SOS Read this before you INVEST in Stocks
SOS Why 80% unit trusts holders under performed?
sosfinance
Publish date: Sat, 13 Sep 2014, 10:41 PM
sosfinance
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VALUATION DOES NOT DETERMINE THE PRICE, IT'S JUST A TOOL TO ESTIMATE A VALUE OF A BIZ
www.sosfinancialplanning.blogspot.my
"How do you save RM50,000? - I shared with a friend on how to do it. I got a term life for RM280 p.a covering RM100k until 70 years old. I cancelled my wholelife insurance of RM2,800 p.a. for the same coverage up to 100 years old. Save RM2500 p.a x 20 years = RM50,000. (PM0122037325)
.....IS THIS ARTICLE FAKE OR FACT?? ANYONE CAN CONFIRM?
www.sosfinancialplanning.blogspot.my
"How do you save RM50,000? - I shared with a friend on how to do it. I got a term life for RM280 p.a covering RM100k until 70 years old. I cancelled my wholelife insurance of RM2,800 p.a. for the same coverage up to 100 years old. Save RM2500 p.a x 20 years = RM50,000. (PM0122037325)
.....IS THIS ARTICLE FAKE OR FACT?? ANYONE CAN CONFIRM?
1. There are about 600 different unit trusts with NAV of RM350 billions or 20% of today's market cap of RM1.7 trillion (for Bursa Malaysia) launched.
2. Have anyone done a research on the 600 unit trusts launched? How many of them have a compounding since their launched say for 5 years, 10 years, 15 years, 20 years or more of more than 10%,15%, 20%? So far, no one is able to answer the question. The answer, may not what we want to hear.
3. In USA, they have conducted a research, only about 20% of its mutual funds out performed the index. That means, 80% of the fund managers in mutual funds did miserably.
4. Lately, I saw an advertisement in a financial paper, shows that the return of the UNIT TRUST over the last 5 years is about 150%. When I actually research it, its return is also the same for last 10 years since launched. The first 5 years of launched it did horribaly, (almost zero), but the second 5 years, it did fantastically (almost about 12% p.a.). The CAGR for 10 years is about 6% p.a.
BUFFET SAYS WE MUST HAVE PATIENCE, IT IS RIGHT ABOUT WHAT, NOT WHEN THAT COUNTS
Yet as Buffett has noted continually, it's terribly dangerous to attempt to time the market:
"With a wonderful business, you can figure out what will happen; you can't figure out when it will happen. You don't want to focus on when, you want to focus on what. If you're right about what, you don't have to worry about when"
So often investors are told they must attempt to time the market, and begin investing when the market is on the rise, and sell when the market is falling.
MY VIEW
Please be careful, Buffett is talking about companies in USA. Example, Coke was listed in 1919. If you bought it at USD40, today it is about USD11million. Coke need another 5 years to celebrate 100 years old since listing. How many companies in Malaysia has INTERNATIONAL brand like coke?
In Malaysia, if we are patient, say 10 years (for discussion sake), Nestle, Digi, Genting Plantation, Gamuda can give us a CAGR of about 19% p.a.
I will do my review on the 600 unit trusts. I will start with those that are launched for more than 10 years.
IT almost sound very easy looking back the rear mirror. Just be patience. But, why, only 10-20% does well in Bursa even after all we can learn from the BEST INVESTOR?
Perhaps you need a different tools? A different technique? A different skills?
Lets us have a look
www.sosfinancialplanning.blogspot.com
Review of UTs (CAGR - compounding Average growth rate, TR - Total return)
FUNDS IN MALAYSIA [>10 yrs)
XXX Equity Fund (commence 4.9.01 till 11.9.14) - 13 yrs TR = 297%, CAGR 8.5%
XXX Dividend Select Fund (commence 17.05.05 till 11.9.14) - 9.3 yrs TR = 180%, CAGR 7.0%
XXX Aggressive Growth Funds (commence 24.05.94 till 11.9.14) - 20.2 yrs TR = 251%, CAGR 4.5%
xxxx Index Fund - (commence 31.3.92 till 11.9.14) - 22.5yrs TR = 762%, CAGR 9.5%
xx Growth Fund - (c: 23.10.02 till 11.9.14) - 12 yrs TR = 358%, CAGR 11.5%
xx Growth Sequel Fund (5.12.11 till 11.9.14) - 2.75 yrs TR = 30% CAGR 9%
xxx Balanced Fund - (c: 8.7.95 till 11.9.14) - 19 yrs TR = 222%, CAGR 4.2%
xxx Islamic Equity Fund - (c 17.6.03 - 11.9.14) - 11 yrs TR = 237%, CAGR = 8%
xxx Smallcap Fund ( c 3.7.00 - 11.9.14) 14 yrs TR = 577%, CAGR = 13%
xxx Industry Fund (c 23.10.93 - 11.9.14) 21 yrs TR = 8.96%, CAGR = <0.5%
[only 2 of them exceeded 10% for 11-14 yrs] [For >20 yrs, 2, - 0.5% - 9.5%]
FUNDS OUTSIDE MALAYSIA
xxx Most of it (>90%) did badly, i.e. CAGR < 3%.
BOND FUND
xxxxx Bond Fund (commence 1997) - 17 years, CAGR = 5.5%
xxxxx Enhanced Bond Fund (2005) - 9 years, CAGR = 6.0%
NAV used in factsheet - when we invest in UT, not sure in the factsheet the NAV starts with 1.00 or 0.95 because the moment we participate we actually start with 5% discounted. When we withdraw, I am not sure the NAV shown is the exit NAV or has to be discounted 5%?
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Discussions
1 person likes this. Showing 2 of 2 comments
dear chowkw xxxxx Bond Fund (commenced 1997 or 17 years) provided about 5.5%. For equity, due to the risk involved, long term return should be around 10% p.a. The reason UT get a lot lower than that is mainly the fee, 5.5%,.1.5%, 0.5%, 0.2%, 0.03%, (service fee, management fee, trustee fee, broking fee, custodian fee, some have performance fee, and a few hidden fee. Let us not compared with Warren Buffett, what is expected from Equity return for Long Run taking into account the risk?
2014-09-15 08:50
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chowkw
I attended a few talks by local fund managers. I see most of them have their own way to look for undervalue stocks. So they are not taking our money for nothing as many would think. To me 7-8 % annual return with unit trust is not bad. Yes warren buffet may make 20% return from stock market every year, but how many retailer has his skill?
2014-09-14 22:27