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Thursday, February 27, 2014

Aboi To Finally Invest In Aberdeen Islamic World Equity Fund

You can read my previous post about Aberdeen: Aberdeen Funds in Malaysia..Are They "Iron" Clad Investments?

Thanks to my close friend (whose also an avid and knowledgeable investor) I obtained the interim report (December 2013) for Aberdeen's Islamic World Equity Fund just today. You can access it here: Interim Report Dec 2013. I spent some time looking through it from top to bottom and here are the key takeaways:-

[1] As at 31 December 2013, the size of the Fund stood at 10.457 million units. That's a bout RM12.25 million in net asset value. As small as it could be, that's good.

[2] Total fund return for 2013 is 17.27%, under performing the benchmark (MSCI ACWI Islamic (Shariah) Index) return of 20.69% by 3.42 percentage points. Under performance attributable to Japanese and Taiwanese stock holdings. Not exactly bad as 17.27% itself is an accomplishment.

[3] No change in investment strategy. Shariah-compliant stock selection is based on a bottom-up approach, as it will always be: focused on high-quality companies that offer good, long-term growth potential at attractive valuations.

[4] Heavyweights on Energy and Healthcare sector (40% of total allocation). Heavyweights on United States and the United Kingdom (34%). To be more exact Europe less UK as a whole is the biggest: 32.6%. Aberdeen will benefit the most if the economies of America & Europe (67% of allocation) does well in the coming years. This is a key thing to monitor when invested in this fund.

[5] For the energy sector, United States looks promising as Obama's administration is heading the initiative to make the USA self sufficient. This is another key sector to keep in mind as you are holding this fund.

[6] As for the healthcare sector, Aberdeen is split across several geographies: United States, some European countries, Japan and Brazil. As you can see, exposure is mainly in developed countries. This is good, as healthcare is almost a recession proof industry and is big business in the developed world. I'm not so much worried here, probably don't even need to monitor this sector at all.

[7] As of December 2013, Aberdeen has invested it's asset allocation as much as 97% into equities leaving only 3% cash. With that level of cash, there's no more room to add more into the portfolio. Either Aberdeen is good at selection or they are too aggressive, either way I cannot tell which. The only downside of holding so little cash is when opportunity kicks in Aberdeen will need to sell off current holdings. On the bright side, Aberdeen can do a little more marketing and get cash from investors like me :)

As of this writing, I do NOT own any stake in Aberbeen Islamic World Equity Fund. However I am going to purchase units via cost averaging starting this month: February (investing equal amounts of $ over a period of time until June) to reduce risk because in my opinion, market looks to be trading sideways for awhile now as the US Fed gradually tapers QE. I am expecting a 10% to 15% return per annum on this fund. Anything above 20% is wishful thinking.

I buy all my funds via Fundsupermart platform because they have discounted sales charge which is always lower than the charges of the investment house..

Disclaimer: The reports, analysis and recommendations in this blog 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.      

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