154 RCEP is signed. Theme for ASEAN funds?

154 RCEP is signed. Theme for ASEAN funds?

The Regional Comprehensive Economic Partnership (RCEP; /ˈɑːrsɛp/ AR-sep) is a free trade agreement between the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. [Source: Wikipedia]

RCEP was signed on Nov 15, 2020. Southeeast Asia is expected to benefit from RCEP. In figure below, we can see that ASEAN funds are making gains recently. Previously I only see names for technology, China, Indonesia, then European funds. Is it time to invest in ASEAN funds?

In a sense, I simplify RCEP = China + ASEAN + Japan + Australia. (Ignore New Zealand, Korea because we do not have those single country fund in Malaysia.)

China + ASEAN

There is only four funds invested in China + ASEAN.

1 Maybank Greater China ASEAN Equity-I Fund Class A (MYR)

2 Maybank Greater China ASEAN Equity-I Fund Class B (USD)

3 Maybank Greater China ASEAN Equity-I Fund Class C (USD)

4 PB China ASEAN Equity Fund

The overall return for those funds are

According to Morningstar Malaysia, for Maybank Greater China ASEAN Equity-I Fund Class A (MYR),

- data as at Apr 30, 2020, 56.58% invested in China, 34.69% invested in Indonesia + Singapore + Malaysia + Thailand + Philippines.

- this fund is less than 10 years old. The 5 Year annualised return is 4.57%.

According to Morningstar Malaysia, for PB China ASEAN Equity Fund,

- data as at Jun 30, 2020, 70.30% invested in China, 22.89% invested in Singapore + Malaysia + Indonesia + Thailand

- as at Nov 19, 2020, the 10 Years annualised return is 5.01%.

ASEAN funds

As sorted out using Morningstar Malaysia, there are 26 ASEAN funds.

- 5/26 more than 10 years old. PB ASEAN Dividend is the top performer with 10 Year annualised return of 5.21%

- 10/26 at least 5 years old. United ASEAN Discovery Fund is the top performer with 5 year anualised return of 10.63%.

- 17/26 at least 3 years old. United ASEAN Discovery Fund is the top performer with 5 year anualised return of 13.23%.

Let's look at what countries they in invested in. Below is table for fund that is more than 10 years old only. The top five are the bigger countries — Indonesia, Malaysia, Philippines, Singapore, Thailand.

Observation (so far)

In categories above, regardless of whether it is China + ASEAN, or pure ASEAN funds, it seems to me the long term annualised returns don't meet my expected rate of return. Seems rather hard to simply buy and hold.

What if I buy single country fund one by one?

Indonesia funds

Singapore funds

Philippines funds? Thailand funds?

There are no Philippines funds or Thailand funds in Malaysia market.

How about Malaysia funds?

Malaysia large cap (conventional)

Malaysia small cap (conventional)

Remember my dumb simplification where I put RCEP = China + ASEAN + Japan + Australia? Don't forget our China funds. In fact, I suspect China will benefit most from RCEP because

- China is looking for alternative market to export their products since they have trade tensions with US

- China or Greater China can export higher technology goods to ASEAN

- ASEAN (except maybe Singapore) or even Australia are mainly commodity exporter, China needs a lot of them

If that is so, China leh? Can ah?

Then, that means all ASEAN funds, Singapore funds, Indonesia funds not worth to invest? Well, I think this is some opportunity to buy at dip too. The strategy matters.

As a final reminder, this post is only for discussion or my note only. I am not promoting any funds.