the above performance with the Kuala Lumpur Composite Index performance between 17th Feb 2013 - 17 May 2013 which gained about +9.14%, I would say most of these fund houses have outperformed the Bursa Index gain.
It is suffice to say that most of the fund managers from the table above have managed to make excellent decisions in selling, buying or holding their stocks. Pure stocks investors would have dispute and challenge the performance of the fund houses claiming that they would have done better by buying their own stocks. I agree to that point to a certain extent, yet how many of us are able to claim the same especially when the prediction that the market will suffer post-election is so strong thanks to the calls for UBAH and possible change over of government?
That aside, how about we take a look at the performance of Funds which are invested in Small-Medium Cap Equities:
| Fund Name | Past 3 Months Performance (% Gain) | 5 Years Annualized Returns (%) |
| Eastspring Investments Small-Cap Fund | 25.45 | 12.58 |
| OSK-UOB Emerging Opportunity Unit Trust | 24.07 | 11.75 |
| OSK-UOB Small Cap Opportunity Unit Trust | 15.51 | 4.62 |
| AMB SmallCap Trust Fund | 13.37 | 7.56 |
A whopping +25.45% gain in 3 months is an impressive figure by any standards! Yet for long term Unit Trust Investor this is just a small success and there is nothing to shout about. Looking at the long run, the 5 years annualized returns of 12.58% is still pale in comparison to the Equity Funds which return about 14-16%. (compounding an additional 2-3% really makes a whole lot of difference to your investment)
In a nutshell, most investors both in unit trust or stocks would have benefited from the current market uptrend. I would however caution investors whom try to time their entry to watch the market come September 2013 as the Countries Budget for 2014 is announced. With our country already in huge debt and facing massive pressure from international rating agency to introduced GST, I doubt there would be much goodies for us Malaysians come Budget 2014. Meanwhile enjoy your profit taking while you still can!
Cheers and Happy Investing!
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2. Like my Facebook Page
3. Subscribing to me. See the "FOLLOW MY ARTICLES VIA EMAIL" section located at the top left? Just key in your email and click Submit
4. Drop me an email at sickfreak03@gmail.com if you have any questions about unit trust investing.
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Discussions
Be the first to like this. Showing 8 of 8 comments
all the funds seemed to have such presentation in their annual reporting prospectus.
but when it comes to unit price per fund investment,it's horrible even when the KLCI is now toppish.
Unit price daily is quoted by Managers Price...rubbish..should be demand and supply price,not the fund company quote any how they like.
2013-05-20 23:13
Once again...Unit Trust has been misunderstood and being compared with stocks investing.
2013-05-21 00:33
kcchongz, I do not monitor all the funds performance, only selected funds. All public mutual funds are not in my list as they are overated.
In total there are 600 over unit trust funds available investing in variety of area from Malaysia to Asia Pac to China and World.
The top 10 equity Malaysia funds average (annualized) about 10-16% over a five year period. When I refer to annualized it means that it could be 20% for 1 year and -10% the following year. It follows the overall market sentiment (bearish or bullish). The difference is how good the fund manager manages the investment in terms of stocks picking and exiting at the right time.
The top 10 funds in Equity Malaysia category over-performs the KLCI index for 1, 3, 5 or 10 years in terms of capital gain. That I am very sure.
Therefore when investing in Unit Trust, it is wise to do some homework or obtain recommendation from reliable Unit Trust Consultant. Not the 3 suku type whom are into it just for the sales and commission.
benhctan, I think you need to read more about how the unit price is derived daily before accusing that it is quoted by the Manager. If unit trust perform poorer then the index, why is KLCI ETF so unpopular? EVeryone would be rushing to invest over there.
Cheers
Shane
2013-05-21 00:40
Shane My,
I don't expect you to monitor all the unit trusts in the order of 600+ as mentioned by you. However, if a unit trust agent or a financial adviser comes to see me to ask me to invest in his unit trusts, I would want to know all the answers to my questions above. I won't be happy with an answer saying the average compounded annual return for a 5-year period is 10-16% because when compounding, a CAR of 10% and 16% is a difference of the sky and the earth. I can't gauge. I am talking about long term as unit trust also always talk about long term as short term investor will not make the required return because of the transaction costs and fees. So short term market sentiment has no effect on the long term return. I am not that impressed only by the performance of the top funds as I am not sure the fund you recommend would be the top performing fund in the future, and if so for a year, whether it will continue to be the top fund for the next few years.
No, I am not expecting that the fund must outperform the market, but a true opinion from a professional whom I would want to entrust my money to.
2013-05-21 05:24
unit trust is based on NAV of its shareholding and cash. Price is quoted according NAV which one can sell and but basing on this NAV. If you want to be quoted by market demand, go for icap or the KLSE closed end index funds.
2013-05-21 06:45
try this for fund quick rank
http://my.morningstar.com/ap/quickrank/default.aspx
2013-05-21 06:51
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
kcchongnz
Shane my, could you kindly provide information below:
1) Total how many funds are there in Malaysia?
2) What is the 5-year average or mean annualized return of the funds above?
3) What is the 5-year annualized return of the Malaysian market?
4) How many funds over-performed the market?
5) How many funds underperformed the market.
Hope you can use the NAV as the basis of the return of the funds. Thank you very much.
2013-05-20 20:12