Raja Rozali

Public Mutual Bhd won the “Best Islamic Fund Manager in Asia” Award

by the Failaka Advisors for the 2nd consecutive year. The award was presented by Mr Mark J Smyth,
Managing Director of Failaka Advisors to Public Mutual’s Chairman,
Y. Bhg. Tan Sri Dato’ Sri Dr. Teh Hong Piow during Public Mutual’s Annual Awards Night held
on 15 May 2008 at Putra World Trade Centre, Kuala Lumpur.

The Failaka Advisors, with headquarters in Dubai, UAE and offices in Chicago, USA,
is a recognised leader in the field of Islamic funds research. The Failaka Islamic Fund Awards
stand apart as the benchmark for excellence in the field of Islamic fund management and
represents a high-water mark for award winners.

In presenting the award to Public Mutual, Mr Mark J Smyth said, for the 2nd year he is happy
to present Public Mutual with the award for Best Islamic Fund Manager- Asia. He also said
that in terms of Shariah-compliant funds, Public Mutual’s funds have once again outperformed
the benchmarks by the highest percentages. In a market where many clients have demonstrated
a preference for Islamic funds, Public Mutual is well-placed to take advantage of this demand.
The team of Public Mutual have proven remarkably consistent in managing their
Shariah funds and the proof is in their performance. No doubt performance has played
a role in their tremendous asset growth.

In his acknowledgement speech, Tan Sri Teh expressed pride that Public Mutual is once
again receiving this international recognition. “The award reflects Public Mutual’s commitment
to do its utmost to give value to our unitholders,” he said. Tan Sri Teh dedicated the award
to Public Mutual’s board of directors, management, staff,
agency force and unitholders in appreciation of their passion and zeal in helping put
Public Mutual on the map of excellence.

Public Mutual is the largest private unit trust company in Malaysia, and it manages
62 funds for more than 1,800,000 accountholders. As at 30 April 2008,
the total NAV of the funds managed by the company was RM27.8 billion.

RISK & RETURN MEASURES USED
IN ASSESSING PERFORMANCE OF FUNDS

I. RISK & RETURN MEASURES

A. Measures of Unit Trust Fund Returns

Returns
from unit trust funds are computed from the percentage change in fund
prices (adjusted for splits and distribution paid out) for the period
under review.

To
compare fund returns over periods exceeding one year, the total
percentage return over the period is divided by the number of years to
derive the average annual return.

B. Measures of Risk

The following measures of risks are used in assessing a unit trust fund’s returns.

1) Beta

Beta
is a historical measure of a fund’s sensitivity to market movements. It
measures whether a fund tends to rise and fall as much as the market.
For equity funds, beta is generally measured relative to the benchmark
KLSE Composite Index (KLCI ). By definition, the beta of the benchmark
index is 1.00.

A
fund with a beta of 1.50 is significantly more volatile than its
benchmark. It would tend to gain 1.5% for every 1% rise in the market,
and lose 1.5% for every 1% decline in the market. On the other hand, a
fund with a beta of 0.50 is notably less volatile than its benchmark
and would gain 0.5% for every 1% rise in the market and lose 0.5% for
every 1% decline in the market.

2) R-squared (R²)

R-squared
is a historical measurement which indicates how closely a fund’s past
fluctuations have correlated with the fluctuations of its benchmark
index. In other words, R-squared captures the degree to which fund
returns go up and down at the same time as the market.

R-squared
values range from 0 to 1.0. An R-squared of 0 means that a fund’s
returns have no correlation with its benchmark’s fluctuations. An
R-squared of 1.0 indicates that a fund’s returns are completely
correlated with the benchmark i.e. 100% of the fund’s past fluctuations
can be explained by fluctuations in the benchmark index. An R-squared
measure of 0.30 means that only 30% of the fund’s movements can be
explained by movements in its benchmark index.

R-squared
can be used to ascertain the significance of beta. The higher a fund’s
R-squared, the more reliable its beta as an indicator of the fund’s
volatility of returns. If the R-squared is lower, beta is less reliable
as an indicator of the fund’s volatility and performance.

3) Standard deviation

Standard
Deviation is a statistical measure of the range of a fund’s
performance. This statistic compares a fund with its own past record
(and not against a benchmark as seen in the computation of beta and
R-squared). Standard deviation is the degree to which a fund’s returns
have fluctuated above or below its mean (or average) return over the
previous 36 months. When a fund has a high standard deviation, its
range of performance has been very wide, indicating that there is a
greater potential for volatility of returns.

Suppose
Fund A posts annual returns of –5%, +10%, and +25%. Over the three
years, it earns an average annual return of +10%, with a standard
deviation of 15. Fund B post annual returns of +5%, +10%, and +15% over
the same period. It too earns an average return of +10%, but its
standard deviation is just 5. Therefore, Fund A (with its returns
ranging from –5% to +25%) has been three times as volatile as Fund B
(with returns ranging from +5% to +15%).

A
fund’s returns are expected to differ from its mean total return by no
more than plus or or minus the standard deviation figure approximately
68% of the time. A fund’s returns should be within a range of plus or
minus two times the standard deviation from its mean return 95% percent
of the time. These ranges assume that a fund’s returns fall in a
statistically normal, bell-shaped distribution. In any case, the
greater the standard deviation, the greater the fund’s volatility.

Note
that all risk measures have limitations. No single measure of risk
paints a complete picture of the fund’s returns. These measures of
risks are based on past performance which may not be indicative of
future returns.

Tags: UnitTrust, Investment, Malaysia

The following table outlines some of the steps that can be implemented to save on taxes.

More to come on this issues on my next update.

Using money saved in Employee Provident Fund (EPF) is a wise way to maximize return because of the lowest upfront service charge of only 3% as compared to 5% - 6.5% . Put a stop loss limit, for example 10%. Once the investment reaches -10%, do a switching or repurchasing (selling the units). Best of all, invest in an aggressive unit trust fund . However during market downturn, make sure to switch to money market funds so that we will be able to ensure stable return.
On the other hand, dollar cost averaging will never goes wrong. Start with a minimum investment of RM 1000 and top up monthly at least RM 100.00 . This will definitely ensure that the units acquired will be acquired at a lower cost.
” The Principle of Dollar-Cost Averaging involves a disciplined regular investment technique, which may be applied to maximum effect in unit trust investing. All that an investor has to do is to invest a regular (monthly) sum of money with a selected unit trust fund over a period of time in order to arrive at his target principal investment amount at the end of that period. This way, he does not have to worry about market timing, or where shares prices or interest rates are headed. His regular investment amount will buy his less when the market is up, and more when the market is down. He may be accumulating the units at their lowest average price over the period.”

Learn which country has the strictest rules on mutual fund construction, and why. At the same time, you can sharpen your knowledge on unit trust.

 

View Original Article

Tags: unittrust, mutual fund

View Original Article

View Original Article

The feeling of Malaysian investors are still the same as the rest of the world.  They are all pessimist about the future caused by the fall of US economy.  Couple with the attitudes of our UMNO politicians, they are not helping either. As for the world economy, I think that this is the right to invest. The time is now.  We shouldn’t put our worry too much on the US economy as China economy should be the one we should be paying our  attention. As of now, the contribution of the US economy is shrinking while the China economy is surging at a rapid speed.

Tags: publicmutual, unit trust, piogf

Please go here for the details since we are not allow to directly/indirectly advertise the fund information here. New browser window will be opened.