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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.

Tuesday, February 9, 2016

Aboi's Investment Strategy for 2016

What have I learned?
I'm becoming more fond of funds. They do perform; Kenanga made me +64%, Affin Hwang +40% and there rest are also in +ve territory. They are easier to monitor; one only looks at certain ratios (I do this twice a year only) and since the stock selection is done by the manager most of my focus is on macroeconomics level which IMO is a lot more interesting. Second with FSM platform (see link) it is far cheaper to invest in funds @ sales charge of 0%-2% (normally they are 6%!). FSM also offers relevant educational and research articles.

More importantly is my time constraints due to other commitments & plans. As such I'm not in a good position to do deep down research in a consistent manner (e.g. using DCF model). Nevertheless it was good experience as all my investments made positive returns (the only exception is Genting which I am still holding). Using my experience since 2009 I believe that I am able to leverage other people's research and come with my own conclusion - this will save a lot of time. Therefore I am moving towards equity investments that offers high dividend yield play.

Obviously there are also things that many did not foresee or expected including me; crash of the oil price towards $30 and China's spectacular 2nd stock market crash (a temporary blow for my PRS). This is why macroeconomics is interesting especially on the global level.

What are my plans?
Here I outline my financial plans for 2016 and these are just highlights; I will go thru them in detail as I go along posting more in the coming weeks. Here are some things you should know first.
  • Risk correlates with expected returns (per annum); the more risk it has I will certainly expect more returns and vice versa; e.g. you can also lose that much. 
  • (New) is something I will add into my portfolio this year. (Add) would mean to increase allocation in an existing holding. (Maintain) is simply holding it for the time being.

Risk: Low; Expected Returns: ~4% or less
(New) RHB Cash Management Fund 2 (see link) - Class: Malaysia Money Market
(Add) AmDynamic Bond - Class: Malaysia Bond (see link)
(Add) Affin Hwang Select Bond - Class: Asia Bond (see link)

Risk: Medium; Expected Returns: 6%-8%
(Maintain) Affin Hwang Select Income Fund (see link) - Class: Asia Ex Japan Conservative 70% Fixed Income 30% Equity
(Add) Malaysian REIT for high dividend yield play - Class: Malaysia Property
(Add) Selected stocks for high dividend yield play - Class: Malaysia Equity

Risk: High; Expected Returns: 10%-12%
(Maintain) Kenanga Growth Fund - Class: Malaysia Equity
(Maintain) Aberdeen Islamic World Equity Fund - Class: Global Equity
(Add) CIMB Principal PRS Asia Pacific ex Japan Equity Fund - Class: Asia ex Japan Equity

Risk: Very High; Expected Returns: ~13 or more
(Add) Eastspring Investments Small-Cap Fund - Class: Malaysia Small to Medium Companies Equity

(Maintain) 11% for EPF contributions - Tax savings & more retirement surplus.
(Maintain) Continue existing insurance policies and endowment plan. No addition.

The above constitutes my active wealth management strategy; a life long learning process and funds can be adjusted on need basis. The only true purpose for this portfolio is to simply make more money from money. EPF remains the core passive retirement fund which is not really adequate therefore I need my active strategy. Insurance forms the basis of wealth protection as well as last resort emergency funds (from policy surrender value).

I did mentioned before that one should "look for safer alternatives even though it offers lower returns". This is where RHB Cash Fund, AmDynamic Bond & Malaysian REIT/selected equities come into the core strategy. Here is where the bulk of the allocation will go.

PRS continues to be an auto include for three reasons; [1] Cheap valuation; more so after the recent selldown (see link) [2] Tax deductible up to RM3k [3] In for the long haul e.g. until retirement age; this reason compliments [1].

Es Small Cap fund is an opportunistic investment ONLY as the small cap index (see below) is experiencing correction. If it falls further say towards 13000-14000 I would say that it is a good chance to load it up. The potential of +ve return comes from starting at a low base that has good upsides going forward.

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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