Tuesday, December 16, 2008

Cash is not lone option, advises fund manager

TheEdge

KUALA LUMPUR: Cash is not the only choice in difficult times as there are many investment opportunities to improve returns in the long term, said Prudential Fund Management Bhd John Lim Eu Hock(PFMB) chief investment officer Yoon Mun Thim.

In a media briefing last week on the topic Cash Is King, But For How Long?, he advised investors to carry out individual risk profiling to judge their own willingness for long-term investments as the market would continue to remain volatile for 2009.

“There is a great chance that you will lose money in the near term, and if you can’t take that kind of volatility, then you should go for something safer,” he said.

He said the situation was different from the Asian financial crisis 10 years ago, when fixed deposit (FD) rates of between 6% and 10% made it worthwhile to retain cash savings. However, with FD rates in recent years below 4%, playing it safe may not be such an appealing option.

Taking a worst-case scenario of the slowdown lasting five years, he advised investors to find investment opportunities that could yield more than 19%, which is the compounded FD interest rate of that period.

“I would advocate to have some risks. Bonds still give more certainty than shares as long as you choose carefully papers from companies that won’t default,” he said.

He added that while investing in the equity market was riskier, many stocks were priced at crisis lows with some values starting to emerge. As an indicator of increasing values, he cited that many listed companies now had lower price-to-book ratios, price-to-sales ratios, and price-to-cash flow ratios than the KLCI average.

“Equities have a history of bouncing back stronger, so the chances of you making a return are high if the companies you invest in survive,” he said, adding that it was vital to do one’s homework in picking the right stock.

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.

CIMB Bank upbeat on unit trust division

TheStar

It’s optimistic on demand for long-term investment products

KUALA LUMPUR: CIMB Bank Bhd is optimistic on its unit trust business despite the uncertain and volatile outlook on equity markets.

Retail banking head Peter England said yesterday that the demand for long-term investment instruments like unit trusts would still be good.

“Our strategy is to encourage clients to think from the longer term perspective, such as 10 to 15 years, when purchasing investment products,” he told reporters after launching CIMB Clicks eInvest, an online portal for unit trust investment.

He said it was difficult to predict the market sentiment going forward but the outlook for the Malaysian market remained positive.

“The Malaysian market has no fundamental problems like in the US, Britain or Australia and we have no issue in the banking sector,” he said, adding that the lenders could still afford to lend.

He said the bank had not tightened up its lending activities. “We have always believed in lending money to people,” he added.

England said the bank had not changed the ratio between corporate and personal financing although it already anticipated some slowdown in the small and medium-scale enterprise and car loan segments.

“The markets we’ve been very active in have been residential mortgage, non-residential mortgage and credit cards. I think to a certain extent those things will continue (at the current level), while corporate business will come and go,” he said.

Asked on the possibility of a further interest rate cut by Bank Negara, he said: “The assumption is it will drop a bit more. Guess we’ll have to wait and see what Bank Negara does. It is likely that there will be another cut next year.”

On its newly-launched CIMB Clicks eInvest, England said the bank targeted 2,000 users next year for the portal, representing 10% of its existing 20,000 unit trust holders.

Investors using the portal can enjoy lower sales charges ranging from 0% to 2.5% of total sum invested compared to up to 6.5% for traditional transactions (via bank or agent).

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.

Monday, December 15, 2008

ASNB fixed-priced unit trust funds a hit with investors

TheStar

AMANAH Saham Nasional Bhd’s (ASNB) fixed-priced unit trust funds launched in the past few years have proven to be big winners due to their commendable returns.

These equity-based funds, namely Amanah Saham Wawasan 2020 (ASW 2020) and Amanah Saham Malaysia (ASM), have achieved compounded annual growth rates of 10.78% and 6.3% respectively since the time of its launch.

ASW 2020 and ASM have been providing an annual average distribution income of 7.74 sen and 7.12 sen respectively.

To paint a clearer picture, say if an investor had placed RM100,000 in ASW 2020 10 years ago, his investment value would amount to RM251,360 today.

Similarly, by placing the same amount in the ASM fund 10 years ago, the investor would have RM173,340 today in his investment account.

ASM was launched on April 20, 2000, with an initial fund size of two billion units which were fully subscribed in 21 days.

ASM undertook its first increase in fund size two months later in June 2000 with one billion units fully subscribed in four months.

In April 2006, one billion units of the ASM open for subscription were fully subscribed in 45 minutes.

The most recent offer of ASM’s additional units was in July 2007 which saw all the 500 million units, capped at 50,000 units per investor, fully taken up in 30 minutes.

Earlier in March 2007, a total of 800 million units, also capped at 50,000 units per investor, were fully sold out in one day.

ASW 2020 also drew strong response for its subscription quota for non-bumiputra investors since its launch in August 1996.

Besides the notable payouts, both these funds have fixed prices at RM1 per unit unlike other unit trust funds, which is an attractive feature for risk-averse investors.

According to an analyst, ASNB’s strength lies in the fact that it manages a big fund and has the luxury of time.

“These two factors are crucial to beat the market at any time,” the analyst added.

To date, the fund size for ASW 2020 and ASM stands at 10.42 billion units and 7.2 billion units respectively.

This includes the additional one billion units each offered to the public last month for both these funds. In comparison to these fixed-priced unit trust funds, ASNB’s variable priced balanced fund, Amanah Saham Nasional 3 (ASN 3), did not perform as well.

ASN 3, which has a fund size of 112.91 million units, only registered a compounded annual growth rate of 3.7%.

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, December 4, 2008

EPF Q3 income dips 60%

TheStar

PETALING JAYA: The Employees Provident Fund’s (EPF) total investment income for the third quarter (Q3) fell 60.4% to RM2.06bil from RM5.2bil in the previous quarter (Q2) as its investments, especially equities, were affected by the global economic uncertainty.

The EPF said in a statement yesterday income from equities in the June to September period fell by more than half to RM1.26bil from RM2.54bil in the preceding quarter.

In line with accounting best practices and as a conservative provisioning policy, the EPF also made allowances amounting to RM2.29bil for diminution in the value of equity investments due to the deterioration in market value compared with RM416.7mil in Q2.

“The outlook in the fourth quarter is likely to reflect the full-scale impact of the global meltdown, although there is still hope for the Malaysian equity market to bounce back,” chief executive officer Datuk Azlan Zainol said yesterday.

Azlan believed Malaysia’s competitive edge would help sustain the economy during these difficult times.

The EPF said due to the current global economic uncertainty, stock markets across the globe had fallen significantly, including the local equity market.

Bursa Malaysia’s market capitalisation during Q3 shrank by about RM200bil to RM770bil.

In the same period, the KL Composite Index fell 243.81 points, or 19.3%, to 1,018.68.

On the investment income of RM2.06bil in Q3, the EPF said it was predominantly driven by Malaysian government securities (MGS) and loans and bonds.

In the quarter under review, the EPF received 3.1% higher returns from loans and bonds, raising income to RM1.71bil which was an increase of 3.14% or RM52.05mil from Q2’s RM1.66bil.

Its investment income in MGS rose 1.38% to RM1.217bil against the preceding quarter’s RM1.2bil.

EPF said the most of Q3 investments were in the trade and services sector and the finance sector comprising 38% and 33.9% of total equity investments respectively.

The next largest Q3 equity investment was in the plantations sector, representing 8.5% of total equity investments.

Money market instruments provided an income of RM142.25mil, down 49.21% from RM191.46mil in Q2.

Investments in properties yielded returns of RM21.53mil, down from RM22.66mil in Q2.

“The EPF will always maintain a policy of low-risk investment decisions. As a national premier pension fund, we cannot afford to take on high risk investments,” Azlan 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, December 3, 2008

Public Mutual declares distributions for 2 funds

TheEdge

KUALA LUMPUR: Public Mutual Bhd has declared distributions for two of its funds — one sen per unit for Public Islamic Balanced Fund and 0.35 sen per unit for Public Far-East Dividend Fund — for the year ended Nov 30, 2008.

“Public Islamic Balanced Fund and Public Far-East Dividend Fund have consistently declared annual distributions since their launch in 2005 and 2006 respectively,” Public Mutual’s chairman Tan Sri Dr Teh Hong Piow 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.

HLB partners Amanah Raya on new trust deposit

TheEdge

KUALA LUMPUR: Hong Leong Bank (HLB), the exclusive appointed agent of Amanah Raya Bhd, has launched the Hong Leong Invest Safe II.

Hong Leong Safe II is a trust deposit for customers who make a placement that can potentially enjoy steady growth and enhance yield on their investments, the bank said in a statement ysterday.

“The first product launched with Amanah Raya in 2006 generated positive response from the public. We exceeded RM500 million in sales and our customers have been happy with the returns.

“On a gross basis, customers have been enjoying a steady return of 5% per annum. We’re confident the new product will equally excite our customers as we are targeting to deliver similar returns,” said Moey Tan, chief operating officer for personal financial services.

She said many customers favoured Invest Safe as it offers competitive dividends, compounding interest and the capital is protected.

The Hong Leong Invest Safe II is limited to RM300 million and is only available through HLB. — 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.

EPF better than stock market

TheStar

It never gives negative returns

IN general, most people have the impression that the money placed in the Employees Provident Fund (EPF) always generates lower returns compared with the returns from their own investments.

In this article, we will look into the returns from EPF versus returns from the KL Composite Index (KLCI). We assume that investors are able to generate their own returns equivalent to the returns from the KLCI.

Based on our 23 years of data compilation, it is generally true that the average returns generated from EPF are lower than KLCI returns. From 1986 to 2008, the average return of EPF was 6.7%, 2.3 percentage points lower than the average return of 9% from the KLCI (see table).

However, most people do not understand the risks they need to undertake when they invest by themselves. The standard deviation of EPF is only 1.5%, 22.2 percentage points lower than the standard deviation of 23.7% from the KLCI.

We use standard deviation to measure risks. Most investors only look at how to generate the extra 2.3 percentage point returns, forgetting that they need to undertake a much higher risk to generate the extra returns. The extra return is unable to compensate for the extra risks that investors need to take.

Let’s assume one investor invested RM10,000 in the EPF and the KLCI respectively at the beginning of 1986. Logically with the average KLCI return higher than the average EPF return, the fund in KLCI should be higher than the fund in EPF in most periods.

However, as the table shows, by the end of 2008 (we assume that EPF will only be able to generate a return of 4.25%), the fund placed in KLCI would have reached RM40,000 versus RM43,946 generated by EPF, a shortfall of RM3,946.

The main reason behind this shortfall is that the EPF never gives negative returns whereas the KLCI generated negative returns eight times over the past 23 years.


There is a market saying that out of 10 people who invest in the stock market, only one can make money, the others will lose money. Warren Buffett says if you want to win, you don’t lose. Hence, we disagree with some people who advise others not to place money in EPF because it generates lower returns.

In most periods, the money in EPF gets lower return than the money placed in KLCI. However, the main reason for the lower fund value in KLCI by the end of 2008 was the market crash during 1998.

The money in KLCI dropped by 47.1% to RM18,105 in 1998 from RM34,246 in 1997 whereas the money placed in EPF increased further to RM26,594 in 1998 from RM24,924 in 1997. After 1998, it took nine years for KLCI to catch up with the fund value in EPF.

Last year the fund value in KLCI (RM46,000) finally surpassed the fund value in EPF (RM42,154). However, as a result of the recent market crashes, we are anticipating the fund value in EPF to overtake KLCI again this year.

It will take a few years from now for the KLCI to catch up with the EPF again. Unless investors are constantly monitoring their own investments and are able to avoid most of the negative returns, we think it is safer to put money in the EPF rather than withdraw it for their own investments.

Ooi Kok Hwa is an investment adviser 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.

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.

Friday, October 31, 2008

Market slump takes RM21b toll on unit trust funds

BusinessTimes

Despite the slump, the percentage of the net asset value had grown to represent 19.31per cent of Bursa Malaysia Securities' market capitalisation

THE sharp falls in the equities market have cut the total value of unit trust funds by RM21 billion in the first nine months of the year.

The value dropped 12 per cent to RM148 billion from RM169 as at December 31 2007.

However, Federation of Malaysian Unit Trust Managers (FMUTM) president Tunku Datuk Ya'acob Tunku Abdullah said the percentage of the current net asset value (NAV) had grown to represent 19.31 per cent of Bursa Malaysia Securities' market capitalisation.

At the end of last year, the percentage was 15.32 per cent. This means that the price reduction for shares held by the funds was not as great as the overall market's.

A total value of RM335.61 billion in market capitalisation had been wiped out from the local bourse between December 2007 to September 2008.

"Our benchmark (for the NAV percentage) will be 20 per cent by year-end," he told reporters after his welcoming note at the annual convention of unit trust consultants in Kuala Lumpur yesterday.

Based on the Morningstar Fund table as at October 17 2008, the Malaysian equity funds posted losses of 29.36 per cent compared to global equity funds which saw losses of 40.07 per cent over a year.

Tunku Ya'acob said there would not be a slowdown in fund launches but a change in the type of new funds is anticipated.

"We will see more aggressive-type funds such as distress asset funds, which will pick up cheap assets. However, subscription to the funds may be affected," he said.

Conventional funds launched for the first nine months of 2008 had increased by 40 to 407 compared to funds launched in 2007. Islamic-based funds have also risen by 16 to 144.

While the redemption rate of funds has increased slightly, the level remains low due to strong saving habits practised by Malaysians, said Tunku Ya'acob.

FMUTM technical chairman Tan Keah Huat said unit trust investors should continue investing especially when prices are weak to enjoy the upside when markets recover.

He expects an increase in net inflows for existing funds since purchasing more units at a lower price will lower the average price paid for all units.

On FMUTM's ongoing initiative, it has appointed Mesdaq-listed Rexit Bhd to develop an e-Unit Trust system, which will shorten investors' application process for unit trust purchases using EPF (Employees Provident Fund) savings.

"The manual process takes roughly two weeks and with this automation system, it should not take longer than six days," said Tunku Ya'acob.

The system should be in place by the first quarter of 2009.

FMUTM will also introduce a fund volatility factor early next year for all funds with a three-year record and above.

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, October 22, 2008

Great Depression versus now

TheStar

As much as there are similarities between the two crises, the damage caused by the current turmoil is likely to be less severe given the swift actions of central banks.

AS a result of the recent financial tsunami, some experts have started to ponder whether we are headed for a depression.

The current credit crunch and the meltdown in some financial institutions were quite similar to what happened during the Great Depression in the 1930s.

In this article we will analyse the reasons behind the 1929 Wall St crash, which kickstarted the Great Depression and compare it to the current situation to identify any signs that a depression is approaching.

Milton Friedman, the leading advocate of monetarism, argued that every great depression had been accompanied or preceded by a monetary collapse.

According to Ben Bernanke, the US Fed chairman, the main reason behind the Great Crash of 1929 was due to the tight monetary policies adopted during that period.

He said the high interest rates back then caused the US economy to fall into a recession that led to the great market crash in October 1929.

As the US dollar was backed by gold, the acute selling of dollars for gold resulted in a run on the dollar.

The Fed continued to increase interest rates in an effort to preserve the value of US dollar.

As a result, high interest rates caused bankruptcies for many companies.

At the peak of the Great Depression, the US unemployment rate hit 25%

To rub salt into the wound, massive withdrawals of cash by panicky depositors were the last straw that brought about the total collapse of financial institutions.

In that period, bank deposits were uninsured and the collapse of the banks caused depositors to lose their savings.

And due to the economic uncertainties, the surviving banks were reluctant to give out new loans.

Another culprit in the 1929 crash was margin financing which caused excessive speculation in the stock market.

Investors needed only to put up 10% capital and borrow the rest from the bank to invest in the stock market.

The collapse of stock prices led to margin calls and further selldowns.

Coming back to the 2008 crash, the banking and credit-market crisis was mainly due to the property boom and subprime bust.

The collapse of subprime loans sparked the credit crunch, which dragged some financial institutions into trouble.

As a result of the securitisation and the creation of innovative financial products like collateralised-debt obligations and credit-default swaps, the collapse of one financial institution had a domino effect, leading to the collapse of other financial institutions.

Now, the pertinent question is whether we are in a long bear market and heading for a depression.

We believe a depression like the one in 1929 may not happen exactly the way it did before.

Given the fast actions taken by central banks around the world, the damage caused by this crisis will be less severe than the one in 1929.

Central banks around the world have been putting in concerted efforts to make sure the global economy will not fall into a depression.

The rescue packages being implemented throughout the world will help stabilise the financial system.

We believe the reduction of interest rates and the increase in money supply will help cushion the impact of the credit crunch.

Besides, deposits placed with most financial institutions are guaranteed by central banks.

Even though the US unemployment rate may rise to 10% from 6.1% currently, it is still far below the peak of 25% hit during the Great Depression.

In the 1929 crash, the Dow Jones Industrial Average took about three years to reach bottom in July 1932 from its peak in September 1929.

From the peak to the trough the Dow lost about 90%.

The Great Depression in the US started in August 1929 and ended only in March 1933.

The stock market started to recover eight months before the US economy ended its depression.

At present, the Dow has already dropped for a year from its peak in October 2007, currently down about 37.5% against its peak of 14,164 points on Oct 9, 2007.

In view of the possible economic recession in most developed countries, we think the Dow will drop further from current levels.

Nevertheless, we believe it will recover much faster and the magnitude of the fall will be far less severe than the one in 1929.

Lastly, we believe the stock market will eventually recover.

At this point, to be more prudent, we may take a “wait and see” approach until things stabilise.

> Ooi Kok Hwa is an investment adviser licensed by Securities Commission and the 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.

Monday, October 20, 2008

Recession risks

TheStar

The malfunction in the financial systems of the US and Europe is affecting the entire economic system, including international trade as evidenced by the collapse in shipping rates. The validity of their government policies will determine the duration of the crisis.

SUDDENLY, the danger of desolation in the US economy has become the consensus view.

Economists and fund managers there are in unison now in their opinions the US economy would be in deep recession. Just a couple of months ago, much of the opinion was that a recovery was in sight by the middle of next year.

Quite abruptly, hardly anyone now is offering a view of the time to recovery.

Economists are stumped, as financial potholes keep popping up. In “normal” years, economists could forecast economic growth rates to within a decimal point.

At inflection points, however, economists are behind the curve in their forecasts as the business landscape changes too fast.

There is also disagreement as to what’s a recession. The most common definition is a period of at least two consecutive quarters of negative economic growth, which implies it would extend over a period of at least six months.

Economists defend that definition — dubbed a technical recession — as the most apt expression of a contraction of the overall economy. That means it might not be depicted as a recession if the economy does not register two consecutive quarters of negative growth.

The man-in-the-street, scorched in the stock or job market, may disagree with that.

Others may escape unscathed. It’s not always everybody’s recession. Some sectors, for instance, may continue to expand. In the financial crisis of 1998 in Malaysia, for instance, plantations and electronics enjoyed bumper profits.

This, however, looks like a broad-based recession in the US, impairing housing, banking, autos and consumer spending. It also threatens to be the first global recession of this century.

Everyone is watching when and to what extent this would impact on this country.

Data in the fourth quarter or next year, if not earlier, may define the degree of that impact.

In the corporate sector, a 50% decline in economic growth from 6% to 3% would feel like a recession. That’s because companies planted up capacities for 6% economic growth, and a lower growth of 3% could cause their revenue to decline 10% that would result in earnings declining 20% or more.

Currently, forecasts for Malaysia’s growth for 2009 range from about 3.4% to 1% by Macquarie which compared it to the experience of 2001.

In 2000, Malaysia’s economic growth for 2001 was forecast at about 6% but due to the Sept 11 terrorist attack in New York, the actual growth was 0.4%.

Policy risks

At this time of change — not what Barack Obama had in mind — the economic policies set out by governments are critical. They would either shorten and moderate the downturn, or prolong and deepen it.

Policy errors in the aftermath of the 1929 stock market crash infamously led to a long and deep depression.

This is the hour of government leaders. After years when the business sector in the US and Europe was deregulated, it became in effect unregulated, and government leaders now have to steer their economies away from the abyss.

So far, governments in the US and Europe have gone out on a limb to save their banking sector, injecting fresh capital and guaranteeing all deposits. That raises the risks of their sovereign debt and high inflation in later years.

“But what else can they do? If the banking system fails, there’ll be no economy,” a fund manager said.

Last week, Globex, a small Russian retail bank, disallowed withdrawals by depositors after a run on the bank.

It’s surprising the regulators allowed that, as it can lead to a nation-wide loss of confidence — it could be due to the government’s lack of experience in a market economy.

External risks

Asia is again experiencing the outflow of foreign equity funds. While foreign portfolio funds are a destabilising force, no country rejects the foreign funds.

Perhaps, that’s because foreign portfolio funds can destabilise stock markets, but not the banking system or the currency, unless there is massive speculation or manipulation of the currency.

External borrowings are a more potent destabilising force as shown in the current exposure of Iceland and South Korea.

Both countries have huge amounts of external borrowings, surprising in the case of South Korea, considering a similar experience in 1997. In Iceland, even consumer loans were taken in foreign currencies.

A sharp turn in the credit cycle led to questions as to whether they can rollover their foreign debts that were largely taken by their banks.

That uncertainty caused the Iceland krona to plunge 40% and the Korean won 30% since July.

It is to Bank Negara’s credit that the banking system and currency are relatively stable. In the banking system, the loan/deposit ratio is about 75%, which is very healthy.

In the west, the financial system is gradually being patched up, with UBS of Switzerland among the last big banks being rescued by its government last week, and the benchmark London interest rate for loans in dollars making its first weekly decline since July, according to 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, October 17, 2008

Morgan Stanley: Some hedge funds may fail

BusinessTimes

MORGAN Stanley Chief Executive Officer John Mack said tumbling markets may drive some hedge funds out of business.

“Some of my friends in that community say that by year-end, you’ll see the number of firms in the hedge-fund area shrink, I’ve heard as large as 30 per cent,” Mack, 63, told CNBC yesterday.

As the industry shrinks, “we need to resize our prime brokerage business.”

Morgan Stanley’s prime brokerage business, which lost clients last month after Lehman Brothers Holdings Inc filed for bankruptcy, is winning back some of those clients since gaining a US$9 billion investment from Mitsubishi UFJ Financial Group Inc, Mack said.

“Funds that took some of their money, in some cases all their money, are coming back,” he said. “Without question those people who pulled out are coming back.”

Mack, who lobbied last month to have regulators restrict short selling because he thought the practice was hurting his company’s stock, said he supports it in principle.

A three-week ban on short selling imposed by the Securities and Exchange Commission expired earlier this month.

“I believe in short-selling, I believe in it today, it’s a way that people can express their view on a company,” he said.

He said that in “extreme circumstances” the practice has exacerbated problems in the financial system and “it’s prudent to have some kind of controls.”

More De-Leveraging Ahead

Morgan Stanley, which became the fifth-biggest US bank holding company, is reducing its ratio of assets to equity, known as leverage, as securities ranging from mortgage debt to corporate loans to stocks drop in value.

The firm’s leverage ratio, currently slightly below 20 times, will drop into the “mid-teens,” Mack said in yesterday’s interview.

“There’s more de-leveraging to be done” Mack said of the broader financial community. “People are scared, and when they’re scared they want to go to cash, they want to de- leverage, and they’re doing that.”

Mack said the current financial system crisis is the worst he’s seen. “I’ve never seen anything like this or anything close to this,” he said. “I think we’re in for a rocky road for a while.” - 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.

Fund managers focusing on balance sheets for investments

TheStar

Leverage is an important factor for investors

PETALING JAYA: Fund managers and investors are focusing on balance sheets more than before as earnings growth prospects dim and borrowing risks in companies are magnified.

While investors have always considered balance sheet strength, levels of leverage have become the most important factor to watch for many of them.

While leverage among some of the banks in the West had reached levels of fragility - gearing levels of investment banks were as high as 30 times - banks in this country do not have leverage anywhere near those levels.

As Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose put it: “Banks here have been lending to customers who can afford to repay their loans.”

Gerald Ambrose

The concerns over the possibility of a global recession have led investors to place primacy in the balance sheet for assurance the companies would survive tough business conditions.

Companies that had issued bonds for working capital and that have to be renewed every five years, might be vulnerable in the cautious lending environment.

This is especially so for companies with balance sheets that are heavily loaded with debt.

The companies that were particularly susceptible would be those in the middle of their capital expenditure (capex) cycle, where the planting up was not completed, said CIMB-Principal Asset Management’s chief investment officer Raymond Tang.

Such companies would be those that have high capex requirements by the nature of their industry.

Trading companies, even though they do not have much capex, could also face cashflow problems. Difficulties could be encountered if their customers stretched the credit period from 90 days to 180 days, he added.

Companies that trade on cash payment terms will not encounter such problems faced by companies that trade on credit terms.

Sectors that trade on cash terms include gaming. Consumer companies with strong cashflow, such as tobacco and beer producers, would have similar attributes, he said.

In the property sector, Ambrose said, companies with weak balance sheets might not be able to hold on to their land bank.

Aberdeen takes large, concentrated positions in a small number of companies.

In the property sector, the asset management company had invested in SP Setia Bhd which had many sources of cashflow from its projects and served a broad market.

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, October 16, 2008

Asian markets fragile, but worst may be over for now

TheEdge

HONG KONG: Concerted action by governments globally to shore up the financial system may have signalled the worst is over for emerging Asia's most battered markets for now, but they are likely to remain volatile given still fragile investor sentiment, a Reuters poll shows.

The poll forecasts gains for South Korean and Indian equities by the end of the year, but it sees little upside for their currencies as weaker trade flows and the countries' respective current account deficits will weigh.

India's benchmark stock index, which has plunged more than 43% so far this year, is poised to recover more than 15% by the end of 2008 from Tuesday's closing level to reach 13,250, according to the poll.

"The valuations are extremely compelling at this point of time," said Rajen Shah, chief investment officer of Angel Broking in Mumbai.

"We see Sensex scaling to 21,000 over three years. Our exports to GDP ratio is relatively lower than countries like China, which implies the global turmoil could impact it less in relative terms," Shah said.

Analysts forecast a 10% gain for South Korea's stock market between Tuesday's close and the end of the year, taking the benchmark Kospi to 1,500 points.

That's well off last year's all-time high of 2,085 points.

Asian equities have picked up this week after European governments pledged bank guarantees and equity stakes in banks at the weekend and the United States followed suit on Tuesday.

While heavy selling in recent weeks offers the chance to scoop up Asian blue chips at reasonable prices, investors will continue to fret about the broader economic impact of the US-led global credit crisis, and a possible global recession, analysts said. "Slower global growth will impact exports across the region," said Patrick Bennett, foreign exchange strategist at Societe Generale in Hong Kong.

The prospect of weakening economic growth next year means there won't be much of a recovery in Asian currencies, if any. The poll forecast the Indian rupee - which hit a record low of 49.3 last week - would be at 47.63 by the end of December. That would be within Tuesday's trading range of 48.09 to 47.59.

The South Korean won, which was trading at 1,233 to the dollar early on Wednesday, is forecast at 1,200 by year-end.

Weakening demand in Western markets for Asian goods is already destroying the idea that Asia can "decouple" from an economic downturn in Europe and the United States. Goldman Sachs this week slashed its forecasts for GDP growth in Asia ex-Japan to 7.6% for this year and 6.7% in 2009, from 7.8% and 7.2% respectively.

While those are growth rates Western nations can only dream of, Asia's financial markets, and fund flows, will be influenced by reduced American and European spending and earning power, analysts say.

Indonesia's large domestic sector offers its economy some protection from a possible global economic slump but it will not be immune. Analysts said their forecasts for Indonesia's equity market had gone out the window as the outlook was too uncertain given the markets large foreign shareholdings and highly volatile foreign fund flows.

"We are concerned that earnings forecasts are way too high, so that raises some concerns," said Tim Rocks, equity strategist at Macquarie in Hong Kong. "Indonesia is not one of our favourite markets." - Reuters

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.

CIMB-Principal: Stay invested

BusinessTimes

Malaysian investors should take a long-term view of between three and five years and take advantage of the current cheap valuations, says CIMB-Principal CEO

THE global financial crisis may have wiped out trillion dollars worth of assets, but this should not deter local investors from investing in the stock market, said CIMB-Principal Asset Management Bhd chief executive officer Datuk Noripah Kamso.

She said investors should take a long-term view of between three and five years and take advantage of the current cheap valuations.

"And when they invest, they must do so through a regular savings plan and do not invest in one lump sum," she said at a media briefing on how to invest in difficult markets in Kuala Lumpur yesterday.

"Stay invested and do not try to time the market," she said, adding that the global recession will pass and market will rebound.

Chief investment officer Raymond Tang said if investors save slowly in capital market funds, they will get the returns.

"Buy when there is blood in the street," he said.

Tang said some US$1.8 trillion (RM6.32 trillion) worth of assets have been marked down worldwide by the US subprime crisis.

"In Asia, in the short term, there will be secondary effects but countries with strong domestic demand such as China and India will be able to withstand this," Tang said.

He said there is a lot of liquidity in the system now in Asia although banks are becoming more cautious in lending, but the slowdown may only be for the next six months or so.

"There will still be some growth as inflation is not going to be as bad in the months to come. Malaysian corporates are also in a better gearing position than they were 10 years ago and it is time that we should stop overly relying on the US market."

CIMB-Principal Asset Management, in trying to encourage the investing public to take advantage of the current situation to invest defensively, has put together eight core funds from over 70 funds it manages, into what it calls Flagship Funds.

The funds, said Noripah, have consistent long-term risk-adjusted returns and are widely diversified across different sectors and asset classes.

The funds are four conventional ones namely CIMB-Principal Equity Fund, CIMB-Principal Equity Growth and Income Fund, CIMB-Principal Balanced Fund and CIMB-Principal Bond Fund.

The other four are Islamic funds, namely CIMB Islamic Dali Equity Growth Fund, CIMB Islamic Dali Equity Fund, CIMB Islamic Balanced Fund and CIMB Islamic Balanced Growth Fund.

Out of the eight funds, three are invested up to 50 per cent in the Asia Pacific markets, excluding Japan.

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.

Hong Kong to tighten rules on fund managers

TheStar

HONG KONG: Hong Kong said yesterday it would tighten regulation on fund managers to better protect investors and is considering a protection fund for insurance policy holders in the wake of the global financial crisis.

Chief executive Donald Tsang, in his annual policy address, said the territory would review the code on unit trusts and the disclosure of information by mutual fund distributors to investors.

The government was also considering establishing a protection fund for insurance policyholders and intends to set up an independent insurance authority to promote stability in the insurance industry.

“Risk management has become more important than ever to our financial system,” Tsang said in his speech to legislators, referring to the global financial crisis which he said would have a much bigger impact than the Asian financial crisis a decade ago.

Hong Kong’s financial infrastructure was more robust than 10 years ago, he said.

Thousands of Hong Kong investors, however, recently suffered losses on credit-linked notes, known as mini-bonds, issued by collapsed US investment bank Lehman Brothers. They are seeking compensation from banks that sold the bonds, but the government has said the investors are unlikely to get back all their money.

Guy Ellis, a partner at accountancy PricewaterhouseCoopers, said he welcomed Tsang’s announcement to tighten regulation on mutual fund sales and protect insurance policyholders.

“These are good things to do at this time,” Ellis said. “Whether they will indeed protect investors remains to be seen. We don’t have the details of what he is proposing. But any measures to protect investors against inappropriate products is a concept one would support.”

The Hong Kong Monetary Authority has eased credit conditions for local banks as a result of the global credit crisis. On Tuesday, it also announced it would guarantee all customer bank deposits for two years and set up a fund to provide standby capital to local banks, if necessary. €” Reuters

Tsang said the HKMA would strengthen supervision of liquidity risk management for authorised institutions, and revise the methodology for calculating capital adequacy ratios in accordance with the Bank for International Settlements’ latest guidelines.

The central bank would also strengthen stress tests, capital planning and management of off-balance sheet exposures, he 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.

Tuesday, October 14, 2008

Funds investing in Greater China badly hit

TheEdge

PETALING JAYA: Local funds investing in equities in China, Hong Kong and Taiwan were worse hit compared with those investing in local assets over the past one year, in view of a sharper plunge in the China stock market amid global financial turmoil.

The credit crisis stemming from the US has caused a global sell-down and China’s stock markets were the worst hit in Asia year-to-date. This year alone, the Shanghai stock market has fallen about 62%.

Over the past one year, China’s Shanghai Composite Index plunged 65.3%, Shenzhen Composite Index slipped 65.5%, Hong Kong’s Hang Seng Index lost 48.2% and Taiwan Taiex Index fell 46.8%.

In comparison, the Kuala Lumpur Composite Index posted a relatively lower decline of 32.2% from a year ago.

Once a high-flier in the emerging markets, China did not see its performance this year as rosy as it was before. Global investors who were attracted to China’s growth story poured funds into the country only to see their funds’ net asset value (NAV) depleting.

To name a few, the NAV of Public Mutual Bhd’s Public China Select Fund fell 36% over a six-month period to 13.32 sen per unit on Oct 8 from 20.82 sen per unit on April 8. ING China Access Fund fell 34.2% to 33 sen per unit from 50.16 sen per unit over the same period, and Public China Ittikal Fund’s NAV declined by 31.2% to 14.8 sen per unit.

According to data by Lipper Fund, local funds investing in Greater China’s equities saw an average negative return of 38.38% over a one year period up to Sept 26, while those investing in Malaysian equities charted an average negative return of 19.4%.

While unit trust funds did not fare well overall, a fund manager told The Edge Financial Daily that investors should allow themselves a longer investment horizon to see the real return.

“Unless you are willing to take losses, there is no point selling the units now. Perhaps the only thing to do now is to be patient and wait and see,” he 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.

Monday, October 6, 2008

Pacific Mutual announces payouts for 5 funds

BusinessTimes

PACIFIC Mutual Fund Bhd has announced an income distribution of between 0.4 sen and 6.0 sen per unit for five of its funds for the financial year ended September 30 2008.

"Despite the slowing global economic growth and heightened volatility of equity markets over the past year, consistent and stable performance over time has always been the hallmark of Pacific Mutual's investment style."

"We are again pleased to be able to offer consistent payouts to our investors who continue to stay with us in these trying times," Pacific Mutual Business Development and Marketing general manager Gary Gan said in a statement on Friday.

"These latest fund distribution payouts would reach over 16,000 account holders who currently hold a combined 1.23 billion units in all these funds." he 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.

RHB Bank to step up wealth management ops

TheEdge

KUALA LUMPUR: RHB Bank Bhd aims to step up its wealth management business by the financial year ending Dec 31, 2008, as customers look to protect and grow their money in the uncertain financial environment.

The bank’s head of retail, Renzo Viegas, said: “We are building the infrastructure and should be ready to do something quite actively by year-end.

“We’re also in the process of hiring a team, defining who our ‘infinity customers’ — high net worth individuals — will be, conducting risk profiling and assessing investment appetite.”

The bank, part of RHB Capital Bhd’s banking group, aimed to grow its existing wealth management business to between four and five times its current size, Viegas told The Edge Financial Daily.

He said in the current climate of unattractive investment returns, customers wanted to protect their money, while still looking for upside.

“I think the wealth management business will drive growth in our financial year ending Dec 31, 2009 (FY09),” he said.

Meanwhile, Viegas said with the softening economy, RHB Bank’s retail operations, which included consumer banking, small and medium-sized enterprise banking, insurance, and finance, would focus on taking market share, expecting to increase the market share of most of its products by between one and two percentage points in FY09.

The bank currently had between 6.5% and 8% market share for most of its products, he added.

He said for example, the bank’s market share of credit cards was under 7%, mortgages in the high 6%, its SME trade business 13%.

Viegas added in the first eight months of FY08, the bank had doubled the volume of home loans it approved and accepted by customers to RM3.3 billion and RM2.6 billion, respectively, against RM1.6 billion and RM1.2 billion in the same period last year.

Meanwhile, RHB Bank’s credit card loans growth was expected to remain at between 15% and 16%, he said.

He said while customers were looking to manage their cash flow and reduce debt burdens due to the current economic environment, the bank had yet to see customers’ repayment of loans negatively affected.

The bank was, however, monitoring this situation closely and expected repayment patterns to depend on the country’s fourth quarter 2008 and first quarter 2009 economic statistics.

Consumer and commercial deposits, meanwhile, were expected to grow by up to 4% and 10%, respectively, totalling RM1.6 billion, this year, he said.

Going forward, Viegas expected the bank’s growth to continue to be driven by its product offerings, and its bancassurance business, while also seeking growth through alternate banking channels.

RHB Bank was expected to enter into strategic tie-ups with two or three banking and non-banking parties by year-end in an effort to step up sales, he said.

On possible mergers and acquisitions, he said the RHB banking group would perform them at the right price, and was on the lookout for targets internationally, particularly in Asean. It currently has operations in Singapore, Thailand and Brunei.

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.

MAAKL Mutual declares distributions for 2 funds

TheEdge

KUALA LUMPUR: MAAKL Mutual Bhd has declared gross dividends of three sen per unit for MAAKL Al-Fauzan and one sen per unit for MAAKL Pacific Fund for the financial year ending Sept 30, 2008.

In a statement, MAAKL Mutual said the gross distributions represented gross distribution yields of 8.95% and 3.8%, respectively, based on the average net asset value per unit from Oct 1, 2007 to Sept 18, 2008.

MAAKL Mutual executive director and chief executive officer, Wong Boon Choy, said: “This is the third gross distribution declared for MAAKL Pacific Fund and the second declared for MAAKL Al-Fauzan since the funds’ inception in June 2005 and September 2005 respectively.”


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, September 25, 2008

HLG aims for fund size of RM6bil

TheStar

It is introducing new products to meet the target by 2011

KUALA LUMPUR: HLG Asset Management Sdn Bhd aims to increase its total fund size to RM6 billion by 2011 from the current RM2.35bil.

HLG Asset Management Sdn Bhd’s executive director and chief executive officer, Richard Lin, said the company was confident of achieving its target with the introduction of new funds.

“The company has more new products in the pipeline. But it needs to review the regional markets first before deciding to launch the products,” he told reporters after the launch of HLG Shariah Inflation Select Fund yesterday.


HLG Unit Trust Bhd executive director/acting CEO Teo Chang Seng left) and HLG Asset Management Sdn Bhd executive director Richard Lin at the launch on Wednesday. - Starpic by Shaari Che Mat


Lin said he expected the new fund to perform well given the current inflationary pressures as it is a structured fund that is benchmarked against the performance of companies, both locally and abroad, that would benefit from an environment of rising inflation.

“The fund’s potential returns are benchmarked on three baskets of reference stocks in the agriculture, consumer staples and oil & mining sectors,” he said.

While global inflation rates are expected to ease, Lin does not expect them to get back to levels they were at one to two years ago.

“The surge in inflation is due to oil and commodity prices ... (but) if you look at the fundamentals of demand, we would not expect nature to produce more oil or minerals,” he said. “We are also not going to see a sharp correction as far as demand for food (is concerned).”

Lin reckoned that the robust economy of China will sustain the demand for food and oil and “that will underpin to a large extent inflationary pressures.”

“We are not saying that inflation is going to go all the way up. It has peaked but it will still be going to be at a high level and (that is) something we have to contend with,” Lin added.

The response to the new fund has been promising since it was launched two days ago, he said, adding that the fund has been seeing “double digit inflow of sales.”

Minimum initial investment for the fund is RM1,000 while the maximum amount is RM20mil.

The fund has a total approved fund size of 600 million units priced at 50 sen per unit during the offer period from Sept 22 until Nov 5.

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.