Tuesday, July 31, 2012
Malaysians Not Ready To Retire
Some 94% of Malaysians believe that having enough money to live on during retirement is important, a survey found. However, only 60% of the respondents who believe so say they feel adequately financially prepared for retirement while another 34% feel they are not when they are out of the workforce.
The survey on The Future of Retirement: The Power of Planning was conducted by Cicero Consulting for the HSBC group. It covered 17,000 respondents in 17 countries, with 7,300 from Malaysia, Singapore, China, India, Taiwan, Hong Kong, South Korea, Saudi Arabia and the UAE. The survey aimed to explore changing attitude towards retirement and are financial planning.
According to the results, Malaysians grasp the fact that they need to plan and prepare for life after retirement. They tend to worry about not having saved enough to cater for unforeseen circumstances and the cost of ill health, with 68% of the respondents saying that they are either very worried or slightly worried about their financial preparedness in retirement.
“In Malaysia, most respondents expect their savings and investments to provide for them in retirement, with only 9% relying on state provision as their largest source of income. While it is a concern that 12% do not know what their main source of retirement income will be, this is lower than in most of our surveyed countries,” stated the report.
Twenty-three percent of Malaysian respondents plan to rely on savings and investments to provide for retirement, followed by 9% who cited stocks and/or shares investments, wages or salary from paid employment, and state pension or social security as their main source of income after retirement.
Eight percent of respondents have their own individual personal pension scheme, while 4% of them plan to utilise their rental income or sell their primary residential property. Other means of retirement funds included selling assets tied up in property (3%) and support from children or descendants (2%).
In terms of planning for their retirement financial needs, the survey concluded that Malaysians are the most prolific financial planners of all nationalities surveyed as 60% of Malaysian respondents consider themselves as active, self-guided planners, compared with only 22% of global respondents who say the same.
“A greater onus will be put on individuals to prepare for their own retirement and, fortunately, Malaysia leads the world in financial planning behaviour: 84% of respondents have financial plans for the future. This remarkably high level suggests that our respondents are thinking independently and proactively about their future; especially since 60% of respondents are self-guided planners, who do not consult advisers,” the report said.
The survey findings revealed that those with a financial plan enjoy several benefits over those who do not. The benefits are not only in terms of greater and more diverse retirement savings, but also a more positive outlook and less worries about later life, according to the report.
Younger people are leading the way in financial planning, with 86% of 30- to 39-year-olds having a financial plan compared with 81% of 50- to 59-year-olds, the survey found.
Source: The Edge Malaysia (http://www.theedgemalaysia.com/personal-finance/198731-malaysians-fret-over-financial-preparedness-in-retirement.html)
The survey on The Future of Retirement: The Power of Planning was conducted by Cicero Consulting for the HSBC group. It covered 17,000 respondents in 17 countries, with 7,300 from Malaysia, Singapore, China, India, Taiwan, Hong Kong, South Korea, Saudi Arabia and the UAE. The survey aimed to explore changing attitude towards retirement and are financial planning.
According to the results, Malaysians grasp the fact that they need to plan and prepare for life after retirement. They tend to worry about not having saved enough to cater for unforeseen circumstances and the cost of ill health, with 68% of the respondents saying that they are either very worried or slightly worried about their financial preparedness in retirement.
“In Malaysia, most respondents expect their savings and investments to provide for them in retirement, with only 9% relying on state provision as their largest source of income. While it is a concern that 12% do not know what their main source of retirement income will be, this is lower than in most of our surveyed countries,” stated the report.
Twenty-three percent of Malaysian respondents plan to rely on savings and investments to provide for retirement, followed by 9% who cited stocks and/or shares investments, wages or salary from paid employment, and state pension or social security as their main source of income after retirement.
Eight percent of respondents have their own individual personal pension scheme, while 4% of them plan to utilise their rental income or sell their primary residential property. Other means of retirement funds included selling assets tied up in property (3%) and support from children or descendants (2%).
In terms of planning for their retirement financial needs, the survey concluded that Malaysians are the most prolific financial planners of all nationalities surveyed as 60% of Malaysian respondents consider themselves as active, self-guided planners, compared with only 22% of global respondents who say the same.
“A greater onus will be put on individuals to prepare for their own retirement and, fortunately, Malaysia leads the world in financial planning behaviour: 84% of respondents have financial plans for the future. This remarkably high level suggests that our respondents are thinking independently and proactively about their future; especially since 60% of respondents are self-guided planners, who do not consult advisers,” the report said.
The survey findings revealed that those with a financial plan enjoy several benefits over those who do not. The benefits are not only in terms of greater and more diverse retirement savings, but also a more positive outlook and less worries about later life, according to the report.
Younger people are leading the way in financial planning, with 86% of 30- to 39-year-olds having a financial plan compared with 81% of 50- to 59-year-olds, the survey found.
Source: The Edge Malaysia (http://www.theedgemalaysia.com/personal-finance/198731-malaysians-fret-over-financial-preparedness-in-retirement.html)
Saturday, July 28, 2012
Unit Trust And Its Importance
Basic Forms of Investment
On the table we can see the basic forms of investments which most people have, starting with the savings account which is barely an investment and is more for liquidity – cash on hand whenever you need it. Naturally, it then progresses to FD, which is the fixed deposit where there is a 3.15% per annum. Credit investors are ready to lock in your money. EPF is provided to working employees as a form of retirement planning. From EPF you can earn 4-6% per annum in recent years. Unit trusts, meanwhile, could actually yield you with potentially higher returns, and they have no lock-in periods. Unit trusts range from low to high risk. Other investment options include a wide variety of money markets, bonds, stocks, property, and REITs, to name a few.
What are unit trusts?
What are unit trusts? Where do they stand among all these instruments? A unit trust is a portfolio that invests into all the investment instruments I mentioned. Basically, it is a basket of stocks or equity funds, bond funds that invest in corporate bonds, money market funds which invest into the money instruments, REIT funds, and property funds. It is well diversified locally and globally. You may a piece of U.S., Europe, or China by investing into unit trusts. It is managed by professional fund managers from top fund houses in Malaysia or foreign fund managers. What I mean by foreign fund managers is that this manager is managing from abroad in foreign markets which are being sold in Malaysia and carried by the local fund house.
Types of Unit Trust
Going on to the types of unit trusts on the market, there are five categories, and you can also find this information in your fund selecter tool at fundsupermart.com. There is the equity market, the balanced market, the fixed income market, the money market, and alternative investments. What do we mean by all these different types of categories? You can see that this money market fund has a risk rating from 0-1. So it is not very risky to put your money into the money market funds. The reason being, it is very low on volatility, the money will just be put in there to grow. You have the domestic fixed income funds, meaning this money is being invested domestically. The risk rating is from 1-4.
Global and regional fixed income funds have a currency exposure, and there is a slightly higher risk rating of about 4-5. After that, you have the global equity funds and the regional or sector equity funds. This risk rating is the highest, from 7-10. You have your investments in countries which are outside of Malaysia, and they are invested into either blue chip stocks or a fund that invests into small cap companies. The balanced fund has a risk rating from 4-9. From 4-6 I think would be pretty balanced and not too risky, and from seven onwards it is a high-risk market.
All the funds can invest into different geographical locations. Just because you are in Malaysia doesn’t mean that you should be constrained to invest in the home market. You can, of course, but you can also open up your options to investing into Asean, Asia (including/excluding Japan), and Australia, to name a few.
How to Choose the Right Unit Trust Fund
Now comes the most important question. With so many concentrations, how can I invest and choose the right fund? Firstly, understand how much risk you can stomach. Secondly, you should create and maintain an investment portfolio. What we mean by investment portfolio is you can have more than one fund from the same geographical location or fund category. This means if you have a unit trust where you invest in China, for example, you can buy 5000 units in China and you can also be allocating another 5000 to maybe Indonesia, and another 5000 into a fixed income fund which is not very risky. This is what we mean by a portfolio. Thirdly, you should set the comfortable investment horizon for yourself. Unit trusts usually invest in wall street for five years. I would be lying to you if I told you that you should by unit trusts and then sell them off without keeping it for very long or that you could get a very big profit within a short period of time. Unit trusts are a long term inv estment and is for investors who believe in keeping their money inside and letting it grow, let it ride through the normal economic cycle. There are good times and bad times, of course, and when you have hit your target return you can sell you funds. This brings us to my last point, that you have to set your expectations to match the portfolio performance.
Conservative Unit Trust Portfolio
There is a portfolio for everyone. We start with a conservative portfolio. What is a conservative portfolio? You have 90% of your money in fixed income and only 10% in equity. If you invest RM10000, for example, you should have RM9000 in fixed income and only RM1000 in equity. It gives a very slow but steady return. What we mean by a steady return is that it’s stable, it’s low risk, and you do not need to manage it actively. You will be keeping this portfolio for at least three years or more.
Moderately Conservative Unit Trust Portfolio
Next we have the moderately conservative portfolio. For the moderately conservative portfolio we invest 70% in fixed income and 30% into equity. For the 70% into fixed income, again with the example of RM10,000 is RM7,000 and another RM3000 into the equity fund. This shouldn’t be a problem because for most of the unit trusts in Malaysia the investment amount starts with RM1000. This portfolio can give you reasonably good returns and is for investors who are able to bear a little bit of risk. This is a medium to long-term portfolio and you should be able to stay here for three years or more.
Aggressive Unit Trust Portfolio
Lastly we have the aggressive portfolio. It is not for the faint hearted, but if you are able to stomach the volatility that goes on in the market with all the ups and downs, you should be able to have an aggressive portfolio. You invest into global, regional, or single country equity. It has high risk and with high risk you are able to generate higher return. The investment horizon you are looking at is maybe 10 years or more. Most of the listeners out there are thinking, “10 years!? I mean, I’m putting my money in there for 10 years? How much return do I expect to have? First and foremost, of course, you will be wanting to beat inflation. Secondly, the purpose of the portfolio is to plan for your retirement, or you could be planning for your children’s education, planning for your new house, or anything like that. 5 years should be a very good time for you to keep your portfolio.
How can you Invest in Unit Trusts?
How can one invest into unit trusts? Say you are interested in having this portfolio, you can invest in a lump sum investment by cash or check. You can also invest using your EPF or you can invest periodically using the regular saving plan. Most investors are reluctant to reconsider their EPF for investment purposes and are content with the dividend yield.
The dividend yield which is given for this past year’s annualized return was a 6% dividend, but if you had taken that money and invested it in unit trusts you could have made 18.33%. This unit trust we are using as an example was taken from a Malaysian unit trust. The EPF does not allow its members to take out their money; the unit trust is invested in to foreign markets, so you have to be investing into malaysian unit trusts.
Even Malaysian unit trusts can give you 18.33% for the year of 2011. Meanwhile, for a three year annualized return, from 2008 to 2011, the unit trust can give 28.48% return. This is annualized, so every year you are getting 28.48%. That is compared to the EPF’s interest of 4.75% on this graph.
Should you Withdraw your EPF money to Invest in Unit Trust funds?
A lot of investors are reluctant to give up their EPF for investment purposes. They are content with the dividend yield, but if you take away the erosion of inflation you may be left with little of the dividend.
The EPF body has allowed its investors to withdraw some savings from account one for unit trust investments. Is it worth it? If you judge from this slide, I think you can see that since the money is in there for the long run, perhaps you can pick it up and make your money work harder for you.
How much of your EPF account 1 money can you take out for your investment? This goes by age. You are not allowed to take out 100% of your EPF account one. I will give an example for a thirty year old. We just need to fill in your account one amount, your age, and then subtract the basic savings. For a thirty year old with 50,000, if you refer to the table, is 50,000 – 18,000, and then 20% of that money is 6,400.
You can use this for investment. So, actually, its not the entire 50,000 that you can pick up and invest. It is the 6,400 which you can invest and it will generate 28% return for you over a year. Why not take a little bit out? Ask for it and take out your money to invest. When you settle this investment it eventually goes back to your EPF as well.
Why you should invest regularly, both in good and bad time with unit trust?
Investing in both good and bad times: To invest in regular timing means to avoid market timing. You should be disciplined to invest consistantly regardless of market conditions. As we look at this chart, how many of you have experienced this before or have already seen this chart?
The point of euphoria is at the top of market. Usually investors feel great and it is usually the time that they buy more. When it goes down to a point of maximum financial opportunity at the bottom you have depression. Investors will usually think, “Maybe the market is not for me. You can see this is a cycle that repeats itself. When it is going up you want to ride on the optimism and you want to invest more. But during that time it is not a very good time to invest.
Avoid Timing the Market
If you want to be an investor in both good and bad times, you have to avoid timing the market, talking about unit trusts. For stocks you have to try to time the market but to know if your time is correct or not, it depends. You need discipline to invest consistently and to not be overcome by your emotions. You need to choose the undervalued market. I’ll quickly explained what an undervalued market is, and you can also refer to our reccomended funds for fund ideas.
When I talk about being consistent and not timing the market, I just want to say that the unit trust is designed to ease the investment slide. The regular savings plan will help investors to achieve their first few coins.
This is a monthly subscription plan which instills discipline to the investor and it is a based on automatic deduction. There are no additional fees for this. With this the investor can also avoid the market timing and not be overcome by the emotion of investing. Every month there is a dedicated amount to be put into the specific fund that you like; it can be any fund. It gets rid of the hastle for you because you don’t need to manually put in an order and make the payment. This is about investing discipline.
Make profit by investing in the under-valued market
I mentioned to choose the undervalued markets. Over here we have the greater China market, and also the emerging markets. Why is it so? If you look at this chart, it is actually for greater China. Greater China consists of China, Hong Kong, and Tiawan. For year 2012 we have PE, which is the price ending ratio of any investment or primary you look at. Estimated PE is what is being calculated now, what is happening now, and the fair PE is what it should be at. There is a lot of potential for these countries that they are not reaching yet. You can see for the year 2012, China. for example, had an estimated PE of 9x, but in fact we think a fair PE should be at least 14x.
Any difference between the 9x PE and the 14x PE is a discount. What we mean by discount is that you are investing into this cheap market, which has more potential than where it has come. Upset potential ranges from 43.6% for Tiawan and 32.3% for Hong Kong to 45.2 for China by the end of 2013. China’s economy is e xpected to grow by an estimated 8.25% to 8.5% in 2012 and 2013. So their growth is expected to be faster than any developed market.
There are probably already a lto of people out there saying that China is good for investment, but some of our listeners who may have China funds may feel not so because maybe their China fund is now showing negetive returns. Given the current market condition, I would like to ask, there are a lot of other countries giving a negative return but when we revisit the chart that I showed just now, does this mean that there is no room for investment? We don’t know if it has hit the bottom yet, but at least according to our PE calculations these are actually cheap markets with good value that you can consider investing into.
On the table we can see the basic forms of investments which most people have, starting with the savings account which is barely an investment and is more for liquidity – cash on hand whenever you need it. Naturally, it then progresses to FD, which is the fixed deposit where there is a 3.15% per annum. Credit investors are ready to lock in your money. EPF is provided to working employees as a form of retirement planning. From EPF you can earn 4-6% per annum in recent years. Unit trusts, meanwhile, could actually yield you with potentially higher returns, and they have no lock-in periods. Unit trusts range from low to high risk. Other investment options include a wide variety of money markets, bonds, stocks, property, and REITs, to name a few.
What are unit trusts? Where do they stand among all these instruments? A unit trust is a portfolio that invests into all the investment instruments I mentioned. Basically, it is a basket of stocks or equity funds, bond funds that invest in corporate bonds, money market funds which invest into the money instruments, REIT funds, and property funds. It is well diversified locally and globally. You may a piece of U.S., Europe, or China by investing into unit trusts. It is managed by professional fund managers from top fund houses in Malaysia or foreign fund managers. What I mean by foreign fund managers is that this manager is managing from abroad in foreign markets which are being sold in Malaysia and carried by the local fund house.
Going on to the types of unit trusts on the market, there are five categories, and you can also find this information in your fund selecter tool at fundsupermart.com. There is the equity market, the balanced market, the fixed income market, the money market, and alternative investments. What do we mean by all these different types of categories? You can see that this money market fund has a risk rating from 0-1. So it is not very risky to put your money into the money market funds. The reason being, it is very low on volatility, the money will just be put in there to grow. You have the domestic fixed income funds, meaning this money is being invested domestically. The risk rating is from 1-4.
All the funds can invest into different geographical locations. Just because you are in Malaysia doesn’t mean that you should be constrained to invest in the home market. You can, of course, but you can also open up your options to investing into Asean, Asia (including/excluding Japan), and Australia, to name a few.
How to Choose the Right Unit Trust Fund
Now comes the most important question. With so many concentrations, how can I invest and choose the right fund? Firstly, understand how much risk you can stomach. Secondly, you should create and maintain an investment portfolio. What we mean by investment portfolio is you can have more than one fund from the same geographical location or fund category. This means if you have a unit trust where you invest in China, for example, you can buy 5000 units in China and you can also be allocating another 5000 to maybe Indonesia, and another 5000 into a fixed income fund which is not very risky. This is what we mean by a portfolio. Thirdly, you should set the comfortable investment horizon for yourself. Unit trusts usually invest in wall street for five years. I would be lying to you if I told you that you should by unit trusts and then sell them off without keeping it for very long or that you could get a very big profit within a short period of time. Unit trusts are a long term inv estment and is for investors who believe in keeping their money inside and letting it grow, let it ride through the normal economic cycle. There are good times and bad times, of course, and when you have hit your target return you can sell you funds. This brings us to my last point, that you have to set your expectations to match the portfolio performance.
Conservative Unit Trust Portfolio
There is a portfolio for everyone. We start with a conservative portfolio. What is a conservative portfolio? You have 90% of your money in fixed income and only 10% in equity. If you invest RM10000, for example, you should have RM9000 in fixed income and only RM1000 in equity. It gives a very slow but steady return. What we mean by a steady return is that it’s stable, it’s low risk, and you do not need to manage it actively. You will be keeping this portfolio for at least three years or more.
Moderately Conservative Unit Trust Portfolio
Next we have the moderately conservative portfolio. For the moderately conservative portfolio we invest 70% in fixed income and 30% into equity. For the 70% into fixed income, again with the example of RM10,000 is RM7,000 and another RM3000 into the equity fund. This shouldn’t be a problem because for most of the unit trusts in Malaysia the investment amount starts with RM1000. This portfolio can give you reasonably good returns and is for investors who are able to bear a little bit of risk. This is a medium to long-term portfolio and you should be able to stay here for three years or more.
Lastly we have the aggressive portfolio. It is not for the faint hearted, but if you are able to stomach the volatility that goes on in the market with all the ups and downs, you should be able to have an aggressive portfolio. You invest into global, regional, or single country equity. It has high risk and with high risk you are able to generate higher return. The investment horizon you are looking at is maybe 10 years or more. Most of the listeners out there are thinking, “10 years!? I mean, I’m putting my money in there for 10 years? How much return do I expect to have? First and foremost, of course, you will be wanting to beat inflation. Secondly, the purpose of the portfolio is to plan for your retirement, or you could be planning for your children’s education, planning for your new house, or anything like that. 5 years should be a very good time for you to keep your portfolio.
How can one invest into unit trusts? Say you are interested in having this portfolio, you can invest in a lump sum investment by cash or check. You can also invest using your EPF or you can invest periodically using the regular saving plan. Most investors are reluctant to reconsider their EPF for investment purposes and are content with the dividend yield.
The dividend yield which is given for this past year’s annualized return was a 6% dividend, but if you had taken that money and invested it in unit trusts you could have made 18.33%. This unit trust we are using as an example was taken from a Malaysian unit trust. The EPF does not allow its members to take out their money; the unit trust is invested in to foreign markets, so you have to be investing into malaysian unit trusts.
Even Malaysian unit trusts can give you 18.33% for the year of 2011. Meanwhile, for a three year annualized return, from 2008 to 2011, the unit trust can give 28.48% return. This is annualized, so every year you are getting 28.48%. That is compared to the EPF’s interest of 4.75% on this graph.
A lot of investors are reluctant to give up their EPF for investment purposes. They are content with the dividend yield, but if you take away the erosion of inflation you may be left with little of the dividend.
The EPF body has allowed its investors to withdraw some savings from account one for unit trust investments. Is it worth it? If you judge from this slide, I think you can see that since the money is in there for the long run, perhaps you can pick it up and make your money work harder for you.
You can use this for investment. So, actually, its not the entire 50,000 that you can pick up and invest. It is the 6,400 which you can invest and it will generate 28% return for you over a year. Why not take a little bit out? Ask for it and take out your money to invest. When you settle this investment it eventually goes back to your EPF as well.
Investing in both good and bad times: To invest in regular timing means to avoid market timing. You should be disciplined to invest consistantly regardless of market conditions. As we look at this chart, how many of you have experienced this before or have already seen this chart?
The point of euphoria is at the top of market. Usually investors feel great and it is usually the time that they buy more. When it goes down to a point of maximum financial opportunity at the bottom you have depression. Investors will usually think, “Maybe the market is not for me. You can see this is a cycle that repeats itself. When it is going up you want to ride on the optimism and you want to invest more. But during that time it is not a very good time to invest.
If you want to be an investor in both good and bad times, you have to avoid timing the market, talking about unit trusts. For stocks you have to try to time the market but to know if your time is correct or not, it depends. You need discipline to invest consistently and to not be overcome by your emotions. You need to choose the undervalued market. I’ll quickly explained what an undervalued market is, and you can also refer to our reccomended funds for fund ideas.
This is a monthly subscription plan which instills discipline to the investor and it is a based on automatic deduction. There are no additional fees for this. With this the investor can also avoid the market timing and not be overcome by the emotion of investing. Every month there is a dedicated amount to be put into the specific fund that you like; it can be any fund. It gets rid of the hastle for you because you don’t need to manually put in an order and make the payment. This is about investing discipline.
Make profit by investing in the under-valued market
I mentioned to choose the undervalued markets. Over here we have the greater China market, and also the emerging markets. Why is it so? If you look at this chart, it is actually for greater China. Greater China consists of China, Hong Kong, and Tiawan. For year 2012 we have PE, which is the price ending ratio of any investment or primary you look at. Estimated PE is what is being calculated now, what is happening now, and the fair PE is what it should be at. There is a lot of potential for these countries that they are not reaching yet. You can see for the year 2012, China. for example, had an estimated PE of 9x, but in fact we think a fair PE should be at least 14x.
Any difference between the 9x PE and the 14x PE is a discount. What we mean by discount is that you are investing into this cheap market, which has more potential than where it has come. Upset potential ranges from 43.6% for Tiawan and 32.3% for Hong Kong to 45.2 for China by the end of 2013. China’s economy is e xpected to grow by an estimated 8.25% to 8.5% in 2012 and 2013. So their growth is expected to be faster than any developed market.
There are probably already a lto of people out there saying that China is good for investment, but some of our listeners who may have China funds may feel not so because maybe their China fund is now showing negetive returns. Given the current market condition, I would like to ask, there are a lot of other countries giving a negative return but when we revisit the chart that I showed just now, does this mean that there is no room for investment? We don’t know if it has hit the bottom yet, but at least according to our PE calculations these are actually cheap markets with good value that you can consider investing into.
Thursday, July 26, 2012
Our Partners
Partners Profiles
Meet our partners
We offer you a range of products from our unique multi-product platform to suit your every need through strategic alliances with our reputable partners:
Create
CIMB-Principal Asset Management Berhad
Hwang Investment Management Berhad
OSK-UOB Investment Management Berhad
TA Investment Management Berhad
Protect
AIA Bhd
AIA AFG Takaful Bhd
Preserve
CIMB Trustee Services
As-Salihin Trustee Berhad
FAQ
General FAQ
A.UNIT TRUST INVESTMENT
Get to know more about Unit Trust Investing, Trust Nomination and Financial Planning.
1. What is 'Capital Appreciation'?
A form of profit from a unit trust investment, it refers to the appreciation of a particular unit trust fund's NAV per unit.
2. What is 'Income distribution'?
A form of profit as it is an income earned by a particular unit trust fund and given out to its investors. An investor may decide to reinvest the income distribution to own more units. No service charge is applied when reinvesting the income distribution, but will be subjected to terms and conditions.
3. What is 'Unit split'?
An exercise by the fund management to increase the affordability of the particular fund's Net Asset Value per unit. This will increase the units in circulation in the fund while lowering its Net Asset Value per unit.
4. What is an optimum investment period?
We encourage a period of at least 3 years, although you are allowed shorter periods.
5. What is 'Forward Pricing'?
A practice we adopt to ensure fairness in unit trust fund transactions including investing, redeeming or switching funds. Every transaction submitted will be based on the next published NAV per unit.
6. What is the 'Cooling-off Period'?
The time period when the investor has the right to cancel the initial investment, with a full refund within 6 business days. At CWA, we allow the cooling-off period for first time investors but not for our staff and consultants.
7. What are the main types of investment plans available?
Cash – Lump sum investment or Cash Plan
Cash – Regular Saving Plan (Auto Debit, Direct Debit, MEPS Direct Debit from Bank accounts)
EPF Investment Scheme
8. What does a regular saving plan mean?
It is an auto-deduction facility with your bank for unit trust investment. CWA partner banks that provide the facility are:
CIMB
BSN
RHB
MBB
BIMB
Citibank
Deutsche Bank
Hong Leong Bank
OCBC
PBB
Standard Chartered Bank
HSBC
Bank Rakyat
9. What would you receive as the confirmation details for your unit trust investment?
Confirmation Advice Slip is given with every investment (Quarterly statements are given with Regular Savings Plan)
Yearly Statement of Account
Unit Split Statement / Distribution Statement (if any)
10. What documents you need to provide for setting up an initial investment?
a) EPF
Account Opening Form
Transaction Form
KWSP 9N Form
Photocopy of NRIC
Photocopy of Police or Army ID - employer's letter confirming that the NRIC number refers to the same person (if applicable).
Pre-Investment Form
b) Cash
Account Opening Form
Transaction Form
Photocopy of NRIC
Photocopy of joint holder's NRIC (if applicable)
Photocopy of Birth Certificate (if joint applicant is below 21 years of age)
Payment – Cheque, banker's draft, money order or cashier's order
Pre-Investment Form
The payee's name on cheques or banker's drafts for unit trust investment is: CIMB Wealth Advisors Berhad. The investor's name must follow his or her identification document and as that written on the Transaction Form.
11. What would be the payee's name on cheques or bankers drafts for unit trust investment?
The payee's name should be written as CIMB Wealth Advisors Berhad for (or behalf of) the investor's name. The investor's name must be the same as his or identification document and as that written on the Transaction Form.
12. What documents are required of the beneficiaries, upon the demise of the unit trust holder?
Declaration Form
Redemption form or Transfer form
Release Letter (if this is EPF Investment scheme)
Letter of Administration certified by Commissioner of Oath or Solicitor
Death certificate certified by Commissioner of Oath or Solicitor
Photocopy of beneficiaries' NRIC certified by a Commissioner of Oath or a Solicitor.
B.TRUST NOMINATION
1. What are the documents required for setting up a Trust Nomination?
a) New unit holders (individual or joint) need to provide the following:
Account Opening Form
Transaction Form
KWSP 9N Form (EPF investment only)
Photocopy of NRIC – 1 copy each for the principal and the joint-holder (if any)
Photocopy of NRIC/Birth Certificate - 1 copy each for the beneficiary/beneficiaries
Trust Nomination Application Form & Declaration of Trust
Cheque payable to CIMB Trustee Berhad for Trust Nomination
Note: In the case of a Joint Account in setting up a Trust Nomination, both the principal and joint holder must agree by signing the Trust Nomination Form.
b) Existing unit holders need to provide the following:
Photocopy of NRIC – 1 copy each of the principal and joint holder (if any)
Photocopy of NRIC/Birth Certificate - 1 copy each for the beneficiary/beneficiaries
Trust Nomination Application Form & Declaration of Trust
Cheque payable to CIMB Trustee Berhad for Trust Nomination’
2. Upon the demise of the unit holder (settler-trustee), what do the Trust Nomination beneficiaries have to do?
The beneficiaries are required to submit the following to CWA:
Death Certificate as certified by a Commissioner of Oath
Letter of Indemnity signed by the beneficiaries
Redemption Form or Transfer Form
Photocopy of their NRIC
Release Letter if part of EPF Investment Scheme
C.FINANCIAL PLANNING
1. What exactly is financial planning?
It's charting your future plans by getting to know your present financial position, through our 6 steps solutions and how you can attain your desired goals. Let us give you a hand in setting the right directions, picking the options that suit you best and putting them together to reach your aspired goals.
2. Why do we need financial planning?
The ultimate goal for many of us is to achieve financial independence. It helps when our financial needs have been identified and provisions have been in place. Think of it as a 'big picture' plan which makes sense of all the various components of our financial jigsaw – taxation, cash flow, debt, investment, employee benefits, insurance protection, inheritance, etc etc.
Financial planning addresses these common life goals:
Financial freedom during retirement
Preparing future expenditure such as marriage, funding the children's education, or for a potential business
Increasing our ability to manage unforeseen circumstances – serious illness, unemployment, business opportunity or accidents
Improving our success rate if we are faced with a financial crisis – death or a breadwinner or business failure
Caring for aging parents.
3. What are the fees involved?
This depends on the range of service you select and the complexity of your financial requirement. Our one time professional fee usually starts from RM500 and includes the initial analysis, strategy recommendations and specific proposals in implementation.
4. What is our scope of financial planning services?
Our comprehensive financial planning involves reviewing your current financial position by way of cash flow, lifestyle needs and investment. We can also help determine your resources required for funding your life goals by factoring into the whole, adverse events like death, disability or loss of income.
5. What is the role of a Financial Planner?
A professional financial planner provides holistic advice covering a complete spectrum of financial options, compatible with your goals and aspirations. He or she will guide you on what's needed for investment, which funds to use, discuss potential risks and can help launch a savings plan into an effective financial life plan.
6. Is financial planning only for the wealthy?
We prefer to think it is for the wise!
Our customers are career professionals, business owners and individuals from all walks of life. Like them, you too can learn that financial planning helps your chart your life goals in a clear, concise manner. Of course, the intention is to make our customers wealthier than when they started.
7. What is the right age to start financial planning?
We say, as early as you can.
Even though you might have just graduated and looking to find your desired career. Start now and get the hang of financial planning as soon as possible.
The more and better prepared you are, the more capable you will be in managing the twists and turns in life.
Sunday, July 22, 2012
Malaysia's Islamic Unit Trust
First launched in the UK in 1931 by M&G, unit trusts are a form of investment by companies or individual who pool their money to make large-scale investments in selected portfolio of securities. Within Malaysia, unit trust started with the formation of Malayan Unit Trust Ltd. in 1959. Government agencies started formulating regulations during the early years but it was in the 80s that the industry started to bloom. The setting up of Amanah Saham Nasional (ASN) by Permodalan Nasional Berhad (PNB) in 1981 drew overwhelming response.
With an ingenious distribution channel, unit trusts nowadays are reaching the investing public even more. Post 1997-Asian financial crisis saw the emergence of Islamic funds as the popular type of unit trust issued by providers. Securities Commission regulates the Malaysian unit trust industry and it defines the Islamic capital market as “the market where the activities are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam.” In other words, the ICM represents an assertion of religious law in the capital market transactions where the market should be free from the involvement of prohibited activities by Islam as well as free from the elements such as usury (riba), gambling (maisir) and ambiguity (gharar), added the SC website. To better strengthen this new banking reality, the Securities Commission established a Syariah Advisory Council (SAC) in 1996, to advice on all matters pertaining to Islamic Capital Market, including that of unit trust. The eight members of the Syariah Council would naturally be best there is in Syariah – both knowledgeable and experienced as well as having a sound Islamic economics and finance background.
The Chairman, Syariah Chief Justice Datuk Sheikh Ghazali Hj Abdul Rahman resides over seven other representatives from UIA, UKM, a Mufti, an Islamic bank’s securities director, a Human Rights Commissioner, and one each from Angkasa and a private company. To advise on all matters within the Islamic Unit Trust industry, SC has appointed a total 26 syariah individual advisers and 4 syariah corporate advisers, all distinguished scholars related to the industry. Broken into four main categories to reflect its investment emphasis, Islamic Unit Trust in Malaysia is made up of Equity Funds (40 funds), Balanced Funds (17), Bond Funds (15) and Other Funds (5). An equity unit trust is the most common type of unit trust where a major portion of its assets are held in equities or securities of listed companies in the Malaysian stock market, which is the largest equity market in South East Asia.
The performance of the units is therefore linked to the performance of the market. A rising market will normally give rise to an increase in the value of the unit and vice-versa. In Islamic unit trusts, funds can only be invested in “halal” stocks that are not only involved in the Haram business like gambling, alcoholic beverages and the production of non-Halal products, but also exclude shares of companies that are involved in conventional banking, insurance or financial services. The returns of the Islamic Unit Trust will also avoid the incidence of 'riba' or usury interest through the process of cleansing or purification by the removal of such amounts representing the interest element.
Such proceeds are normally donated to charities. As of September 2005, there are 36 unit trust management companies managing 331 approved funds in the overall unit trust industry that circulates some 99.6 billion units in the hands of 10.7 million unitholders. With the active role played by governing body the Securities Commission and the commitment showed by Malaysia’s Central Bank, the Islamic Unit Trust market has indeed played a complementary role to the Islamic banking system in broadening and deepening the Islamic financial markets in Malaysia.
source:islamic-invest-malaysia.com
Choosing Unit Trust
There are many unit trusts funds from which to choose, but having considered the type of fund or funds most likely to meet your needs, you have already narrowed down your choices considerably.
The next logical step is to decide which unit trust fund to invest in.
What To Look For ?
A random check will confirm most, if not all, investors would look at the performance or investment results.
Unfortunately, it is impossible to predict a unit trust's future investment performance. This will depend on the type of fund, the general market trends and the investments which a fund manager picks.
Most managers would provide the past performance tables that normally show the total returns since inception or how much an initial investment made several years ago would be worth today with any income reinvested.
Look at the performance of the funds but do not pay too much attention to period of a year or less - external factors beyond the control of the managers may have influenced results - a high flyer may not stand the test of time. Ideally, a fund showing consistent performance over a long period, the longer the better.
Check the performance of a company's other funds to make sure that it was not just a bit of luck with one fund.
Do not let another type of fund take your fancy just because it has produced better results than the one you had initially chosen. It may be more risky and may not meet your requirements.
However, be warned, past performance figures are no guarantee of the future. A fund that has performed well in the past may not do so in the future and vice versa. Go to Fund Performance for fund comparisons.
Do's and Don'ts of Choosing a Unit Trust Fund
Do
-Decide which type of unit trust fund meets your saving needs.
-Shop around for a reliable unit trust company
-Check whether investment limits, frequency of income payments, etc, are suitable
-Check past performance records
Don't
-Don't choose any unit trust fund just because its performance has been good, make sure it is the right fund for you.
-Don't pay too much attention to short term performance, good consistent performance over all periods is the best lead.
-Don't decide on a unit trust fund just because it has low charges, good performance is far more important
-Don't borrow to invest in unit trust unless you are absolutely aware of the risk involved.
Source:islamic-invest-malaysia.com
The next logical step is to decide which unit trust fund to invest in.
What To Look For ?
A random check will confirm most, if not all, investors would look at the performance or investment results.
Unfortunately, it is impossible to predict a unit trust's future investment performance. This will depend on the type of fund, the general market trends and the investments which a fund manager picks.
Most managers would provide the past performance tables that normally show the total returns since inception or how much an initial investment made several years ago would be worth today with any income reinvested.
Look at the performance of the funds but do not pay too much attention to period of a year or less - external factors beyond the control of the managers may have influenced results - a high flyer may not stand the test of time. Ideally, a fund showing consistent performance over a long period, the longer the better.
Check the performance of a company's other funds to make sure that it was not just a bit of luck with one fund.
Do not let another type of fund take your fancy just because it has produced better results than the one you had initially chosen. It may be more risky and may not meet your requirements.
However, be warned, past performance figures are no guarantee of the future. A fund that has performed well in the past may not do so in the future and vice versa. Go to Fund Performance for fund comparisons.
Do's and Don'ts of Choosing a Unit Trust Fund
Do
-Decide which type of unit trust fund meets your saving needs.
-Shop around for a reliable unit trust company
-Check whether investment limits, frequency of income payments, etc, are suitable
-Check past performance records
Don't
-Don't choose any unit trust fund just because its performance has been good, make sure it is the right fund for you.
-Don't pay too much attention to short term performance, good consistent performance over all periods is the best lead.
-Don't decide on a unit trust fund just because it has low charges, good performance is far more important
-Don't borrow to invest in unit trust unless you are absolutely aware of the risk involved.
Source:islamic-invest-malaysia.com
Thursday, July 19, 2012
CIMB-Principal biggest winner at The Edge-Lipper awards
KUALA LUMPUR: CIMB-Principal Asset Management Bhd won the Best Overall Fund Group award at The Edge-Lipper Malaysia Fund Awards 2012 held here yesterday. It also bagged six other awards to become the biggest overall winner at the event this year.
The fund house’s winning funds were CIMB-Principal Equity, CIMB Islamic Balanced Growth, CIMB Islamic Equity and CIMB Islamic Balanced, which picked up awards in their respective categories for various time frames.
“We are proud to be accorded this award that recognises as well as validates our funds’ consistent performance. We at CIMB-Principal are focused on harnessing top-billing performance to provide utmost value to our investors, supported by good portfolio risk management practices and continuous diligent risk oversight by our investment committee,” said CIMB-Principal CEO Campbell Tupling at the awards ceremony.
“In line with our vision to be Asean’s most valued investment manager offering total asset management solutions, we will continue to develop products and expertise as a regional house, strengthening our retail and institutional business growth not just in our four core markets, but across the region.”
Winning Edge...The Edge Communications Sdn Bhd managing director Tan Boon Kean (sixth from the left) and Alexander Looijen, business manager for Asia Pacific ex Japan -Lipper at Thomson Reuters (seventh from the left) with winners of The Edge-Lipper Fund Award in Kuala Lumpur yesterday.
In the individual categories, Public Mutual Bhd — a unit of Public Bank Bhd — was also a big winner, picking up eight awards. AmInvestment Services Bhd won the award for Best Bond Fund Group again this year, while Pacific Mutual Fund Bhd won the award for Best Equity Fund Group for the second year running. MAAKL Mutual Bhd won the award for Best Mixed Assets Fund Group.
Koh Huat Soon, chief investment officer of Pacific Mutual Fund, said the award gives the fund a little more visibility although the performance of the funds would speak for themselves, as what matters most to investors is the company’s ability to deliver decent returns.
“This year, we will do the same in term of intensity, and aim to continue the streak of success as this is the third year that the company has managed to win the award for best fund house. We will continue the strategy as it seems to be a proven formula to provide a good performance every year,” said Koh after the awards ceremony.
In his address, The Edge Communications Sdn Bhd managing director Tan
CIMB Investment Bank CEO Datuk Charon Wardini Mokhzani (centre) with the Best Overall Fund Group Award which was presented to him by Tan (left) and Alexander Looijen, business manager for Asia Pacifcic ex Japan -Lipper at Thomson Reuters.
Boon Kean noted that it was interesting to observe how the winners performed given the volatility in the financial markets last year.
“At the start of 2011 many of us thought the worse of the financial crisis was over. And by then, the man and woman in the street had discovered a new acronym called QE1 — followed soon by QE2. Quantitative easing is a financial drug to temporarily ease the problems, but can become addictive. Given last year’s volatility, it will be interesting to see who are and how last year’s fund winners performed,” he said.
The Edge-Lipper Malaysia Fund Awards are held annually to recognise top-performing unit trust funds in the country. The event marked the 13th year the awards have been held.
Only funds that have done well for three years or more are recognised, and winners are determined based on the Lipper Leader ratings for Consistent Return, a risk-adjusted investment performance return measure developed by Lipper, a Thomson Reuters company.
For the full analysis of the results, look out for a special pullout in The Edge this weekend.
The fund house’s winning funds were CIMB-Principal Equity, CIMB Islamic Balanced Growth, CIMB Islamic Equity and CIMB Islamic Balanced, which picked up awards in their respective categories for various time frames.
“We are proud to be accorded this award that recognises as well as validates our funds’ consistent performance. We at CIMB-Principal are focused on harnessing top-billing performance to provide utmost value to our investors, supported by good portfolio risk management practices and continuous diligent risk oversight by our investment committee,” said CIMB-Principal CEO Campbell Tupling at the awards ceremony.
“In line with our vision to be Asean’s most valued investment manager offering total asset management solutions, we will continue to develop products and expertise as a regional house, strengthening our retail and institutional business growth not just in our four core markets, but across the region.”
Winning Edge...The Edge Communications Sdn Bhd managing director Tan Boon Kean (sixth from the left) and Alexander Looijen, business manager for Asia Pacific ex Japan -Lipper at Thomson Reuters (seventh from the left) with winners of The Edge-Lipper Fund Award in Kuala Lumpur yesterday.
In the individual categories, Public Mutual Bhd — a unit of Public Bank Bhd — was also a big winner, picking up eight awards. AmInvestment Services Bhd won the award for Best Bond Fund Group again this year, while Pacific Mutual Fund Bhd won the award for Best Equity Fund Group for the second year running. MAAKL Mutual Bhd won the award for Best Mixed Assets Fund Group.
Koh Huat Soon, chief investment officer of Pacific Mutual Fund, said the award gives the fund a little more visibility although the performance of the funds would speak for themselves, as what matters most to investors is the company’s ability to deliver decent returns.
“This year, we will do the same in term of intensity, and aim to continue the streak of success as this is the third year that the company has managed to win the award for best fund house. We will continue the strategy as it seems to be a proven formula to provide a good performance every year,” said Koh after the awards ceremony.
In his address, The Edge Communications Sdn Bhd managing director Tan
CIMB Investment Bank CEO Datuk Charon Wardini Mokhzani (centre) with the Best Overall Fund Group Award which was presented to him by Tan (left) and Alexander Looijen, business manager for Asia Pacifcic ex Japan -Lipper at Thomson Reuters.
Boon Kean noted that it was interesting to observe how the winners performed given the volatility in the financial markets last year.
“At the start of 2011 many of us thought the worse of the financial crisis was over. And by then, the man and woman in the street had discovered a new acronym called QE1 — followed soon by QE2. Quantitative easing is a financial drug to temporarily ease the problems, but can become addictive. Given last year’s volatility, it will be interesting to see who are and how last year’s fund winners performed,” he said.
Only funds that have done well for three years or more are recognised, and winners are determined based on the Lipper Leader ratings for Consistent Return, a risk-adjusted investment performance return measure developed by Lipper, a Thomson Reuters company.
For the full analysis of the results, look out for a special pullout in The Edge this weekend.
EPF-MIS FAQs
1. What are the benefits investing via EPF?
- Potentially higher returns compared to savings and Fixed Deposits (FD)
- Diversification of retirement savings for reduced risk
- Effective alternative to long term investments
- You can use your EPF account 1 to invest if you meet the criteria.
3. What documents I need to bring upon sign-up?
- MyKad
- Latest EPF Statement
- Yes you can, provided no withdrawal made from your EPF account for the past 3 months.
- Yes, switching is allowed between funds currently available under the EPF-MIS scheme and is restricted to the same fund house.
- EPF withdrawals for investment can only be made for individual investments. No joint-holder or group investments allowed.
- No. You will only be able to transfer your investment once you reach the age of 55.
- You will receive your Investment Statement once a year
- You will also receive and Account Statement each time there is a movement of any number of units and also for every redemption made
- You will receive your Investment Statement once a year and Account statement whenever there is any movement in your funds.
Unit Trust Funds Available For EPF-MIS
CWA being an institution under the EPF-MIS (Members' Investment Scheme) enables you to invest part of your EPF Savings into its full range of unit trust funds.
Under this scheme, members can invest not more than 20% of their credit in excess of Basic Savings in Account 1. The minimum amount of savings that can be withdrawn is RM 1,000 and can be made at intervals of three months from the date of the last transfer, subject to the availability of the Basic Savings required in Account 1.
Estimated amount is just a guide as to how much is eligible for investment withdrawal. The actual amount can be obtained from the nearest EPF counters.
The following is the list of partner's unit trust funds available for Employees Provident Fund - Members Investment Scheme (EPF-MIS) effective 16 May 2011:
Under this scheme, members can invest not more than 20% of their credit in excess of Basic Savings in Account 1. The minimum amount of savings that can be withdrawn is RM 1,000 and can be made at intervals of three months from the date of the last transfer, subject to the availability of the Basic Savings required in Account 1.
Estimated amount is just a guide as to how much is eligible for investment withdrawal. The actual amount can be obtained from the nearest EPF counters.
The following is the list of partner's unit trust funds available for Employees Provident Fund - Members Investment Scheme (EPF-MIS) effective 16 May 2011:
Tuesday, July 17, 2012
EPF posts 18.5% increase in 1Q12 investment income
KUALA LUMPUR (June 5): The Employees Provident Fund's (EPF) investment income for its first quarter (1Q) ended March 31 this year rose 18.52% — or RM1.21 billion — to RM7.74 billion, compared to the corresponding period last year.
"The fund's performance was primarily driven by gains realised in equities when we capitalised on the positive equity market during the quarter by taking profits early in the year. The results for the quarter reflect the success of our active but disciplined investment approach that allows the fund to react when opportunities present themselves," said EPF CEO Tan Sri Azlan Zainol.
Investment income from equities for 1Q 2012 amounted to RM3.62 billion, a 12.08% increase compared to RM3.23 billion a year earlier.
Loans and bonds were the second largest income contributor, bringing in RM2.49 billion for the quarter compared to RM1.77 billion in the same period in 2011.
One of EPF's major investment transactions during the quarter was its subscription to the global sukuk issued by PLUS Bhd following the privatisation of PLUS Expressways Bhd in December 2011.
At the end of the quarter under review, EPF's total overseas exposure constituted 13.96% of its total investment cost.
In 1Q 2012, an additional US$1.2 billion (RM3.84 billion) of investments were made in global equities and real estate.
"In addition to global equity holdings, we plan to step up our investments in overseas real estate and infrastructure deals as well as Islamic and conventional bonds, taking into consideration the right opportunities, market movements and directions, with an intention to gradually increase our overseas exposure to between 18% and 19% of our total investments by the year-end,” he said in a statement on Tuesday.
However, Azlan assured members that the EPF is very selective and cautious in its global ventures and only invests in countries appropriate for the fund's risk-return profile.
"The move into international assets also does not mean that the EPF is shifting domestic investments out of the country as our domestic assets in terms of absolute amount has and will continue to experience positive average growth of about 4% per annum,” he added.
"Uncertainties surrounding the global economy, especially the ongoing sovereign-debt crisis in Europe, will continue to have a bearing on EPF's investment performance. While we predict a tough year going forward, we will hold firm to our long-term strategic asset allocation approach that provides the resilience necessary in the present challenging market conditions," Azlan said.
The Edge
"The fund's performance was primarily driven by gains realised in equities when we capitalised on the positive equity market during the quarter by taking profits early in the year. The results for the quarter reflect the success of our active but disciplined investment approach that allows the fund to react when opportunities present themselves," said EPF CEO Tan Sri Azlan Zainol.
Investment income from equities for 1Q 2012 amounted to RM3.62 billion, a 12.08% increase compared to RM3.23 billion a year earlier.
Loans and bonds were the second largest income contributor, bringing in RM2.49 billion for the quarter compared to RM1.77 billion in the same period in 2011.
One of EPF's major investment transactions during the quarter was its subscription to the global sukuk issued by PLUS Bhd following the privatisation of PLUS Expressways Bhd in December 2011.
At the end of the quarter under review, EPF's total overseas exposure constituted 13.96% of its total investment cost.
In 1Q 2012, an additional US$1.2 billion (RM3.84 billion) of investments were made in global equities and real estate.
"In addition to global equity holdings, we plan to step up our investments in overseas real estate and infrastructure deals as well as Islamic and conventional bonds, taking into consideration the right opportunities, market movements and directions, with an intention to gradually increase our overseas exposure to between 18% and 19% of our total investments by the year-end,” he said in a statement on Tuesday.
However, Azlan assured members that the EPF is very selective and cautious in its global ventures and only invests in countries appropriate for the fund's risk-return profile.
"The move into international assets also does not mean that the EPF is shifting domestic investments out of the country as our domestic assets in terms of absolute amount has and will continue to experience positive average growth of about 4% per annum,” he added.
"Uncertainties surrounding the global economy, especially the ongoing sovereign-debt crisis in Europe, will continue to have a bearing on EPF's investment performance. While we predict a tough year going forward, we will hold firm to our long-term strategic asset allocation approach that provides the resilience necessary in the present challenging market conditions," Azlan said.
The Edge
Thursday, July 12, 2012
EPF's global foray seen as beneficial
THE Employees Provident Fund (EPF) will offer its members greater exposure to global equities and global fixed-income markets. This follows the government's mandate to the EPF last April to invest up to 23% of its investment assets in international markets.
Going global adds diversity to an otherwise bland basket of local investments. "It is a good move to allow the EPF to increase its total assets in the international markets. A big chunk of its total assets are already invested in the Malaysian market," says Choo Swee Kee, executive director of TA Investment Management Bhd.
The EPF has been progressively increasing its global exposure. Last year, an additional US$5.54 billion (RM17.51 billion) worth of investments were made overseas. As at Dec 31, 2011, the fund's global investment assets contributed 13.37% of total assets. "Now, that is not alarming. Foreign investments will not increase quickly in a short period. I believe it will be be increased proportionately over time. However, there are risks when the assets reach the limit of 23%. That is close to a quarter of EPF's total assets, which is significant," opines Choo.
The EPF collects on average more than RM2 billion every month from its 13.15 million members. The members make a compulsory monthly contribution that is capped at 11% while employers can add up to 13%. Membership is mandatory for working Malaysian citizens and permanent residents. " The move to increase international exposure is aimed at enhancing returns. It allows the EPF to seek opportunities to improve its performance. This is as opposed to investing to maintain the value of its existing assets," says Danny Wong, CEO and executive director of Areca Capital Sdn Bhd.
Volatility across global markets is expected to continue and the global investment outlook is generally cautious. "Only certain markets in Asia, such as Singapore, Hong Kong and Thailand, are trading at a discount. Most institutional and retail investors have adopted a wait-and-see approach and are holding cash," says Azian Abu Bakar, executive director of Apex Investment Services Bhd.
While the move to allow the EPF to increase its international exposure is seen as beneficial, returns made will depend on the timing of the investment. "It may not be wise to increase its international exposure now. Perhaps, [it should] wait till the markets are more stable."
Wong, however, says the emphasis should be on asset allocation. "For instance, since the US recovery is not as strong as expected, it is quite good to go into its fixed-income papers now. Besides that, it also depends on the sectors, asset classes and markets that the EPF moves into."
"While it is wise to move part of the portfolio offshore, I am not sure about the EPF's competency in managing global assets. It makes sense for it to appoint external fund managers to manage the foreign portfolios," adds Wong.
Going global adds diversity to an otherwise bland basket of local investments. "It is a good move to allow the EPF to increase its total assets in the international markets. A big chunk of its total assets are already invested in the Malaysian market," says Choo Swee Kee, executive director of TA Investment Management Bhd.
The EPF has been progressively increasing its global exposure. Last year, an additional US$5.54 billion (RM17.51 billion) worth of investments were made overseas. As at Dec 31, 2011, the fund's global investment assets contributed 13.37% of total assets. "Now, that is not alarming. Foreign investments will not increase quickly in a short period. I believe it will be be increased proportionately over time. However, there are risks when the assets reach the limit of 23%. That is close to a quarter of EPF's total assets, which is significant," opines Choo.
The EPF collects on average more than RM2 billion every month from its 13.15 million members. The members make a compulsory monthly contribution that is capped at 11% while employers can add up to 13%. Membership is mandatory for working Malaysian citizens and permanent residents. " The move to increase international exposure is aimed at enhancing returns. It allows the EPF to seek opportunities to improve its performance. This is as opposed to investing to maintain the value of its existing assets," says Danny Wong, CEO and executive director of Areca Capital Sdn Bhd.
Volatility across global markets is expected to continue and the global investment outlook is generally cautious. "Only certain markets in Asia, such as Singapore, Hong Kong and Thailand, are trading at a discount. Most institutional and retail investors have adopted a wait-and-see approach and are holding cash," says Azian Abu Bakar, executive director of Apex Investment Services Bhd.
While the move to allow the EPF to increase its international exposure is seen as beneficial, returns made will depend on the timing of the investment. "It may not be wise to increase its international exposure now. Perhaps, [it should] wait till the markets are more stable."
Wong, however, says the emphasis should be on asset allocation. "For instance, since the US recovery is not as strong as expected, it is quite good to go into its fixed-income papers now. Besides that, it also depends on the sectors, asset classes and markets that the EPF moves into."
"While it is wise to move part of the portfolio offshore, I am not sure about the EPF's competency in managing global assets. It makes sense for it to appoint external fund managers to manage the foreign portfolios," adds Wong.
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