I continue the series of update with Mixed Assets. Yesterday I did the Bonds category. You may recap my first half update: Aboi's Updates For Malaysian Mutual Funds for 1H'2014. 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)
Mixed Assets
 |
| TER is the total expense ratio, a measure of total cost (purchase, redemption, auditing, management fees) of a fund to the investor. The lower the better. |
Commentary
[1] All my top three picks in the three main categories since Dec 2012 have excellent performance so far.
[2] The sole exception of 2nd choice UOB KidSave (Balanced fund) which has been performing flattish for almost two full years and thus under flagged. The fund is invested primarily in Asia emerging and developed markets e.g. Malaysia, South Korea, Indonesia. It had a good run between late 2008-early 2013 with the same manager now so I'll give it some time still.
[3] As of this writing, I own Affin Hwang Select Income Fund which has exposure in Asia ex Japan and has been performing to my expectation.
What about the recently 'hot' and 'spicy' Eastspring funds?
Updated 09/10/2014:
My analysis and use of ratios has been wrong and I apologize. I will use a better risk-adjusted returns measure using the five principles of risk measures; alpha, beta, r-squared, std deviation and Sharpe ratio. I will just explain what they represent rather than showing hefty equations.
Alpha: A +ve of 1.0 means the fund has outperform its benchmark index by 1.0%. The opposite goes for -ve.
Beta: A +ve of 1.2 means the fund is 20% more volatile than the index. The higher the beta suggest it offers the possibility of higher returns but also posing more risk. The opposite goes for -ve.
R-squared: A higher R-squared will indicate a more useful beta value (85 to 100) aka good correlation. A low R-squared value means you should ignore the beta. It's a measure on well the fund is measured against an appropriate benchmark.
Standard deviation: A large dispersion tells us how much the return on the fund is deviating from the expected normal returns.
Sharpe Ratio: The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. It describes how much excess return you get for extra volatility you endure in holding riskier asset.
[2] The sole exception of 2nd choice UOB KidSave (Balanced fund) which has been performing flattish for almost two full years and thus under flagged. The fund is invested primarily in Asia emerging and developed markets e.g. Malaysia, South Korea, Indonesia. It had a good run between late 2008-early 2013 with the same manager now so I'll give it some time still.
[3] As of this writing, I own Affin Hwang Select Income Fund which has exposure in Asia ex Japan and has been performing to my expectation.
What about the recently 'hot' and 'spicy' Eastspring funds?
Updated 09/10/2014:
My analysis and use of ratios has been wrong and I apologize. I will use a better risk-adjusted returns measure using the five principles of risk measures; alpha, beta, r-squared, std deviation and Sharpe ratio. I will just explain what they represent rather than showing hefty equations.
Alpha: A +ve of 1.0 means the fund has outperform its benchmark index by 1.0%. The opposite goes for -ve.
Beta: A +ve of 1.2 means the fund is 20% more volatile than the index. The higher the beta suggest it offers the possibility of higher returns but also posing more risk. The opposite goes for -ve.
R-squared: A higher R-squared will indicate a more useful beta value (85 to 100) aka good correlation. A low R-squared value means you should ignore the beta. It's a measure on well the fund is measured against an appropriate benchmark.
Standard deviation: A large dispersion tells us how much the return on the fund is deviating from the expected normal returns.
Sharpe Ratio: The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. It describes how much excess return you get for extra volatility you endure in holding riskier asset.
 |
| Source: MorningStar - Rating & Risks section for respective fund |
It may seem to suggest that Eastspring's Dana Dinamik fund performance is not just through lucky pickings or mere coincidence. Definitely under the watch list. On the other hand under the Balanced category, Eastspring's Alpha Std Deviation value is 2% higher than that of its closest competitors. Though with a higher Sharpe ratio it's Std Dev is behaving more like a Flexible fund rather than a Balanced one. This is also confirmed when comparing it's Alpha & Beta to Dana Dinamik, very similar indeed. Too much volatility & risk taking which is expected when chasing higher returns in my opinion. For comparison sake I took another: CIMB Principal.
What could possibly explain Eastspring's rapid ascension in the rankings? Perhaps it was the establishment of a new independent brand name from Prudential and possibly an internal shakeup for all we know. All I know is that has been operating under 'Management Team' in early 2012 as per MorningStar report. Prudential announces new Asia asset management brand – Eastspring Investments. As usual I will poke fun at Public Bank. The RM9 billion fund (immensely huge) is starting to crack, falling from 4 to 13 in rankings.
My five rules of choosing funds:
#1 Avoid choosing big sized popular funds!
#2 Compare fund expenses!
#3 Information on the fund manager!
#4 Good funds don't advertise.
#5 Avoid the usual past performance > riskiness of fund > manager's rep (some don't) > fund expenses > popularity of fund. Look from the opposite direction and do your filtering from there.
What could possibly explain Eastspring's rapid ascension in the rankings? Perhaps it was the establishment of a new independent brand name from Prudential and possibly an internal shakeup for all we know. All I know is that has been operating under 'Management Team' in early 2012 as per MorningStar report. Prudential announces new Asia asset management brand – Eastspring Investments. As usual I will poke fun at Public Bank. The RM9 billion fund (immensely huge) is starting to crack, falling from 4 to 13 in rankings.
My five rules of choosing funds:
#1 Avoid choosing big sized popular funds!
#2 Compare fund expenses!
#3 Information on the fund manager!
#4 Good funds don't advertise.
#5 Avoid the usual past performance > riskiness of fund > manager's rep (some don't) > fund expenses > popularity of fund. Look from the opposite direction and do your filtering from there.
No comments:
Post a Comment