Friday, November 28, 2008

Prudential Fund Management upbeat on Malaysia’s equity market

TheEdge

KUALA LUMPUR: The Malaysian equity market is outperforming other markets in the region and is still attractive with huge upside potential.

“Companies in Bursa Malaysia also have attractive upside valuation, with price-to-book value of 1.6 times among the lowest in the region.

“All indications point to resilient and strong fundamentals among most companies listed in the local bourse,” said Robert Rountree, head of investment marketing, Prudential Fund Management Services.

Some of the sound fundamentals highlighted by Rountree are the average net gearing to equity level of less 0.5 times and the strong price-earnings ratio projection of more than eight times.

Asian countries also have reserves that are being channelled into the economy through infrastructure investments, compared to the US and Europe where funds are being used to prop up banks’ balance sheets, he said.

Rountree added that Asian equity markets could bottom out sooner than the rest if the economic growth in this region held up as Asia was becoming less dependent on the US. Stock market recovery usually started six to nine months before the end of recession, he added.

On the greatest concern for the Malaysian market, Rountree said the quality of assets in the banking sector was unknown at this moment and that could pose a danger to the loan books of the banks.

The level of households’ debt over the GDP of around 60%, which is the highest among Asean countries, poses a concern. Singapore and Indonesia for example have household debt level of around 45% and 20% respectively. But these were still way below those of the UK and the US which are over 100%, he said.

With regards to Prudential’s own funds, Rountree said one of the company’s main funds, London-based M&G Global Basic Fund — an equity fund which invests mainly in companies operating in basic primary and secondary industries — had also been hit by the stock market selldown and was down 19.9% against 10.4% for its benchmark, the FTSE global Composite Index.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Tuesday, November 25, 2008

Public Mutual gets another award

TheEdge

KUALA LUMPUR: Public Bank Bhd’s wholly-owned subsidiary, Public Mutual won the Most Outstanding Islamic Fund Manager award for second consecutive year at the 5th KLIFF (Kuala Lumpur Islamic Finance Forum) Islamic Finance Awards 2008 ceremony.

The award was presented by Second Finace Minister Tan Sri Nor Mohamed Yakcop to Public Mutual's chairman Tan Sri Dr Teh Hong Piow at the award presentation ceremony on Nov 18 here.

The 5th KLIFF Islamic Finance Awards 2008 is organised by The Centre for Research and Training (CERT) together with the host, Halal Industry Development Corporation (HDC), and in collaboration with Dow Jones Islamic Market Indexes (DJIM), the International Institute of Islamic Finance (IIIF) and Messrs Hisham, Sobri & Kadir (HSK).

"This award represents the 121st award won by Public Mutual since 1999. Winning this award not only reinforces our position in the Islamic unit trust industry, but also affirms our commitment to excellence," Teh said.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Money market-linked funds best performers

TheStar

They delivered positive returns over one year till Oct 31

PETALING JAYA: Money market-linked funds registered for sale in Malaysia were the best-performing asset type in comparison with commodity and equity funds for the year ended Oct 31, according to data provider Morningstar Asia Ltd.

On average, money market funds delivered positive returns (2.19%) over the period compared with commodity and equity-linked funds, which registered negative returns.

Morningstar told StarBiz that as a result of the uncertain global economic climate, investor risk appetites had been sharply reduced.

Higher-risk asset classes, such as equities and commodities, typically performed poorly in such an environment, while perceived safe harbours – such as money market linked-funds – generally did better, Morningstar added.

However, it must be noted that in the preceding year, commodity funds posted impressive performances with an average return of 70.61%, followed by equity-linked funds (41.53%) in comparison with money market funds (2.81%), according to Morningstar.

According to OSK-UOB Unit Trust Management Bhd, the fund manager of OSK UOB Money Market (the best performing money market-linked fund over the past one year), the fund had invested in short-term Islamic commercial papers and placed short-term syariah-based deposits with financial institutions to preserve capital and to generate consistent income streams.

The fund manager said it focused more on high-quality short-term corporate securities to limit credit and duration risks.

In the first quarter of 2008, the fund capitalised most of its profits when short-term government sukuk traded below overnight policy rate of 3.5% amid strong demand from offshore investors, it added.

“Subsequently, we adopted a more cautious approach given the increased market volatility amid heightened inflationary pressures and political uncertainties,” it said.

Meanwhile, fund manager Meridien Asset Management Sdn Bhd chief executive officer and managing director Nicholas Ng said its MAAKL Money Market Fund, another top-performing money market-linked fund, had consistently focused on commercial papers with top credit quality, hence sheltering it from the volatility associated with the bond market.

To further fortify itself, the fund decided to cease investments in short-term bonds, even though in the past it had prudently limited its short-term bond exposure to AAA credit ratings with less than six months’ duration and no more than 10% of its fund size.

Ng said he expected stability to continue in the money market, given the recent steps taken by Bank Negara to strengthen confidence in the financial system.

Going forward, the fund manager for OSK-UOB Unit Trust said the US financial turmoil would pose volatility and bode well for risk-aversion investment, namely money market-linked funds.

Also, current account surplus and ample liquidity in the banking system should continue to provide support for the money market, he added.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

AmConservative declares payout

BusinessTimes

AMMUTUALS AmConservative has declared an interim income distribution of one sen per unit for the financial year ending April 2009.

This represented a yield of two per cent investment return based on the net asset value per unit of RM0.4881 as at April 30 2008, said AmInvestment Group in a statement.

AmConservative aims to preserve capital and provide a stream of income by having a bigger exposure to fixed-income investments than equities, it said. - Bernama


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Fine prospects for wealth management

TheStar

Local industry prospers despite slowdown in developed economies

KUALA LUMPUR: The prospects of the wealth management business in Malaysia remain positive although the industry has taken a big hit in developed economies, industry players said.

Citibank Bhd head of wealth management products Aisyah Lam said the bank currently had more than 30,000 Citigold customers in the country and expected a double-digit growth in the next 12 months in the affluent customer sector, beating the industry’s growth of 7%.

“Despite the global market volatility, our current Citigold client base has grown by double digits this year,” Lam said, referring to the bank’s wealth management service.

“As clients’ sophistication increases, so will the demand for more comprehensive and tailored services,’’ she told StarBiz in an e-mail.

The bank recently launched its Citigold Global Banking, catering for clients with cross-border financial and banking needs.

Citigold is offered to customers who have a minimum portfolio value of RM200,000.

Forbes Asia revealed this year that the top 40 in Malaysia’s Rich List had a collective wealth of US$46bil, up US$3bil from last year, with 10 billionaires listed on the Rich List.

Standard Chartered Bank Malaysia Bhd (StanChart) head of wealth management Choong Wai Hong said proper wealth management was needed more than ever to preserve existing assets and protect investors’ “nest eggs.”

StanChart’s growth in wealth management over the years had been “significant” in tandem with the overall growth of the industry, he added.

Last year, the bank’s wealth management business grew by 65%.

Choong said, however, the bank was expecting more moderate growth due to the more cautious sentiment after the financial crisis.

Nevertheless, the bank plans to launch more innovative wealth management products “very soon.”

Meanwhile, OCBC Bank (M) Bhd head of wealth management Lim Wyson has been advising clients on how to invest amid a global financial crisis.

He said a key concern among investors was in deciding how much of their wealth to put in the various forms of investments like unit trusts, structured products, stocks and bonds.

“The smaller the percentage of wealth placed into such investments, the less the customer will need to perform significant portfolio changes,” Lim said.

“For those who are already investing in the markets, we advise that they should not panic as this may lead to irrational actions to their portfolios.’’

He noted that assets like capital protected investments, capital guaranteed investments, selected categories of bonds and the more balanced funds held up much better than equities.

Lim said research results from past crises such as the Asian financial crisis had shown that investors stood to lose more if they switched to cash instead of holding on to their investments.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Friday, November 21, 2008

Affin Fund Management aborts JV with Asia Equity Partners

TheEdge

KUALA LUMPUR: Affin Investment Bank Bhd’s wholly owned Affin Fund Management Bhd (AFM) and Asia Equity Partners Sdn Bhd have aborted their joint-venture plan announced on March 7, 2007 due to challenging financial market conditions.

Under the proposed joint venture, AFM and Asia Equity Partners would set up a RM150 million commercial property fund and expand AFM’s fund management product portfolio and mark AFM’s entry into private equity fund management business


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

HLG Unit Trust to sell another 4-5 products via Maybank

TheEdge

KUALA LUMPUR: HLG Unit Trust Bhd is looking to offer another four to five of its existing products through Maybank’s distribution channel.

HLG Asset Management Sdn Bhd’s executive director/chief executive officer Richard Lin said Maybank had been distributing the HLG Syariah Inflation Select Fund for the past month as well as the HLG Global Value Fund.

“We only select certain products to be distributed by Maybank to ensure it meets the investment criteria of Maybank’s customers,” he told reporters after a strategic agreement signing ceremony between HLG Unit Trust and Maybank here yesterday.

The agreement enables Maybank to be an Institutional Unit Trust Adviser (IUTA) of HLG Unit Trust. Maybank is the 10th IUTA to have joined HLG Unit Trust’s stable of IUTA distributors.

Apart from Maybank, HLG Unit Trust’s stable of distributors comprises Hong Leong Bank Bhd, Standard Chartered Bank Malaysia Bhd, OCBC Bank (Malaysia) Bhd, HSBC Bank Malaysia Bhd, United Overseas Bank (Malaysia) Bhd, Citibank Bhd, The Royal Bank of Scotland Bhd, Affin Bank Bhd and CIMB Private Banking.

To date, HLG Unit Trust manages 35 unit trust funds, which are distributed nationwide through multiple channels. As of Oct 31, 2008, HLG Unit Trust Bhd had a combined total fund size of RM2.5 billion. — Bernama

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Wednesday, November 19, 2008

SC grants two more Islamic fund management licences

TheStar

KUALA LUMPUR: The Securities Commission (SC) has granted two additional Islamic Fund Management licences to India’s leading fund management company Reliance Capital Asset Management and Kuwait-based Global Investment House, said Deputy Prime Minister Datuk Seri Najib Razak.

Leading firms, including Prudential, were using the country as their regional centre for Islamic fund management activities, reaffirming their confidence in it as an international Islamic financial centre, he said.

“There are several other leading firms being reviewed by the SC for licences,” he said in his address at the opening of the 5th Kuala Lumpur Islamic Finance Forum (KLIFF 2008) yesterday.

The event was organised by the Centre for Research and Training and co-hosted by the Labuan Offshore Financial Services Authority and the Halal Industry Development Corp. - Bernama

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Tuesday, November 18, 2008

Hedge funds lose US$100b on investor withdrawals

TheEdge

TOKYO: The global hedge fund industry lost US$100 billion (RM360 billion) of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co and Man Group plc were hammered by investor redemptions.

Funds fell an average 3.3%, based on preliminary figures from the Singapore-based data provider, as measured by the Eurekahedge Hedge Fund Index, which tracks the performance of more than 2,000 funds that invest globally. That compares with a 19% slide in the MSCI World Index last month.

The biggest market losses since the Great Depression and investor withdrawals hurt the US$1.7 trillion hedge funds industry that manages largely unregulated pools of capital. The index of global funds has lost 11% this year, set for the worst performance since 2000 when Eurekahedge began tracking the data.

“This wave of redemption in the hedge fund industry is going to last for at least another six months,” said Toyomi Kusano, president of Kusano Global Frontier, a hedge fund research firm here. “There are some funds that halted withdrawals, but those funds would eventually have to defreeze, and that means another wave of redemptions.”

Earlier this week, Sparx Group Co, Asia’s biggest hedge-fund manager with US$8.5 billion in assets, posted a first-half loss on redemptions and falling stock prices. Its assets under management on a preliminary basis were 839.1 billion yen (US$8.8 billion or RM31.68 billion) as of Oct 31, compared with a peak of 2 trillion yen in August 2006.

London-based Man Group, the largest publicly traded hedge-fund manager, reported assets under management, which stood at US$70.3 billion as of Sept 30, fell to US$61 billion at the beginning of November, the least since March 2007.

“As both hedge fund managers and fund of funds scramble to meet client redemptions, one thing is clear: the industry is going to shrink substantially over the coming months, perhaps as much as 50% in terms of both assets under management and number of funds,” said Kostas Iordanidis, head of hedge funds at Geneva-based Unigestion Holding SA, which invests US$3.2 billion in hedge funds worldwide.

Unigestion is investing in macro and commodity trading advisers, or CTA, funds, avoiding equity long-short portfolios, Iordanidis said.

Assets in Singapore-based Tantallon Capital’s flagship Tantallon Fund shrank to US$284 million at the end of October, according to data compiled by Bloomberg. The fund, managed by Nicholas Harbinson, a Tantallon co-founder and former Merrill Lynch & Co. head of sales, stood at US$877 million at the end of August, from as much as US$1.5 billion at the start of the year.

Still, hedge funds have outperformed relative to the MSCI World Index that has lost 46% this year. In October, managers who trade futures, or CTAs, and those who invest in Japan helped offset declines, Eurekahedge said.

In terms of regional mandates, the Eurekahedge Japan Hedge Fund Index was the best performer, declining 0.8% last month, even as the benchmark Topix index slid 20%, the firm said. Trades that involved selling regional stocks and took advantage of currency moves helped stem losses, Eurekahedge said. The yen strengthened more than 7% against the dollar in October, the biggest gain since October 1998.

Among Japan funds, the 2.7 billion yen Sparx Japan Stocks Long Short Fund, also known as “Best Alpha,” declined 2.2%t in October, according to monthly data posted on the company’s Web site.

The Eurekahedge Asian Hedge Fund Index lost 4.3%. Singapore-based Tantallon’s long-short fund, which seeks to profit from both gains and declines in stock prices, fell 28.6% this year through October. It was up 0.59% last month, Bloomberg data show.

“Although we are seeing and we will see attrition amongst Asian funds, it is unlikely to be as bad as the more developed markets,” said Peter Douglas, principal of Singapore-based hedge-fund consulting firm GFIA Pte, citing the cost of running a hedge fund in the region.

US hedge-fund managers may lose 15% of assets to withdrawals by year-end while their European rivals shed as much as 25%, Huw van Steenis, a Morgan Stanley analyst in London, wrote last month in a report to clients. Combined with investment losses, industry assets may shrink to US$1.3 trillion, a 32% drop from the peak in June.

The Eurekahedge North American Hedge Fund Index fell 4 percent, the firm said, while the index tracking Eastern Europe and Russia was the worst performer with a slide of 16%. The Eurekahedge European Hedge Fund Index slid 6.8%, while the measure tracking Latin American funds declined 4%, the data provider said.

Millennium Global Investments Ltd., the $14 billion firm founded by former Goldman Sachs Group Inc executive Michael Huttman, is planning to limit withdrawals from its US$600 million high-yield bond hedge fund after investors asked to pull more than a quarter of their money.

By strategy, CTA funds outperformed, with average gains of 6.2% as managers exploited directional trends in the commodity and currency markets, the firm said. Similar trades also helped boost the performance of so-called macro-fund managers, who wager on trends in stocks, bonds and currencies worldwide, Eurekahedge said.

Among macro funds, Astmax Commodity Global Macro Fund, run by former Sumitomo Corp. copper trader Tetsu Emori, rose 2.6% last month. The 1.4 billion yen fund takes long and short positions in global commodity markets.

The preliminary figures were based on 41.5% of the funds reporting their October 2008 returns as of Nov 12, Eurekahedge said. For CTA managers, the performance figures were based on 60% of the funds reporting, it said. - Bloomberg

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Friday, November 14, 2008

Fund buys Shangri-La shares

BusinessTimes

ABERDEEN Asset Management has emerged as a substantial shareholder of Shangri-La Hotels (Malaysia) Bhd.

The Scottish fund manager bought 22 million shares or five per cent of the hotel operator on November 5, a filing to Bursa Malaysia said.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Hwang-DBS M’sia in foreign Islamic fund management tie-up

TheEdge

KUALA LUMPUR: Hwang-DBS (Malaysia) Bhd has proposed to enter into a 49:51 subscription and joint-venture agreement with DBS Asset Management Ltd and Asian Islamic Investment (AIIMAN), to operate AIIMAN as a foreign Islamic fund management company.

In a statement yesterday, Hwang-DBS said the move is to diversify its income base and to cater to the growing demand for Islamic asset management products, as well as capitalise on incentives provided by the Malaysian government.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Affin launches 2 money market funds

BusinessTimes

AFFIN Fund Management Bhd, which manages RM495.3 million, is starting two money market funds to meet new demand for short-term, yet steady investments in the highly volatile market.

Fund managers have been launching money market products in recent months due to the market uncertainties, as there is a flight to cash, and equity funds had quickly fallen out of favour among investors.

The Affin Money Market Fund, and the Affin Islamic Money Market, which comply with Syariah rules, will target corporate investors who have excess cash in the current account, but are not ready to be locked in long-term investments.

"A lot of risk averse investors want to switch out of equity funds. It is the right time for them to move some money out if they think the economy is heading downhill in the next six months," Affin Fund Management chief executive officer Mohamad Ayob Abu Hassan said after the launch of the funds in Kuala Lumpur yesterday.

The funds are relatively safe as they will only invest in high-quality fixed-income products with short maturity periods. They also provide high liquidity that allows investors to withdraw anytime without a penalty, Mohamad Ayob said.

The conventional fund is aimed at providing a higher return than the three-month fixed-deposit rate of around 2.3 per cent currently, while the Islamic fund has a similar benchmark to provide better returns than bank deposits.

There is no upfront sales charge, but investors will pay a 0.5 per cent annual management fee. Minimum investment starts at RM5,000.

Mohamad Ayob expects response to be good and that it will fill the RM200 million approved size for each fund in six months.

The company, which has yet to invest abroad, also plans to start launching regional funds next year to take advantage of the beaten-down stock prices and will be working with the group's Hong Kong-based shareholder, Bank of East Asia Ltd, Mohamad Ayob said.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Wednesday, November 12, 2008

Commodities-linked funds take a beating

TheStar

Strengthening US dollar will continue putting pressure

PETALING JAYA: Commodities-linked funds in Malaysia have been the worst performers for the past one year and the outlook is not encouraging, according to data provider Morningstar Asia Ltd.

Economists said commodity prices would continue to come under pressure, going forward, given the current bullishness of the US dollar.

“The strengthening of the US dollar, to some extent, explains the weakness of commodity prices,” said Nor Zahidi Alias, chief economist of Malaysian Rating Corp Bhd.

“The current surge in the greenback against major currencies – except the yen – means many traders will continue unwinding their positions in the less attractive dollar-denominated commodities.”

Morningstar Asia’s data showed that, on average, commodities-linked funds slumped 37.32% while equity funds fell 36.36% in the past 12 months from October, underperforming other funds.

The CRB/ Reuters US Spot All Commodity index fell by 28% from its high in July this year.

Another closely watched barometer – the CRB/ Reuters US Spot Raw Industrials index – declined by 30% from its high in May.

Only money market funds delivered positive returns, climbing 2.19% over the same period.

However, it must be noted that the fund size for commodities was RM206.5mil as at end-September compared with equity funds, which had RM22.6bil, and money market funds RM13.1bil.

Morningstar Asia said the commodities market might remain subdued over the short term due to the slower global growth, de-leveraging by financial institutions and sharply-tighter global credit conditions.

Singapore-based Asian Forecasting Group economics director David Cohen said in view of the current downbeat outlook, investors were expected to make further redemptions from commodities-linked investments in the near term.

Does this mean that unit trust funds with primary exposure to commodities, especially those launched recently, are in a quandary?

One asset management company told StarBiz the commodities market were still volatile and was, therefore, unable to comment.

Another fund manager said sales had slowed and redemptions increased, but not at an alarming rate.

Some funds had lost their net asset value by more than 30% over the past six months due to the softening demand for commodities, the fund manager said.

Nor Zahidi said a downbeat outlook on global economic growth by the International Monetary Fund (IMF) also led to a drastic decline in overall commodity prices.

The IMF has forecast that the global economy will grow by only 3% in 2009, suggesting that the world is near a recession.

Nor Zahidi said China’s economy, for instance, had moderated to 9% in the third quarter this year, down from 10.1% in the preceding quarter.

“Prices of crude palm oil (CPO) have also responded to the expectation of a softer demand, particularly from China, and lower crude oil prices,” he said.

“Prices have recently fallen below its 12-year average of RM1,622 per tonne and will likely remain below RM 2,259 per tonne in the near term.”

The January 2009 benchmark contract for CPO closed unchanged yesterday at RM1,586 per tonne.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Friday, November 7, 2008

Maybank Islamic offers new fund

BusinessTimes

MAYBANK Islamic Bhd has launched the Maybank Al-Sayf Structured Islamic Deposit (MAS-i), which provides 100 per cent capital protection on principal investment at maturity and a guaranteed payout at the end of each year.

The fund will invest in Islamic Negotiable Instruments of Deposit (the capital protected portion) and the Maybank Al-Sayf Index (annual bonus coupons) which aims to profit from the trend of commodities and benefit in both upward and downward trending commodity cycles.

MAS-i is based on a 3.5 year tenure. There are no upfront fees, management fees, or exit fees.

The minimum investment amount is RM50,000 with subsequent subscriptions of RM50,000. The initial offer period ends on November 20.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Thursday, November 6, 2008

75 sen per unit for HwangDBS fund

BusinessTimes

HWANGDBS Investment Management Bhd has declared an interim income distribution of 0.75 sen for its second institutional fund, an income-type bond fund called the HwangDBS Enhanced Deposit Fund (EDF).

The income distribution is for the financial year ending April 30 2009, representing it sixth distribution since its launch on April 18 2005.

EDF has registered total growth of 11.53 per cent on its net asset value per unit.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

4 sen interim distribution for RHB fund

TheEdge

KUALA LUMPUR: RHB Investment Management Sdn Bhd (RHBIM) has declared a gross interim income distribution of four sen per unit for the RHB Income Fund for the financial year ending April 30, 2009.

In a statement yesterday, RHBIM said the annualised distribution yield based on the average net asset value per unit from May 1, 2008 to Sept 30, 2008 was 4.5809%.

It will be re-invested into additional units next Tuesday or alternatively, unitholders who choose to receive the distribution in cash will be paid on Nov 18.

RHBIM said this was the second income distribution for the RHB Income Fund for 2008. The previous distribution of 3.75 sen per unit was declared on June 20.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

AmFirst REIT posts bigger H1 revenue

BusinessTimes

AMFIRST Real Estate Investment Trust (AmFIRST REIT), the country's oldest property trust, saw a 63 per cent increase in revenue to RM45.4 million for the first half ended September 30 2008.

Net profit surged by 50 per cent to RM29.8 million from RM19.82 million a year ago.

The growth was attributed mainly by profit from its newly-acquired units at The Summit Subang USJ, which started to contribute from April 1.

There was also organic growth from positive rental reversion from tenancy renewals and tenant replacement, its manager Am ARA REIT Managers Sdn Bhd said in a statement yesterday.

As at September 30 2008, the average occupancy rate of AmFIRST's total properties stood at 88.26 per cent.

Am ARA chief executive officer Lim Yoon Peng said global uncertainties over real estate valuations, which developed during the period under review, have had an impact on investors' view on REIT stocks, reflected in depressed unit prices, and Malaysian REITS were not spared.

"Nevertheless, we believe fundamentals of the Malaysian property market remain firm," he said.

"REIT with good occupancy rates and strategies for development will be able to maintain steady dividend streams arising from the middle- to long-term nature of their tenancies, to the benefit of their unitholders," he added.

Lim said Am ARA will continue to extract the best value out of the existing assets in the trust's portfolio as there is still room to further improve the earnings capacity and potential.

AmFirst, listed in December 2006, is one of the larger commercial space REITs in Malaysia with six properties worth RM840 million in its portfolio. They are Bangunan AmBank Group, Menara AmBank, AmBank Group Leadership Centre, Menara Merais, Kelana Brem Towers and The Summit.

AmFIRST aims to diversify its portfolio via investments in profit-producing real estate, primarily used for commercial, retail and office purposes.

A distribution of 4.268 sen per unit, representing 100 per cent of AmFirst income after tax, has been declared. Based on AmFirst's market price of RM0.88 per unit (as at September 30), the distribution per unit represents an annualised yield of 9.7 per cent.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Wednesday, November 5, 2008

In these troubled times do you hold stocks or cash?

TheStar

OVER the past few weeks, as a result of the sharp plummet on the stock market, some investors regret not selling their stocks early as almost all of their stocks have been incurring huge losses.

However, the market recovery over the past few days caused some investors to again regret — not buying stocks when the market hit the bottom.

The decision to hold more cash or stocks is one of the most difficult decisions to make.

According to a study by Gary P. Brinson, L. Randolph Hood and Gilbert L. Beebower in 1986, 95% of the variance of fund returns was the result of the asset allocation decision.

Hence, the right asset allocation between cash and stocks plays a very important role in determining the returns of a portfolio.

In this article, we will look into two key strategies in asset allocation, namely the constant mix (CM) and the constant proportion portfolio insurance (CPPI) strategy.

The key principle behind the CM strategy is to buy stocks when the market drops and sell them when the market recovers.

As for the CPPI strategy, it is the reverse, which is to sell when the market plunges and buy when it recovers.

We should continue selling stocks until the portfolio drops near our pre-set floor level. Once the market touches our floor level, we will hold all cash and no stocks.


Under normal market conditions, the CM strategy is an excellent tool for rebalancing our portfolio.

This strategy requires us to rebalance our portfolio based on a constant mix, where we set a constant ratio of stocks to total assets.

Assuming we have only two asset classes, namely stocks and cash, we will maintain the desired invested portion in our portfolio regardless of market conditions.

If we have a portfolio value of RM100,000 and intend to maintain a stocks to total asset ratio of 60%, we invest RM60,000 in stocks and hold RM40,000 cash.

If the overall market drops by 10%, our stocks will drop by RM6,000 (10% of RM60,000) to RM54,000. Now, our portfolio will be RM94,000 (RM54,000 + RM40,000 cash)

Our invested portion will drop to 57.5% (RM54,000 of stocks divided by our new portfolio value of RM94,000).

In order to maintain a 60% investment, we need to have an invested portion of RM56,400 (0.6 x RM94,000).

So we will use RM2,400 in cash to buy stocks (RM56,400 - RM54,000).

After this portfolio rebalancing, our new invested portions will be RM56,400 in stocks and RM37,600.in cash.

This will bring the invested portion back to 60% with the total portfolio value of RM94,000.

The CM strategy will cause us to buy more stocks when the market drops. We will be able to acquire a lot of quality stocks at cheap prices.

However, we will continue buying more stocks while the overall market continues to plunge.

During a bear market, we will see our portfolio shrink in value as our earlier purchase price may get cheaper.

Unfortunately, not many investors can tolerate a drop in their portfolio value.

The CPPI strategy is appropriate for use in either a super bull or a super bear market.

It is not suitable for use on normal market periods as we need to sell stocks when the market drops and buy when the market is on the way up.

We may end up buying at high prices and selling them at low.

Under the CPPI strategy, the portion of money in stocks is based on the formula that:

Money in stock = M x (TA - Floor) Where M = stock investment multiplier (proportion), TA = total assets held in the portfolio, Floor = the minimum allowable portfolio value (zero risk level) and TA - Floor = cushion or funds that can be put at risk.

Assuming we have a portfolio value of RM100,000, if we set our minimum allowable value (Floor) = RM70,000 and stock multiplier (M) = 2, we will invest RM60,000 in stocks [2 x (RM100,000 – RM70,000)].

If the overall market drops by 10%, our stocks will drop by RM6,000 (10% of RM60,000) to RM54,000. Our portfolio will be RM94,000 (RM54,000 + RM40,000 cash).

Our invested portion needs to be reduced to RM48,000 as 2 x (RM94,000 – RM70,000).

We need to dispose of RM6,000 worth of stocks (RM54,000 – RM48,000) and bring the cash level to RM46,000.

Following this portfolio rebalancing, the portion invested in stock is RM48,000 with cash of RM46,000.

The total portfolio value is RM94,000.

We will continue to sell stocks and hold more cash as the market drops.

We will stop investing in stocks when our total portfolio hits the floor level (TA – Floor= 0).

The strength of the CPPI strategy is that our lowest portfolio value at any point in time will be RM70,000 whereas the CM strategy may cause our portfolio value to drop much lower if the market crashes further.

In conclusion, the choice of strategy will depend on the overall economic outlook.

Unless we know our economy will not drop into recession, otherwise — based on our current situation, the CPPI strategy has the advantage of protecting our minimum portfolio value at the floor level.


Ooi Kok Hwa is an investment adviser licensed by Securities Commission and managing partner of MRR Consulting.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Tuesday, November 4, 2008

AmMutuals fund's maiden payment

BusinessTimes

AMMUTUALS AmDual Opportunities - Capital Protected has declared its first income distribution of 7.30 sen per unit for the financial year ending October 2008.

The first yearly income distribution represented a yield of 7.3 per cent based on the net asset value (NAV) per unit of RM1 offered during the offer period from September 3 to October 2 2007.

"As at October 17 2008, the fund delivered a one year return of 12.95 per cent as compared to its benchmark, the Maybank one year fixed deposit rate of 3.70 per cent, an outperformance by 9.25 per cent," Datin Maznah Mahbob, chief executive officer of the funds management division, AmInvestment Bank Group, said in a statement.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Public Mutual to make distribution

TheStar

KUALA LUMPUR: Public Mutual Bhd has declared a total gross distribution 7.5 sen for its Public Industry Fund for the financial year ended Oct 31.

It also declared total gross distributions of five sen for the Public Equity Fund and four sen for the Public Islamic Bond Fund.

In a statement, Public Mutual chairman Tan Sri Dr Teh Hong Piow said the unit trust company was pleased to be able to declare distributions on the three funds despite challenging market conditions.

As at Sept 30, the total net asset value of the funds managed by the company was RM24.2bil. — Bernama

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.