Investing is full of risks. You need to determine what levels of risks you can tolerate before you plunge into the various financial products with variable inherent risks. The financial chaos beginning with the subprime crisis in the US, later called credit crunch then global financial crisis has taught valuable lessons to individual investors.
The lesson for me is not to hold your position too long. Lock down your profit at a reasonable percentage while the euphoria is still on. Do not be greedy. Choose your portfolio carefully. Between 2005 and 2007, I bought four mutual funds sold by my bank. I must admit, I did not look, let alone read their respective prospectus. I bought simply because at that time the fund was just being launched and the markets were doing well and I wanted to diversify from just having capital protected products with lower returns.
My frustration began when the funds depreciated at alarming rates especially those related to property equities and climate change. I have waited for close to four years for the funds to at least return my capital. Since March 2009, the prices have slowly appreciated. In October 2008 my losses were nearly 55%!
Now that the market is on its way to a recovery, I have to take risks to compensate for my current losses on two mutual funds, CIMB Principal Climate Change Equity at 42.46% and Pacific Advantage GDP Momentum Fund at 11.79%. I am dumping these two current non-performing funds at a loss of 22.03% and put whatever meagre remaining capital into the stock market. I am keeping Amglobal Property Equities Fund, though my current loss is at 45.08% as I have more confidence in its future performance depending on the recovery of the US property market. It seems that there is light at the end of the tunnel as people have to buy properties, sooner or later.
The climate change fund is a real let down from the beginning ,well before the financial crisis and is a sight for sore eyes. I want to move on and avoid this particular organisation-related fund managers like the plague!
The lesson for me is not to hold your position too long. Lock down your profit at a reasonable percentage while the euphoria is still on. Do not be greedy. Choose your portfolio carefully. Between 2005 and 2007, I bought four mutual funds sold by my bank. I must admit, I did not look, let alone read their respective prospectus. I bought simply because at that time the fund was just being launched and the markets were doing well and I wanted to diversify from just having capital protected products with lower returns.
My frustration began when the funds depreciated at alarming rates especially those related to property equities and climate change. I have waited for close to four years for the funds to at least return my capital. Since March 2009, the prices have slowly appreciated. In October 2008 my losses were nearly 55%!
Now that the market is on its way to a recovery, I have to take risks to compensate for my current losses on two mutual funds, CIMB Principal Climate Change Equity at 42.46% and Pacific Advantage GDP Momentum Fund at 11.79%. I am dumping these two current non-performing funds at a loss of 22.03% and put whatever meagre remaining capital into the stock market. I am keeping Amglobal Property Equities Fund, though my current loss is at 45.08% as I have more confidence in its future performance depending on the recovery of the US property market. It seems that there is light at the end of the tunnel as people have to buy properties, sooner or later.
The climate change fund is a real let down from the beginning ,well before the financial crisis and is a sight for sore eyes. I want to move on and avoid this particular organisation-related fund managers like the plague!
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3 comments:
I don't 'trust' these kind of unit trusts. That why I never invest with them. Their fund managers always ask investors to invest for long term to see the yield, but from my observation, they're failed or returns are not as high as from stock market.
However, I prefer the fixed price unit trusts like ASM, Wawasan 2020 & now 1 Malaysia, which give higher dividend (base on current track records) at the same time your investment values are protected.
Don't be sad over the loss in your investment in mutual funds. Make sure you don't repeat this. Remember this!
Hi AC,
Thank you for your kind advice. I am a bit wiser now. I have wasted a lot of money on these kinds of unit trusts. I will not buy any new ones. You are right, it is better to invest in blue chips in the stock market and capital protected PNB products.
By the way, I managed to lock in some profit by selling 50% of my SIME shares at 8.42 last Friday 14 Aug before the "tumble". The profit has compensated my mutual fund loss.
My UEMLAND is not doing well at the moment! But I can wait :)
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