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.


KCLau
KCLau

Personal finance author and trainer

    21 replies to "Public Far East Select and China Select Fund Review"

    • money chaser

      I appreciate the fact that you did not turn this into a marketing post considering your position as a public mutual agent.

      I agree that China and the Asia Pac region in general will be seeing both higher growth and volatility in the coming years, hence the high risk nature of the funds as you mentioned above. I’m looking forward for your post on how to reduce this risk by having a balanced portfolio.

      Great post.

    • […] up to my previous post commenting about Public Mutual’s Far-East Select Fund and China Select Fund, Lim would like to know more about the right mix of high risk and low risk investment. In other […]

    • kclau

      Thanks money chaser, if you are doing any research or something, you can consider guest blogging at my blog too 🙂

    • money chaser

      I feel privilege to be invited to guest blog. Thank you.

      I’ll definitely send you an article if I have the time to write anything but for now I will stay as a loyal reader of your blog.

    • cloudie

      Hi KC, can I know what is the difference between capital growth and capital appreciation? pretty confused on this. Thank you very much!!

      cloudie

      • KCLau

        I think they are the same.

    • SGTeo

      What’s the best fund to invest in nowdays. Thanks in advance.

      • Louis

        It is hard to say which fund is the best. From my past experience, the fund performance cycle will change every 3 months. My advise are as follows:

        1. Choose no. 1 unit trust company in Malaysia, the company must has the most share of the market. It is obviously Public Mutual, which owns 40% of market share as per 31/5/2010.

        2. Look for the top 5 performing Malaysia funds most of the time, choose 1-3 funds which suit your risk. (Get advise from your agent). Now is not the good time to buy China funds.

        3. Buy them

        4. Go to Public Mutual Office to sign up free online service so that you can monitor your fund and be the first one to run away when something serious happen to market. Public Mutual Online service allows investors to do switching online.

        5. I admit the service charge for Public Mutual fund is high. For cash investment itself, the service charge is 5.5%. If you are going to buy Public Mutual funds for long term, make sure you be an agent yourself and save the commission.

        6. You might be wondering why I don’t recommend Fundsupermart funds, the funds are so cheap in terms of service charge, 1-2%. Well, it is all up to you, I prefer to buy from a no.1 unit trust in Malaysia and has won 135 awards since year 1999. To me, the performance and brand name is more important than the upfront service charge. You can easily earn back the high upfront charge with good performing funds.

        Hope these help….

    • RGin-Drink

      hi,

      what ever happened to this fund? can u advise? i invested in it and it doesnt seem to want to come out of its slumber…..

      advise?

      RGin

    • karen

      i have invested a fair bit in china select fund for 25cents (launching). to date, i have not got any returns yet since 2007. can u pls advise me should i wait for the best return? when is the best return?

      • Louis

        If I am not wrong, Public Mutual fund will only start declaring distribution after the fund is 3 years old. I think this year the fund will declare distribution. To date (30/7/2010), the fund is making lost of 25.56%. If you sell now, you will make lost. I would say keep it there until it starts making money, In my opinion, China market is expected to grow greatly in 5 yrs time.

        • karen

          Thanks Louise for enlightening me. the only way i can think of is to wait for good opportunity to sell all my pcsf asap with good returns ., sigh…. still waiting for a good time….. i felt foolish to hold that many for 20 cents and now its dropping like mad everyday and i have no more confidence to leverage it any loongerrrrrr. pls advise. thanks again.

          • Netmask8

            Greetings & G’Day,
            In latest economic report, China is the 2nd largest country in term of GDP overtaking Japan(now stand at 3rd placing). China’s growth (in %) is excellent year-by-year basic. Perhaps you may want to wait for years ( perhaps year 2015 or beyond ) to grow the seed to become high profit yields.
            http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

            Do not sell your units now, as once you sold your units, you are already make losses. Assume that i’m in your shoe now, i will buy more units now, to get “average cost” / lower cost of my purchase.. When business & economies get better (perhaps year 2015 ) you’ll definitely consider to sell it. Remember, China is the 2nd biggest GDP country in the world now and always look for long-term investment.

            Hold it tight and have good confidence in China Economies & Asia regions.
            Hope you have a fruitful investment ..

    • Netmask8

      For me, i will sell all the units and put it into blue chips banking/finance stocks like Public Bank, CIMB or Maybank.

      Beside the high yield yearly dividents, it also gave better Return Of Investment(ROI) confidence appreciation.

      From my view In Mutual Funds, the director / mgmt fees ate up your profits margin.

      Just a Thought.

    • komathi

      Hi,

      I had a bad experience via dumping in my hard earn cash in china select fund in 2007. till now im making loss, almost RM10k. since its almost 4-year i have decided to sell of everthing and dump in Public Itikal. Although the fund price is very high but they never neglect to declare dividend for every year which could average down our purchase price. the reason i did not take out the $ coz i want to gain back wateva i lost it!

      So far, i feel my investment in UT is the biggest mistake because the same about i have dumped in share i.e. blue chips are giving awesome returns. capital 1005 growth hence good dividen pay master.

    • ong yi

      I have the similar loss and almost lost confidence but still looking positive on China economic outlook in long run. Just top up some money into this fund to average down the investment cost. Any comment from you guys?

    • ong yi

      I have the similar loss and almost lost confidence but still looking positive on China economic outlook in long run. Just top up some money into this fund to average down the investment cost. Any comment from you guys?

    • Hari

      Insurance is protection. I want Cary it like asset not as liability…
      how to choose the best insurance policy like asset……
      Any idea guys?

    • kennyfoo

      how can i know when is the lowest price for me to enter??? even Public Mutual website don’t even show the actual charting for the mutual funds. All the do is showing the performance. As an investor, I’m sure to look at the best profit that I can earn from this fund that i have invested. There is know charting tools provided at all. With no information, how to do technical analysis???

    • Iota

      Hi KC

      Just wondering, would you think it’s better to actually put all money into 1 trust or multiple trust?.
      I just top up my epf into unit trust and my agent proposed to put into PFES and not into my other funds. So now i have 4 funds. I thought if all in same fund that you have more units right?

      • KCLau

        You can also diversify into different unit trust fund. It is also a form a diversification when the funds invest with different objective (or in different market)

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