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21 comments:
Are good for me to invest in new launch fund or its better to invest in well established fund.......
Hi Usahawankekal,
I have written in my post #92 (http://www.unit-trust-investment.com/2008/05/92-best-time-to-invest-in-unit-trust.html) on buying newly launched fund.
Well, it's just my opinion. I usually don't go for new funds even if people say the potential upside is greater than the downside.
I only go for tried and tested products.
Hi Carson,
As UTC we need to do Risk Profiling for our prospects to know their risk profile before proposing any fund. 1) However, during this current economic downturn, is it still relevant for such profiling as most funds under PM are considered undervalued. E.g. under current PE Ratio, a moderate investor is advisable to place their investment at 70% equity & 30% Bond.
2) If client still insists on placing 100% in equity when he should be investing at 70/30, what is the best advice we can offer to our client as UTC?
EWL
Hi Werry E,
You are right on point 1. We need to do risk profiling and understand the client better before suggesting the funds to them.
I would suggest and not 'advise' them. They are different things. I would suggest and let the client decide which funds they want to go for. Advising would be likened more to asking them to just take your advice for it.
Now, regarding your point 2, sounds like you are the one insisting on something here. A client has the right to decide on whatever they want to do after you have put across your suggestion. They should be made to understand that they bear their own risk.
The market is cyclical. In this so-called economic downturn, I would not insist an investor on 70% equity and 30% bond. What if the market makes a quick upturn and your client is right in selecting to go for 100% equity?
How sure are you on the market's movement?
I would let the client decide whatever they want to do after they have listened to our suggestion. Thereafter, our duty is to monitor their funds performance regularly and keep them updated of what is their next course of action. Keep a watchful eye for them on their investment and give them suggestion from time to time whether they want to continue to do dollar-cost averaging, or switching, or cash out, etc.
Hi Carson,
1) May I know what makes up the annual return of a unit trust fund?
2) As we can't predict the future pricing of a particular fund, can we base our suggestion to client on the past annual return when suggesting a fund as this seems to be the norm of UTCs nowadays when trying to promote a fund?
Thanks
Werry,
1. The annual return of a unit trust fund is made up of two parts - the capital growth of the fund (the increase in the price) and the distribution or dividend given out yearly.
2. You may have heard of this phrase "Past performance is not an indication of future performance." For most Malaysian funds, their performance more or less mirror the KLCI. Therefore, if you have a good grasp of the local market, you will be able to know where the market is heading.
Using the past performance is only a guidance to show us where the market will head. There is a technique popularly used by traders ie. reading the charts. The chartists (as they are called) will use many methods to analyse the trend. Therefore, this is much better than buying a new fund that has no past performance record (no chart to analyse).
A fund with good performance record and awards to its name will show that it is well managed by the fund manager. In this so-called downturn, it is definitely a good time to buy and when the market picks up again, you will know that the same fund manager will help you to make profit. again.
How long does it take after the formation of an investment portfolio before its initial public offering?
Anonymous,
Sorry, I don't quite understand your question.
What I can say is the formation of an investment portfolio is usually developed in secret. Therefore, I have no idea how long it takes.
Hi Carson,
I just came across your blog. I would like to seek your expert advice on unit trust investing. What is the right way to invest in unit trust? From what I understand, there are a few ways.
Dollar Cost Averaging
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Dummy way of investing where every month allocate a fixed sum to invest in the fund whether the price increase or decrease.
Value Cost Averaging
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Create two funds, one bond and one equity. Invest fixed amount every month but percentage of allocation changes depending on how price increases or decreases.
My question is about value cost averaging. How do we know when is the fund price too high and requires a switch to bond fund or vice versa?
Hi Daniel Chew,
Yes, there are a few ways on investing unit trust.
You are right to say that Dollar Cost Averaging (DCA) is the dummy way of investing. DCA is good if the fund is forever in an uptrend. Something like bond fund. I don't recommend it for funds that have big ups and downs.
Splitting the funds in Value Cost Averaging? Hmmm. This is again more or less like DCA.
I would recommend a third way: Maximizing your gains. The best way to maximize your gain is buy-low, sell-high. Understand the economy situation, which industry and market is booming. Invest in those sectors to achieve massive gain. Go with the trend. Go with the flow.
To understand the flow, feel the wind. To understand the trend, read the chart.
Remember, the first reason for investing is to make money. Look for the best way to maximize the amount that you can make in the shortest time.
i am a new utc.a potential client asks me- 'if the fund experience losses instead of profits, will i lose my money that i have invested?'--> how do i answers this questions?
Anonymous (UTC),
It is not a simple answer and needs more space than here.
Please see article #196 for the answer (http://www.unit-trust-investment.com/2009/12/196-losses-in-investment.html).
Hai Carson Ding,
Is it good to buy unit trust funds before distribution or after distribution to maximize my profit pls advice. thk
Anonymous,
It all depends on the trend. If you get the distribution and the price trends downward, you will still lose.
Don't chase after small profits and forget the big picture (capital).
Hi Carson
Just out of my curiosity. Are you working as a unit trust consultant for a spesific company like public mutual or CIMB?
Norizad,
I have stopped being a unit trust consultant. Focusing now only on managing my own funds.
If you wish to invest in Public Mutual, let me know. I can introduce to the unit trust consultant that I know.
Just curious, why are you asking?
Actually I have already invested in Public Mutual since 2006. Now I am thinking to become a part time unit trust consultant myself, but hopefully under a different unit trust consultant from my current one. He is not bad, but I think I can find a better one.
Hi, what does investment in unit trust operate through nominee system by IUTA means? Thanks
I wish to invest in Google Inc shares, which unit trust should i go for?
Unit Trust investing in Google Inc? None that I know of.
Unit trust operate through nominee system... don't really know what it means. Perhaps you can read the fund prospectus for more information.
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