Public Far East Select and China Select Fund Review

Recently I received an email from Lim, one of this blog’s readers. Lim is eager to learn. I asked his permission to share our discussion in this article. Here is the email I received:

I’m new to investing. I find your blog to be very interesting and I’m
seriously considering diversifying my savings for higher returns.I have heard a lot about funds from Public Mutual. What are your comments
about their Far-East Select and China Select fund? What is the rule of thumb
for a right mix of high and low risk funds?

Up to date, Public Mutual is still the biggest fund house in Malaysia. For your information, I am also a Public Mutual agent. Anyway, I am not going to say all the good things about my company. As usual, I will inform you all the pros and cons and let you make the decision yourself.

1. Public Far-East Select Fund

From the company’s homepage, you can download the financial reviews and prospectus here. Actually, you can get a lot of information just by reading their reviews and prospectus.

First let’s look at the objective of the fund:
To seek long-term capital appreciation by investing in blue chips and growth stocks in domestic and regional markets

Secondly, let’s look at the fund’s performance since launched on Nov 22, 2005.

For the first financial year period, the fund is actually performing lower than the benchmark. What we are looking for in a fund is how it perform compared to the benchmark. According to the interim report, the benchmark used for PFES is

The returns for the Fund’s Benchmark are accumulated daily with 70% of Ringgit-based returns from the Morgan Stanley Capital International Far East Ex Japan Index (MSCI FEXJ) and 30% of returns from the KLCI.

The fund merely beats the benchmark during the 2Q (second quarter) of 2007, giving a total return of 59.27% total return since launched. However, if you compare PFES to the similar fund such as Public Regional Sector, SBB Asian Equity, Pacific Asia Brands and OSK-UOB Asia Pacific, PFES is ranked number 1 according to the report on Personal Money Magazine July 2007 issue. No doubt that it is still the best choice if you want to diversify your portfolio broader into Asia Pacific region.

These are taken from the fund manager’s review:


The above report is for the period of Jan-June 2006. Malaysia, Singapore and Hong Kong is the best performing economic nation.

2. Public China Select Fund

This is a brand new fund which is launched on the 5th of June 2007 for high risk investors.

The fund objective is:
To achieve capital growth over the medium to long-term period by investing in a portfolio of investments in the greater China region namely in Hong Kong, China and Taiwan markets and including China based companies listed on overseas markets. The fund may also invest in companies listed on Bursa Securities and other foreign markets which have significant or potentially significant business operations in the greater China region.

Let’s look at the performance chart so far:

The fund had just passed the initial offer period and start investing at late June 2007. It is not fair to judge the fund performance by looking at such a short period of time. When we invest in a new fund, there is no history data for reference. So it is actually a risk we are taking here. That’s why most fund offer some bonus unit or service charge rebate to investors during the offer period. That’s the best time to buy a new fund. If you missed that period, it is still okay to invest if you don’t mind other earlier investor actually run ahead of you because they pay lower load. As long as the fund meet your investment objective, it is always worth investing in.

To diversify investment portfolio into China, we should justify the risk by looking at China’s economy as a whole. I suggest that you do some googling about China’s economy and stocks performance. There are many blogs out there commenting on China’s stock.

Bear in mind that nobody can ever predict the future accurately. Investment is always a risky activity. If you are an active investor, please go ahead invest in stock and bypass unit trust. You already save a lot by not paying the current service fees of as high as 6.5%. If you choose to be a passive investor, by applying some simple strategies you can actually reap good return from unit trust investment.

Lim, I will write another post about the mix of low risk and high risk funds, which is actually the right asset allocation or investment portfolio for an investor. Stay tuned and happy investing!

I would like to hear what you think about these funds. Please give us your view.