Two days ago I covered the Bonds category: Aboi's Updates For Malaysian Bond Mutual Funds for 1H'2016. 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. |
[1] My previous picks for Flexible (Es Inv Dyanmic) and Conservative (Affin Hwang SIF) continue to do well and their rankings are maintained.
[2] It's a different story for Balanced (Affin Hwang SBF). This fund was previously exposed to Malaysia but has changed its mandate to invest in Asia. This has not gone well as evident from its 1 year return. I am putting my recommendation on hold until I get another round of data on 2H'2016.
[3] As of this writing, I continue to own Affin Hwang Select Income Fund (+36.24%, 5.1 years holding period) which has exposure in Asia ex Japan and has been performing within my expectation (6% to 8% returns per annum).
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.
Eastspring Inv Bal used to be under my watch list but now I am recommending it. This is because Affin Hwang Select Balanced is now considered beyond Malaysia (now Asia), Eastspring will stand alone in its category and that is within Malaysia. The drawback: high Std Dev value of 10.64% (in a way behaving more like a Flexible fund rather than a Balanced one) so have some caution there. In a flexible fund it can be as high as 100% equities as the manager see fit therefore it boils down to your investing risk level.
Why not RHB-OSK Smart Balanced? It's scary. Even though it is a 50/50 balanced fund, its 50% equities portion is invested in Small-Medium Caps. You can clearly see the Std Dev of 13.91% (the highest among all and behaves a lot more like an Equity fund instead).
Affin Hwang Select Income continues to be my choice (for safer reasons). But note that RHB-OSK Smart Income has been giving far better returns in 2013 & 2015 only and thus making it look better especially for the 3-years and 1 year returns. Like it's bigger brother Smart Balanced, it is also invested in Small-Medium Caps. Sharpe ratio is explained with the higher Std Dev (double of that of SIF).
[2] It's a different story for Balanced (Affin Hwang SBF). This fund was previously exposed to Malaysia but has changed its mandate to invest in Asia. This has not gone well as evident from its 1 year return. I am putting my recommendation on hold until I get another round of data on 2H'2016.
[3] As of this writing, I continue to own Affin Hwang Select Income Fund (+36.24%, 5.1 years holding period) which has exposure in Asia ex Japan and has been performing within my expectation (6% to 8% returns per annum).
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 used to be under my watch list but now I am recommending it. This is because Affin Hwang Select Balanced is now considered beyond Malaysia (now Asia), Eastspring will stand alone in its category and that is within Malaysia. The drawback: high Std Dev value of 10.64% (in a way behaving more like a Flexible fund rather than a Balanced one) so have some caution there. In a flexible fund it can be as high as 100% equities as the manager see fit therefore it boils down to your investing risk level.
Why not RHB-OSK Smart Balanced? It's scary. Even though it is a 50/50 balanced fund, its 50% equities portion is invested in Small-Medium Caps. You can clearly see the Std Dev of 13.91% (the highest among all and behaves a lot more like an Equity fund instead).
Affin Hwang Select Income continues to be my choice (for safer reasons). But note that RHB-OSK Smart Income has been giving far better returns in 2013 & 2015 only and thus making it look better especially for the 3-years and 1 year returns. Like it's bigger brother Smart Balanced, it is also invested in Small-Medium Caps. Sharpe ratio is explained with the higher Std Dev (double of that of SIF).
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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