EPF Member's Investment Scheme. WHAT, WHY, HOW..SURE OR NOT? (Part 4)

This is the fourth installment for the series. If you miss the first three, here's the link:
EPF Member's Investment Scheme. WHAT, WHY, HOW..SURE OR NOT? (Part 1 - Intro)
EPF Member's Investment Scheme. WHAT, WHY, HOW..SURE OR NOT? (Part 2 - Bonds)
EPF Member's Investment Scheme. WHAT, WHY, HOW..SURE OR NOT? (Part 3 - Equities)
For the last installment (will be posted in the next two days) I will show how easy it is to monitor your investments (just a cup of coffee and a good Saturday afternoon!) and my conclusions.

The Mixed Asset Class (The Best of Both Worlds)

It is called mixed asset because it has exposure on both the bond market/money market as well as equities (remind you again stocks). The exposure percentages differ based on fund prospectus (make sure you read them after screening the funds) so they can generally be divided into four:

• Aggressive (e.g. 70% equities/30% fixed income)
• Balanced (e.g. 50/50)
• Conservative (e.g. 30% equities/70% fixed income)
• Flexible (up to 100% in equities/fixed income)

Step 1: Expectations. Decide your risk profile. I will pick 8% returns p.a. and thus the following will be used for screening: 1-year returns 8%, 3-year returns 26% and 5-year returns 47%.

Step 2: Screening. Fund screening can be done via web @ lipperleaders.com.

Step 3: Weeding. That was a snap by simply using the 5-year returns criteria. Only the top 4 funds remain. As usual there are exceptions when you are looking for insurance linked funds. Also RHB’s GoldenLife funds aren’t bad either if you are looking at the “Target Maturity Other” category.

*Expected returns: 1-year returns 8%, 3-year returns 26% and 5-year returns 47%.

Step 4: Fund Size. Hwang Select Income is huge in comparison. Some of you may know that I have invested some decent amount of money into this fund for the past 2 years but back then it was only RM400 million in size =) so it has become too popular. You can either switch it. But if you are looking for something Conservative this is still the only good choice available.

Step 5:  Preservation. All four looks good. No changes required.

Step 6: Expenses. They look more or less the same except that MAAKL offers 2 free switches each year. Like in equities, we have different classifications, so you can opt to diversify in all of them but I'll say just pick one =) as most of them have exposure in Malaysia only. You can flip a coin and decide whether to go with Hwang Select Balanced or OSK-UOB Kidsave Trust.

MAAKL-HW Flexi stands out as it is investing 100% into equities during times of boom/bullish period and switch to money market strategy when market is in bearish mode.

Go with MAAKL-HW Flexi (flexible type) with a track record of *17.70% returns p.a.!!
Go with Hwang Select Balanced (balanced type) with a track record of *10.90% returns p.a.!! OR

Go with OSK-UOB Kidsave Trust (balanced type) with a track record of *9.50% returns p.a.!!
Go with Hwang Select Income (conservative type) with a track record of *8.70% returns p.a.!!
*Minus annual management fee not considering one time sales charge, returns p.a. based on 5 year performance.

Disclaimer: The reports, analysis and recommendations in this article are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.