Amanah Saham 1 Malaysia...Have I got It Wrong?

Jumping on the Bandwagon
by Matt Hamm

Like many other eligible Malaysians, I happily acquired units from this PNB latest product, hoping to diversify my current capital- protected portfolio. However I have not been that excited lately as news of its low return has surfaced. As of Aug 25 only one fifth of the 10 billion units offered have been taken up forcing PNB to extend its offer deadline to one more month to September 30.

Have I bothered to read the prospectus before I acquired those units on Aug 5? A sheepish no! You know why? Because I was lazy to monitor my stock market portfolio, because I was getting risk-averse in the current market situation, because I listened to other people, because I trust PNB, because I was caught in the euphoria to ride on that bandwagon! So many unacceptable reasons. Now, the crux of my uncertainty is the following statement in the fund prospectus... read retrospectively of course:

The fund's returns will be benchmarked against the five-year Malaysian Government Securities (MGS).

The current yield of five-year MGS is about 3.7%, so the return is slightly higher than bank interest rates and, therefore, is not as attractive as previous Amanah Saham funds. The general feature of this equity income fund seems to be higher risk with low return so its risk reward ratio is not that favourable. The only upside is its high liquidity as there is no sales charge and it can be transacted at RM1 per unit.

Gee.... one always can be wise after the event... had I bought TM shares at 2.97 on Aug 5, the day I bought AS1M, I would have made a small fortune today as it has appreciated to 3.29! That would have been thrice the annual return for AS1M under the current rate... and what more, it is within a matter of six weeks! How can you lose with TM, the reliable blue chip. Still I cannot complain as I'd bought a sizeable TM shares at 2.62 out of investor's frustration and also as a form of dollar averaging, when the then price dropped drastically following TM's May capital repayment exercise... still could have made some more.... greed creeping in.



Roller-coaster ride

As for my AS1M investment, I will keep it there till after the dividends have been declared next year and take it from there, hopefully all the investment research houses are wrong and that the word "benchmarked" is only a rough guide such that the return could be higher, or at least comparable to other PNB fixed-price funds and alternatively MGS yield would have doubled by then?... But of course if the bull starts to awaken I might just get off the bandwagon ride and go on that roller-coaster ride instead... The thrill and the fun of it all...