Fund can Invest More in the Overseas...

STARTING April 1, Malaysians will be able to invest more of their money abroad as they search for better returns.

Bank Negara Malaysia has relaxed rules to allow unit trust companies to invest half of their total net asset value (NAV), or the market value of their investments, up from 30 per cent previously.

This means that unit trust firms will be able to offer additional units in funds that invest overseas.

Such funds have been selling well, but unit trust managers have complained that most of them are close to hitting the ceiling in terms of foreign investments.

"This is good news for unit trust players to come up with more global funds which will give more choices for investors to diversify their investment portfolios," Amanahraya Unit Trust Management Sdn Bhd chief executive officer Roslan Harun said.

"I personally think the figure should be more than 50 per cent of the NAV as local investors' appetite for global funds now is on the rise."

He said investors do not want to be restricted to only investing in the local market.

The announcement could entice one or two unit trust companies to focus only on global funds, he added.

"Players now can come up with products that could actually focus on specific countries, such as China and India, apart from the US and Europe," said Roslan , adding that Amanahraya Unit Trust has applied to launch a global fund.

Another industry player, a senior manager at a unit trust firm, said that this latest move had been long awaited.

"It has been close to two years that the limit was revised to 30 per cent, and some of us had expected it to go up to 60 per cent," she said.

She said that this latest development would certainly enhance investment returns as investors would be given more options for a better risk-and- return profile for their funds.

Great Bonus for Public Mutual Investors!

With regards to our market’s performance during the first half of today’s trading, I would like to reassure investors that our market fundamentals remain strong and we maintain our optimistic outlook on our market's performance over the medium-term. The KLCI opened at 1,189.58 points and declined 8.17% to a low of 1,136.01. However, as of 12:30 pm today, at the end of the day’s first trading session, the KLCI has already seen some recovery, closing at 1,162.91. From our analysis, coupled with feedback from fund managers, analysts and brokers, it is clear that our market’s performance this morning is not an isolated incident.

The sharp fall experienced early in this morning’s trading session was a knee-jerk reaction to the regional market slide caused mainly by the sharp decline of the China indices yesterday. We will continue to monitor the situation but I am assured that our market will maintain its growth position in the long run. Our economy is stable and the outlook for 2007 remains positive. Our public-listed companies also continue to demonstrate progress and provide good returns to shareholders. (Statement From Dato’ Yusli Mohamed Yusoff, Chief Executive Officer, Bursa Malaysia Berhad, 28 Feb 2007)

To some the current KLCI sharp fall is bad news as they are lossing a lot of money. But I think this is a great opportunity to Public Mutual investors in the long term as they can apply the buy low sell high concept. This is a double boon for them as concurrently Public Mutual is running the Award Appreciation Campaign. They will be able to buy at a lower price per unit and at the same time get 1% free unit.

Some of the unit trust investors have switch their equity fund into bond to lock profit. But to do this you have to know where is the lowest point before KLCI bounce back, so you can switch back from bond to equity and make profit. The safer method is to diversify your investment into bond and equity for investor with a large amount of money. But to long term investors who do dollar cost averaging they don't have to do switching. The dolar cost averaging method will ensure that the units will be bought at an actual cost which is lower than the average unit price over the same period.

I think it is a hassle to do the monitoring yourself and to run around to the Public Mutual office to submit your switching form every time there is a great change in the KLCI. This is the job for your fund managers, that is why you are investing in the unit trust fund and not investing directly to the securities in the KLCI.

What does it mean to me as an investor when public mutual offers 1% free units

Well if you as an investor invest RM50,000 and the current selling price of the fund is 25 cent per unit. What you will get is:

RM 50,000 ÷ RM0.25 = 200,000 units
1 % Free units = 2,000 units

Total units that you as an investor will get is 202,000 units. The total cost of your investment will go down to:

RM 50,000 ÷ 202, 000 = 0.2475 cents per unit

So those who take this opportunities to invest will reap attractive capital gains on his "enlarged" unit holdings when there is a market upturn.

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Three Big Events Coming Up!

6th CAREER AND TRAINING FAIR 2007

Venue: Mid Valley Exhibition Centre
Date : 6th - 8th April 2007, Fri - Sun
Operating Hours : 10.00am - 8.00pm

Malaysia's No. 1 career and training exhibition is into it's 6th year - with over 200 booths in Kuala Lumpur’s premier exhibition venue, the Mid Valley Exhibition Centre. Since 2002, this annual event has attracted over 180,000 fresh graduates, managers and professionals, filling up thousands vacancies ranging from top managerial to entry-level positions.

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4th Malaysia International Halal Showcase (MIHAS)
Venue : Kuala Lumpur Convention Centre, KLCC, Malaysia
Date : 9th May to 13th May 2007
Operating Hours : 10.00am - 7.00pm

MIHAS 2007 is a platform to further promote local halal products and penetrate the international market.MIHAS, which made its debut in 2004, has become an iconic brand name in the halal industry and is seen as an effective gateway especially to the global Muslim market. Last year, MIHAS attracted 27,523 visitors to its 505 booths. Forty per cent of its visitors were from the trade sector representing 60 countries.It is expected that MIHAS 2007 showcase will see a 25 per cent increase in the number of visitors especially so when both events are held back to back and at the same venue.

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International Islamic Fair 2007
Venue : Putra World Trade Centre, PWTC, Kuala Lumpur
Date : 27th - 29th July 2007, Fri - Sun

It is organised by SABA Islamic Media, with IFFM as the event organiser, and Islamic Information & Services Foundation (IIS) as a co-organiser, with kind cooperation of other Malaysian NGOs and support from relevant government bodies. Given the potentially attractive line up of exhibitors representing a wide range of business activities from all over the Islamic world, the Fair promises to be an annual Islamic event of choice.

Wide ranging products, services and activities await visitors - from books, children edutainment products, clothing and decorative items to Islamic banking and insurance, franchising, talks, conference, symposium and even charity performances.

More Local offerings poised for launch this year

Unit trust have over the years proven their ability to give better returns compared with other instruments, and at relatively lower risks.

A report by Standard & Poor’s Fund Services, dated January 23 2007, indicates that the average return on equity funds last year was 24.88 per cent, followed by asset allocation category of 17.74 per cent.

The Kuala Lumpur Composite Index (KLCI) in comparison delivered lower but still solid 21.8 per cent return in 2006.

“The above clearly demonstrates that unit trusts do deliver respectable returns. Of course, this is buoyed by the good performance of the local stock market in the later part of last year.” Federation of Malaysian Unit Trust Managers president Datuk Tunku Ya’acob Tunku Abdullah said.

The trend pursued by mutual fund companies since last year has been offshore-based funds, and this year alone four have launched such funds

The reason why these foreign funds sold like hot cakes was the poor performance of the local equity market, MAAKL Mutual Bhd chief executive officer and executive director Wong Boon Choy said.

But today, the tables have turned. The KLCI is shooting its way towards the 1,200-level and analysts remain bullish about the market.

In fact for 2006, MAAKL’s local equity funds outperformed the offshore funds, Wong said.

“Take, for example, the one-year period ended December 29 2006: the average total return of the local Equity Growth category was 25.87 percent versus the Equity Asia Pacific Ex-Japan category’s average total return of 22.78 percent,” he noted.

Fund companies unanimously agree that more local unit trust funds will be introduced this year to build up foreign investment capacity, pointing out that most of the 30 per cent of the foreign capacity is used up.

“We intend to launch local funds as the demand is always there. This is in readiness to build up our fund size for future foreign fund launches,” OSK-OUB Unit Trust Management Bhd chief executive officer Ho Seng Yee said.

And build it will. Even as competition increases and margins start to get squeezed, mutual houses have set ambitious targets for their fund sizes.

OSK-UOB plans to increase its fund size to RM3.5 billion this year from RM2.4 billion; MAAKL intends to launch between four and five funds this year to boost its fund size to RM1.5 billion; while RHB Unit Trust Management is working towards a RM1 billion target.

Source: New Straits Time, 6 Feb. 2007

What do unit trust and a RM10 restaurant have in common?

Recently I attend a Robert Young seminar, a speaker from Singapore. He makes a simple analogy to describe the concept of a unit trust.

There is this restaurant that sells each dish for RM10. You only have RM10. So when you go by yourself, you only can buy one dish. You may get the dish that is tasty or to your liking and you may not. But as you don’t have any more money, you have to eat it regardless.

But then if you take 9 of you friends who also have only RM10 each. You can buy 10 different dishes that can be shared. From the 10 dishes, you may like all or you may not. You can eat what you like and not what you don’t like.

This is the same with unit trust, where you can own 10 or more blue chip company equities with a small amount usually RM1,000. If you try to enter the share market on you own, you usually can afford to buy only one blue chip company. If the share price go up you are in heaven, if the price go down you are in hot water.

In unit trust the loss from shares that go down will be balanced by the gain from other shares that went up.

So guys, it looks like varieties do make it tastier and safer for all.