ASN or AS1M : Which one would you invest in?

For those lucky people who can no longer top up their investment in ASB due to the pre-determined  limit of 200k for each investor,you may like to look for other unit trusts in the PNB stable. The other products such as ASM,ASW,ASD have all been fully subscribed but you can still get them if you are willing to keep asking the agents whether some are available to be purchased. The downside is you need to have ready cash at that particular point of time the units became available. Who would be carrying that amount of cash just so you can capture the opportunity? Some smart people who trust such agents even leave their cash with the latter to enable prompt purchase.

Now for those who can invest in ASN, a variably priced unit trust, you may do so at any time without any limit. The recent dividend declaration of 6.30 for ASN, the highest in 12 years, may attract people to make additional investments specially in the first week in January 2013 following the issuance of dividend as the unit price will be low. Two to three months before the dividend declaration, ASN unit price shot up from a low of 0.8190 in January 2012 to about 0.89 to 0.90 in September to December.

I just want to work out whether investing in ASN is better than in AS1M at that rate of dividend. My friend told me last week that her friendly ASNB agent had called asking her to invest in ASN and take advantage of the low price post-dividend. She was wondering which one is better investing in ASN or AS1M?

Now let's suppose I want to invest 20k   in ASN at a unit price of 0.80, then calculating for the sales charge of 5% , the number of units due to me will be 24,750. Supposed I keep these units, despite appreciation, for dividend purposes and suppose the dividend rate for 2013 is still 6.30 sen, then the amount I expect to receive at unit price of say 0.82 is roughly RM1278 (with my capital of 20k (minus 5% towards cost of purchase). The dividend yield here is 7.8%. Please note the assumptions made.

Now supposed I want to invest 20k in AS1M at a fixed unit price of 1.00, without any sales charge, the number of units due to me will be 20,000. If the dividend is the same as last year, that is at 6.60, then the amount of dividend I would get is RM1320. The dividend yield here is 6.6%.

The dividend yield for ASN is higher because of its lower unit price. Since the price is variable, you could well get a better return if the unit price at dividend declaration is, say ,higher than 80 sen, eg if at 90 sen, then your return would be RM1403, surpassing AS1M's  by RM83.... hmmm, not that hot eh!

The main difference is in AS1M you have to keep your investment for 12 months to earn that return, otherwise it would be proportionate to the number of full months you invest, whereas in ASN it can be any number of months provided it shows up on the first day of the following month at the time of dividend declaration.

It could be a difficult decision if you wanted to invest a large sum but I suppose it would depend on your risk appetite. For the risk-averse, it is better to stick to the fixed-priced unit trust where your capital is protected but the gain may not be as high.

High dividend at 12.5 sen  (2010 and 2011) plus possible capital appreciation

Me?, I have just returned to my high risk mode by putting my money in a plantation stock last week after a two-year hiatus. As they say,high risk,high gain......and high loss!