Financial Review - Year 2011

It's a new year and a good time to look back on the year of 2011 to review my financial standings, i.e. what I have done great and what needs improvement. Here's the review for my financial situation:


The Great Stuffs:

1. Expenses: Compared to year 2010, expenses further decreased 8.6% despite the ever increasing inflation and larger spending amount during the year end sale 2011. Actually i surprised myself that i still manage to cut down expenses year after year.
2. Savings: Compared to year 2010, savings increased 20.5% over the year 2011. Again, this is great achievement despite the meagre increment and higher inflation in the year 2011. So far, I've managed to save on average 44% of my net household income.
3. Net worth: Compared to year 2010, net worth increased 31.2% over the year 2011. This is mainly due to the disposal of an investment property.
4. Stocks investment: Stocks portfolio has grown 2.5x mainly due to higher allocation to stocks investment. I cut some losses during the market riot in August, and yet still managed to churn out positive gains over the year 2011.

Asset Allocation - End June 2011

Portfolio review for Q2 2011 has been way overdue and I would like to apologize for the delay in updates to my portfolio holdings and its performance.

As compared to my portfolio in Q1 2011, there is some minor changes to the fund compositions in my Q2 2011 portfolio. I've switched my OSK-UOB Asian Growth Opportunities Fund (AGO) to OSK-UOB Resources Fund (RESO) as I feel that AGO fund is too volatile for my liking, even though i was making some profit on this fund. I've decided to concentrate my Asia Pacific ex-Japan exposure to only a single fund, Public Far East Select Fund (PFES).

Since I've switched to OSK-UOB Resources Fund (RESO), this fund will be my main fund for exposure to resources sector, although the resources exposure is limited to AP ex-Japan region, as compared to the global nature of previous holding of Pacific Global Agriculture, Infrastructure & Resources Fund (GAIR). I've disposed off GAIR fund in Q2 due to lack of performance as well as limited fund size.

Asset Allocation - End of March

Portfolio review for Q1 2011 has been way overdue and I would like to apologize for the delay in updates to my portfolio holdings and its performance. Based on my investment objectives for 2011, I've made significant changes to my unit trust portfolio.

At the beginning of the year, I've sold of Hwang-DBS Global Emerging Fund (HGEMF), Pheim Income Fund (PIF), Hong Leong Global Value Fund (GVF) and AmOasis Global Islamic Equity Fund (AmOasis) even though the first two funds have been generating positive returns to me. I've sold off HGEMF and bought AmGlobal Emerging Markets Opportunities (AmGEMO) because its comparative performance to HGEMF but with much lower sales charge at 2% on Fundsupermart online platform. I've also sold off PIF to concentrate on PB Fixed Income (PBFI) and AmDynamic Bond (AmDynamic) funds as my core fixed income holdings. As for GVF and AmOasis, I've hold these two funds for two and three years respectively and they have been underperforming their peers in the global equity and global islamic equity funds. Therefore, I sold off these funds at a small loss.

Financial Review - Year 2010

It's a new year and a good time to look back over the year of 2010 to review our financial standings, i.e. what we have done great and what needs improvement. Here's the review for my financial situation:

The Great Stuffs:

1. Expenses: Compared to year 2009, expenses decreased 2.3% despite the ever increasing inflation. This is a great achievement!
2. Savings: Compared to year 2009, savings increased 25% over the year of 2010. Again, this is great achievement despite the meagre increment and higher inflation in the year 2010.
3. Investments: A superb year in investments overall (especially local stocks/funds), thanks to the great rally of stock markets for most part of the year 2010.

The Not-So-Great Stuffs:

1. Overseas Investments: Returns have been relatively flat or slightly negative, mainly due to currency appreciation of Ringgit that diminished most of the returns of foreign funds which are usually dominated in USD.
2. Over cautious: I have been too pessimistic over the stock market rally for the past year, and too profit far too early. I should have also allocate more money for stocks rather than bonds.

Changes for Year 2011:
I expect year 2011 to be much more volatile with higher downside risks, mainly due to the long running rally over the past year. With this investment perspective, I would make changes to my investment portfolio as follow:

1. Focus on local investments: This is due to the more defensive nature of Malaysian stock market. Investments into local stocks/funds will be split into blue chips, dividend play and REITs.
2. Dollar cost averaging: Will start dollar cost averaging on local funds in anticipation of more downside risks, with some lump sum investments when the market crash/panics.
3. Streamline overseas investments: Further lump sum investments will be mainly on Asian and emerging market funds when the market crash/panics.

I will detail fund switching/new investments in the future articles whenever possible. So, what's your view on the performance of stock markets in the coming months?

Asset Allocation - End of September

Portfolio review has been missing for a few months. This is a deliberate decision from myself due to lack of investments for these few months. As witnessed, stock markets around the world have rocketed since the lows in mid March until end of September. Some of the most encouraging returns came from Asia Pacific ex Japan and emerging markets.

During the month of September, I've taken profit for some of the funds in my portfolio,  added Hong Leong Global Bond Fund into my stable of funds, and bought extra units in OSK-UOB Cash Management fund. In this review period, I've sold of some units from my Hwang-DBS Global Emerging Markets Fund (HGEMF) and Hong Leong Global Value Fund as well as took profit from OSK-UOB KLCI Tracker and Pheim Income Fund. The star performers during this month are HGEMFand Public Smallcap which have generated returns of 8.4% and 4.6% respectively.

Asset Allocation - End of April

April has been a good month for my portfolio. Most of the equity funds have shown gains in the range of 3 - 10% for the month of April. The most significant gains came from Public Far East Select Fund and Public Smallcap Fund which improved 11% and 10% respectively. With the recent gains, there are some funds that have out-grown the allocation in my portfolio. However, the over allocation percentage is still too small for me to take profit as yet. Here's the asset allocation for my portfolio in April as well as the March asset allocation for comparison purpose.

Asset Allocation - End of March

As mentioned in the previous post, my initial target allocation of my unit trust funds is as follow:

However, on end of March, I've modified my target allocations to increase the percentage of Public Far East Select Fund (PFES) from 7% to 10% and on the same time, reduce the weight age of OSK KLCI Tracker (Tracker) fund to 10%. This is due to expected positive outlook of returns for Asia Pacific markets and rather subdue performance of Bursa Malaysia of late. The new target asset allocation of my portfolio is as below:

Below is the asset allocation of my unit trust funds portfolio as of end of March.

As you can see, most of my funds are still underperforming and below my target asset allocation percentage, except for fixed income funds. As for Pheim Income Fund, I have yet to reduce the weight age of this fund in my portfolio since this fund has been holding up well to act as a performance buffer to my overall portfolio and also due to the volatility of stock markets. PFES and HGEMF are also performing well in March by gaining 6% and 8% respectively in my portfolio.

I do foresee more investments in those funds which are below the targeted allocation in the coming months especially when the market corrects heavily. I am looking at the window of opportunity sometime in April or May which had seen very selloff for the past two to three years.

My Unit Trust Portfolio

I began to construct my unit trust investment portfolio beginning end of June last year and below are some of my holdings in the portfolio.

1. OSK-UOB Cash Management Fund (CMF)
   
2. Pheim Income Fund (PIF)
3. PB Fixed Income Fund (PBFI)
4. Public Far-East Select Fund (PFES)
5. Public SmallCap Fund (PSmallCap)
6. OSK-UOB KLCI Tracker (Tracker)
7. Hwang-DBS Global Emerging Market Fund (HGEMF)
   
8. AmOasis Global Islamic Equity Fund (AmOasis)
9. HLG Global Value Fund (GVF)
10. ING Global Real Estate Fund (IGREF)

The main reason for having this portfolio is to construct a group of funds that invest in different niche areas of the stock markets locally and around the world, based on the following requirements:

• Local funds vs foreign funds
• fixed income vs equity
• for local equity funds, blue chip vs smallcap
• for global funds, equity vs properties
• for global funds, developed markets vs emerging markets
• asian fund
  

My targeted allocation % is shown in the pie chart below.

I will try to report on the fund performances and actual allocation percentage at every month end. Keep coming back for the latest reviews!