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Decided to make adjustments on the way I blog & share due to time constraints and other commitments. In the coming weeks you should see them. Short updates but more frequent & concise.

Friday, January 22, 2016

Investing in Malaysian Mid/Small Cap Companies

FTSE Malaysia Small Cap Interactive Chart (link)

Malaysian Small caps index did not have a good run in 2015 and had a pretty shaky start in 2016. It would be good for value investors like us to buy when it is cheap, preferably at 12000 levels; sometimes I'm not conservative. Mid/Small caps are not easy to invest directly (higher risk than big caps, too many companies to screen and more volatile). However there is an easier way which I believe is also safer: Eastspring Investments Small-Cap Fund

Key Points
1. Ranked 1st for 3Yr, 5Yr and 10Yr Annualized Returns under Category Equity Malaysia Mid/Small-cap as of 30 Nov 2015. Good track record.

2. Fund size of approximately RM 241.14 million (as at November 30, 2015) is small and manageable, manager has focus. Big funds tend to under-perform lower ones.

3. Cash level has dropped from 2014 (25%) to 2015 (15%), this would suggest to me that it has sought to buy some securities at discounted price due to the index's fall in 2015 hence there is potential for upside if the index recovers.

4. Purchasable under fundsupermart (link) @ 2% sales charge; during promo it can be as low as 0.5%. You can also utilize EPF account 1. It also has a decent expense ratio for an equity fund @ 1.64%. Affordable and flexible.

5. Fund fact sheet located here: Dated December 2015 (link). Fund has wisely positioned itself out of O&G/Banking/Automotive/Plantation industry which is expected to be so-so/not well in 2016. Manufacturing @ 21.25% is a boom as exports is poised to gain with a weaker MYR and especially if exports are denominated in USD. Good selective pickings.

**Please bear in mind that this is a high risk investment :) ** Just look at the returns and you will understand why. Can you stomach certain years that are bad and not emotionally sell them?

Annual Returns
2015 : +18.65%
2014 : +16.22%
2013 : +64.02%
2012 : +11.07%
2011 :    -8.68%
2010 : +30.39%
2009 : +56.02%
2008 :  -38.60%

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