Bond Fund
Lately, I am wanting to do some researches in bond fund as I intend to re-invest the spare cash from stock market into it. I have read from book that bond is the right vehicle. Bond provides a stable, relatively higher return than FD of bank and most importantly, has an opposite growth trend than share during an economy downturn.
However, my intention to make such a research comes to a "pleasant" end when I discovered her blog, Emily Wee where she has summarized the best funds base on criteria of >5% return in 1-year that available in Malaysia. It really save me a lot of researching works, either from internet or magazine.
From her result, and excluding those funds of ILP (Investment-linked product), I find that there are only a few bond funds that are attractive to my perception. Maybe I have a bigger appetite, my target is set at >7% return in 1-year horizon. That only leaves me with either RHB or Pheim funds. The objective of buying bond for me is to temporarily hedge from a possible stock market crash, thus I am primarily looking for bond that really outperform during that time, base on its price history. Unfortunately, all the top 3 bond funds are too new that they have no reference during last recession of 1997-1998 or even later 2000-2001.
My next closest choice is Public Bond Fund, which has only 5.02% of 1-year return (2.95% if follow data of Public Mutual site). I have managed to obtain a performance chart of the fund from Public Mutual website as below. The total return since inception (~10 years ago) is 130.75%, which is average ~8.6% p.a. effectively. I reckon this is quite good, especially it performed very good when stock market was bottoming (e.g. in year end of 2001). I will consider to invest some amount of money into it but not too large the portion. The obvious reason of course is its so-so performance (~3 or 5% p.a.) during normal time like now and only performed well when in the bad time. Definitely, I do not want to be cursed for looking forward to bad time because of this investment...hahaa
However, my intention to make such a research comes to a "pleasant" end when I discovered her blog, Emily Wee where she has summarized the best funds base on criteria of >5% return in 1-year that available in Malaysia. It really save me a lot of researching works, either from internet or magazine.
From her result, and excluding those funds of ILP (Investment-linked product), I find that there are only a few bond funds that are attractive to my perception. Maybe I have a bigger appetite, my target is set at >7% return in 1-year horizon. That only leaves me with either RHB or Pheim funds. The objective of buying bond for me is to temporarily hedge from a possible stock market crash, thus I am primarily looking for bond that really outperform during that time, base on its price history. Unfortunately, all the top 3 bond funds are too new that they have no reference during last recession of 1997-1998 or even later 2000-2001.
My next closest choice is Public Bond Fund, which has only 5.02% of 1-year return (2.95% if follow data of Public Mutual site). I have managed to obtain a performance chart of the fund from Public Mutual website as below. The total return since inception (~10 years ago) is 130.75%, which is average ~8.6% p.a. effectively. I reckon this is quite good, especially it performed very good when stock market was bottoming (e.g. in year end of 2001). I will consider to invest some amount of money into it but not too large the portion. The obvious reason of course is its so-so performance (~3 or 5% p.a.) during normal time like now and only performed well when in the bad time. Definitely, I do not want to be cursed for looking forward to bad time because of this investment...hahaa
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Labels: Bond Fund
posted by velo at 4:26 AM
6 Comments:
hi, im irwan from irwan.biz, using this old nickname.haha
so, how was it? have you bought some bonds? or are you waiting for economy slowdown before buying bonds?
Hi..Irwan, thanks for your visit. No, actually I'm at oversea now, will have to wait till next month to contact an agent and make the procedure. Also, have not decide the amount to invest yet. Do you monitor Public Bond price recently? From The Star website, only can get price history of 1 week. I wanted to see how the price at least in recent 1-2 months. Any suggestion?
no, i also don't know where to check the bond price history. btw, I'm going to oversea soon too. It will be hard for me to take control of my investment, especially in Mutual fund where the agent need my signature to sell the fund in case of bearish market. Right now, I will allocate most of my money in ASB, lower risk with acceptable return. What do you think.. is this a good move?
hi..Irwan, I have visited ur blog and u posted the same question there too. I am not familiar with ASB but if the yearly return is stable >8%, then i will say it is better. As I still think an economy slowdown (global and local) is imminent, I will not place any significant portion (>20%) of total money into investment that will be affected in a downturn, esp if i cannot change it with flexible. It's just my 2 cents though...
Hi Velo, many thanks :) for highlighting my site in your post. Besides bonds, I also compare the performance of Malaysian equity funds in case anyone's interested. Anyway, I think I have the answer to your question. Go to http://www.publicmutual.com.my/application/fund/performance.aspx and you can check out the historical performance. I quite like the Public Islamic Bond myself - reason: less supply compared to traditional bonds so price more stable even if interest rates rise. On Irwan's problem with selling off, I have pre-signed a switching/repurchase form - and just leave with my agent. That way, she can sell for me at a moment's notice. Alternatively you can sign up for "phone banking" and do it via phone. Quite convenient really :)
Thanks Emily for the link. I actually looking for individual daily price. The site only plot a chart showing the % return. Anyway, thanks a lot.
Yeap, u r right on the suggestion, i did that last time too. Irwan will be happy to know that.
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