Monday, December 28, 2020

158 Do I prefer single country funds or regional funds?

 158 Do I prefer single country funds or regional funds?

In short, single country funds.

Why?

1. Easier to monitor. Each country has an index, easier to track the index of a single country. Example, track STI for Singapore funds, JKSE for Indonesia funds. If, example, you see an index drop, you know you can get cheaper fund price if you want to take advantage to do dollar cost averaging.

2. Easier to predict the closing price trend of the fund. Overseas funds' fund price normally come in 2 days later, so easier to track the index and predict the price trend. When you need to do switching or redemption, you can know you'll get a higher or lower price by seeing the index. You may not know the actual price, but knowing it is higher or lower than now.

3. The underlying asset is within a single country only. If a fund is Singapore fund, majority of the fund will be in Singapore. You know you won't order a durian but it become apple. I once bought a Far East fund with most of its investment in China, Japan etc.; but who knows few years later its allocation became majority in Malaysia.

4. Regional funds may invest in countries I don't favour or duplicated in my portfolio. Example, an Asia Pacific fund may invest in Japan and it could happened I may think Japan market is over-priced. Or an Emerging Market fund may invest quite a lot in China while I may already have China funds.


That said, the pre-conditions are:-

1. Capital. If I have enough capital to manually select the countries. If I only have few thousands, then maybe a regional fund.

2. No other choices. Two situations: First, example is I may want to invest in Thailand but there is no such fund in Malaysia, so I may use ASEAN fund that overweight Thailand. Second is let's say I may want a single country fund but it's not approved under EPf investment scheme, I may need to look for regional fund.



 158 我比较喜欢单一国家型基金还是区域型基金呢?

简单一句,是单一国家型基金。

为何?

1. 容易追踪。每个国家有自己的指数,那追踪单一指数容易过追踪一揽子指数。例如,新加坡基金就追踪海峡指数、印尼基金就追踪雅加达综合指数。若是看到某个指数大跌,就晓得基金报价也会变得便宜,这就容易进行摊平啦。

2. 比较容易预测基金的报价趋势。国外基金的报价通常会迟两天报出,所以比较容易追踪指数并预测报价趋势。当我们有意进行基金转换或是赎回,看单一指数就可以大约知道可以以更高或是更低的价位交易。当然无法知道真正的价位,而是知道更高或更低。区域型基金因牵涉多个指数,比较难预测整体的高低。

3. 基金后边的真实投资仅在一个国家罢了。新加坡基金顾名思义绝大部分投资在新加坡。买的是榴莲绝不会收到苹果的意思。我曾买过远东基金(投资于中国、日本等)但几年后发觉绝大部分竟然投资在马来西亚!

4. 区域型基金或许会投资于我不喜欢的国家或是重复的国家。例如,亚太平洋基金可能投资在日本而我可能觉得日本市场已经过热。抑或新兴市场基金可能投资于中国,而我已经另外有中国基金了。


当然,先决条件如下:-

1. 资本。如果我有足够的资本,就自行配置。如果只有区区几千元,可能就买区域型基金吧。

2. 别无选择。两个:其一,比如我想投资泰国而本地没有泰国基金,那可能就选侧重泰国的亚细安基金;其二,如果我要的单一国家型基金不开放于公积金投资,那只好屈就于类似的区域型基金。


Thursday, December 10, 2020

157 Regular Savings Plan 2.0 (RSP 2.0)

157 Regular Savings Plan 2.0 (RSP 2.0)

RSP 2.0 is the total upgrade of RSP 1.0 and RSP 1.5.

Under RSP 2.0, all monthly top up will be channeled into cost-efficient unit trust investment platform (aka Wrap Account).

Under this cost-efficient platform, investors enjoy lower upfront service fee, and unrestricted free switching. There is an annual wrap fee though.

By using this cost-efficient platform, investors first pay lesser fee to lower his investment cost (faster to make profit). The difference can be as high as 2%-3% depending on funds. Meaning the same fund can be charge different service charge / service fee because of different platform use.

And investors can always use the best funds according to market conditions. Example before this China funds was leading but recently European funds has been rising. Under this cost-efficient platform, investors can choose and invest in the best funds in the market, at NAV price.

However, to achieve the privilege of free switching, investors has to pay a annual fee (Wrap fee). With that, investors need not be bound by a fund company's product only.

Under normal RSP 1.0, agents will not ask investors to take profit. Under RSP 1.5 and RSP 2.0, agent will ask investors to take profit and then re-deploy the redeemed amount into market by doing manual monthly switching.

It is very important to take profit. Market can be very volatile. By taking profit, investors can lock in profit and use it to re-invest again. The benefits of taking profits are:-

1) after long term of monthly top up, the total amount invested is no different to lump sum investment. Any large drop could have a big impact for the investment.

2) by locking profit, investors can use the profit or let profit be invested again, and thus compound the interest. So if market still go up, investors still enjoy new profits.

3) by locking profit, investors can wait for market drop to buy more cheap units.

4) letting a profit investment to become a loss investment is really a painful experience.

5) after locking in profit, investors will be very happy to see market drops. His emotion is totally different than letting whole investment floating with the market. For he knows he will make more profit by capitalizing the market movement, but he must have his first pot of silver (and his first pot of silver is exactly his redeemed profit investment).

So, if you have been investing for a long time, at a substantial amount with profit, you should consider doing your own RSP 2.0. However, if your platform is not switching friendly, then you should think somewhere else. Like I mentioned before, I transfer most of my investments from a very famous unit trust company into Phillip because it is not cost-efficient to do switching there.

Tuesday, December 1, 2020

156 Regular Savings Plan 1.5 (RSP 1.5)

156 Regular Savings Plan 1.5 (RSP 1.5)

Yesterday I wrote about our normal regular savings plan (RSP), where I termed it as RSP 1.0.

Today, I am going to write about RSP 1.5 (again, I created the term)

In RSP 1.0, when an investors accumulated sum becomes very big (e.g. RM100k), the whole investment is no difference from a lump sum investment.

In lump sum investment, any slight fluctuations in fund price will have a big impact on the value of the investment. Same in RSP 1.0. The investor will feel pain when seeing value drop.

The way to avoid earned profit from getting thinner or totally gone, is to take profit. The problem with taking profit is when should we invest back or where to invest next.

When one market is good, it usually means another market is also good. So it makes no sense to come out from this fund and go into another fund especially if they invest in similar sector/industry.

In RSP 1.5, we modified the whole investing process.

We start with an regular savings plan. After three to five years when the sum get big, we will take profit by redeeming the fund and re-invest into a cost-efficient platform. To be fair to clients, the re-invest is done at zero sales charge.

The original regular savings plan will keep on running in the original platform. Repeat the redemption and re-invest process after 3-5 years or profit target hit.

In the new platform, the whole amount will be put into bond funds and money market funds.Then, we split the amount into 30 parts and re-invest into equity fund every month. Whenever profit taking target is hit, the money in equity fund will be switched to bond funds again. Repeat the whole process.

This way, an investor can take profit when market is running up and re-deploy the money into market when market drop. As the market rapidly goes up, the frequency to take profit should happen faster. Hopefully investor can be in time to get out of market before a fall, or reduce the amount bought at high price. As the market goes down, the money in bond fund can be use to buy more units to expedite the process to make profit.

As the money keep on accumulating in original regular savings plan and cost-efficient platform, the monthly investment amount also becomes higher and higher. But the risk is greatly reduced.

Actually, the ideal situation is straight way implement RSP 2.0 (explain in later article). But because of Phillip Mutual's cost efficient platform requires a monthly RSP of minimum RM2,000, RSP 1.5 is the alternative method.

To give an idea of cost difference. Example of upfront service charge, normal unit trust platform will charge service charge of 5%-6.5% (depending on the fund). In cost efficient platform, upfront service fee is 3% only.

I also have some small investment in a very famous big fund house. I find it very costly to do frequent switching there because of the high switching fee.

Whoever familiar with unit trust investing, will know one of the strategy is re-balancing of equity-bond ratio. RSP 1.5 and RSP 2.0, though not re-balancing, are methods to take profit.