Two weeks ago I covered the Bonds category: Aboi's Updates For Malaysian Bond Mutual Funds for 2H'2015. I continue the series of update with Mixed Assets. 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
Commentary
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| 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] Both my top picks for Conservative and Balanced type since Dec 2012 have excellent performance so far.
[2] I am under recommending MAAKL HW Flexi in favour for Eastspring Inv Dynamic finally. MAAKL had a good run between 2008-mid 2014 until the oil price crash as well as subdue prices of palm oil. Its portfolio consists of 35% cyclical industries. Until the next commodity super cycle begins it is difficult to continue holding on for lack of any catalyst. Fund is also holding a 25% cash level now so returns will be suppressed.
[3] As of this writing, I continue to own Affin Hwang Select Income Fund which has exposure in Asia ex Japan and has been performing to my expectation.
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.
With roughly 2% difference in Std Dev between MAAKL HW-Flexi vs Eastspring Inv Dynamic, the latter has been able to provide twice the better of risk-adjusted performance. Hence I under recommended MAAKL HW-Flexi for reasons that I have explained before. Both Std Dev values are relative high (similar to Equities type funds) hence I don't really fancy them (better to invest in Equities fund instead).
Eastspring Inv Bal will be under the watch list. It can perform on par with Affin Hwang Select Balanced and in most cases provide better returns judging from Sharpe ratio (1.07 vs 0.76). The drawback: again high Std Dev value (in a way behaving more like a Flexible fund rather than a Balanced one) so I have some reservations still. Consider that Select Balanced fund has changed its mandate to go beyond Malaysia (now Asia), has made me to maintain my pick on it for now (wouldn't want to put all my eggs into the Malaysian market only).
Affin Hwang Select Income continues to be top notch. Almost similar Sharpe ratio vs RHB-OSK Smart Income while only having half Std Dev of its competitor.
[2] I am under recommending MAAKL HW Flexi in favour for Eastspring Inv Dynamic finally. MAAKL had a good run between 2008-mid 2014 until the oil price crash as well as subdue prices of palm oil. Its portfolio consists of 35% cyclical industries. Until the next commodity super cycle begins it is difficult to continue holding on for lack of any catalyst. Fund is also holding a 25% cash level now so returns will be suppressed.
[3] As of this writing, I continue to own Affin Hwang Select Income Fund which has exposure in Asia ex Japan and has been performing to my expectation.
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.
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| Source: MorningStar - Rating & Risks section for respective fund |
Eastspring Inv Bal will be under the watch list. It can perform on par with Affin Hwang Select Balanced and in most cases provide better returns judging from Sharpe ratio (1.07 vs 0.76). The drawback: again high Std Dev value (in a way behaving more like a Flexible fund rather than a Balanced one) so I have some reservations still. Consider that Select Balanced fund has changed its mandate to go beyond Malaysia (now Asia), has made me to maintain my pick on it for now (wouldn't want to put all my eggs into the Malaysian market only).
Affin Hwang Select Income continues to be top notch. Almost similar Sharpe ratio vs RHB-OSK Smart Income while only having half Std Dev of its competitor.
This info is still relevant till this day
-> 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.
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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