The Prime Minister has finally launched the much talked about Amanah Saham 1Malaysia (also popularly known as AS 1Malaysia). The sale of the Amanah Saham 1Malaysia units will commence on August 5 and the initial offer period of 30 days will end on September 3.

Unlike other unit trust funds where the minimum initial subscription is 1,000 units, the Amanah Saham 1Malaysia’s initial mininum subscription is 100 units, with subsequent minimum subscription of just 1 unit! Each unit of the Amanah Saham 1Malaysia is priced at RM1.

The fund size totals some 10 billion units, so it seems like there will be quite a lot of units to be going around for sale. However, they are to be sold to the different races according to quotas again. So what’s this about being 1Malaysia? I thought 1Malaysia meant there being no divide amongst races.

Anyway, the quota for allocation of the funds to be sold according to race is as follows:

• 50% to be allocated to Bumiputeras
• 30% to be allocated to Chinese
• 15% to be allocated to Indians
• 5% to be allocated to other minorities

There is no specific mention of the returns of this fund. The only key that hints at a return rate is that it is benchmarked to the 5-year Malaysian government yields, which is currently between 3.7% to 4% per annum.

During the initial offer period, an accountholder is limited to a maximum purchase of 50,000 units if they are aged between 18 to 55 years old. For senior citizens above the age of 55, the maximum purchase is limited to 100,000 units.

Are you interested to buy this? I’m not. For one thing, the benchmarked returns are not satisfactory to me. And I also don’t like the idea of investing into something we are told to be a united trust fund for the country but yet it is still being sold by racial quota!

To read more personal finance and money related articles, visit Penny Sense.

Amanah Saham 1Malaysia for sale from Aug 5

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Good news for those who missed out on buying units of Amanah Saham Malaysia (ASM) the last round. You now have a chance to invest in these units again.

Permodalan Nasional Bhd (PNB) is opening up the remaining 1.6 billion ASM units for interested investors, without setting any quotas for bumiputras and non-bumiputras.

However, during the offer period of 21 July to 27 July, each investor is limited to a maximum purchase of 20,000 units.

After this offer period, there is no maximum limits and sale of the units will depend on availability of remaining ASM units.

So if you want to top up from your previous purchase or you missed your chance of buying, this is your second chance at investing in some ASM units.

You can read the full news release of this re-offering of Amanah Saham Malaysia units here.

To read more personal finance and money related articles, visit Penny Sense.

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I saw an ad in today’s paper about the newest fund in the market by Public Bank – the PB USA Recovery Fund. From what I understand reading the brochure, this is a structured fund and it’s 100% capital protected in Ringgit. This fund aims to capture the economic recovery of the US equity market in the next 5 years.

I downloaded a copy of the brochure but the more I read, the more confused I got. So I decided to call and speak to a warm body. Here’s what I found out about the PB USA Recovery Fund and how it works.

• 100% capital protected in Ringgit Malaysia at maturity
• A closed end fund with an investment tenure of 5 years
• It’s a structured product that invests:
  • 90% of the NAV of the fund into domestic bonds and money market instruments
  • 10% of the NAV of the fund into S&P 500 options
• It has a callable feature, which means that some targeted returns are set and once these targets are being met, the investment will be called and returns will be paid out to unit holders
• No annual management fees and no service charges
• Minimum investment to start with is RM100,000

I do believe that the US equity market has a great potential upside come 5 years from today when the economy takes a turn for the better. Everything about the fund, especially the promise of zero management fees and no service charges, seem to be attractive. But I’m quite appalled by the minimum investment amount of RM100,000.

But if you have that kind of money, would you go for this fund? If I had all that extra money sitting in a bank in some FDs, I will really consider this fund.

To find out more, you can read the brochure (download it from Public Bank’s fund info page) for detailed technical explanations of how this fund works.

To read more personal finance and money related articles, visit Penny Sense.

How does the new Public Bank’s PB USA Recovery Fund work?

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Everyone is asking what is a good investment to go into in today’s world of uncertainties. With the launch of the recent investment vehicles like the Sukuk Simpanan Rakyat and Amanah Saham Malaysia (ASM) which promise 5% annual returns, many Malaysians have rushed in to buy the units. They are indeed good investments in times when fixed deposits stand at 2% per annum, and at best 3% per annum on some promotional rates.

So if you have missed out on buying the Sukuk Simpanan Rakyat and Amanah Saham Malaysia units, what then do you plan to invest in so that you do not keep your cash idle?

I read the latest issue of Fundsupermart which has an interesting article that suggests 4 ways to invest to earn a steady stream of passive income. I find the 4 asset classes suggested to carry a good mix of risk appetite as a way to divest an investment portfolio. If you are more risk averse, you may want to choose what you regard as safer investment vehicles but if you are gamed for a little more risk, then go for it wisely.

Here are the four suggested asset classes put forth by the article in Fundsupermart which are relatively low risk in nature which will give you some reasonable returns and dividend over time.

1. Money market funds
2. Bond funds
3. REITs
4. High yield dividend stocks

Money market and bond funds are generally low risk investments as they place money in relatively safe debt instruments like commercial papers, treasury bills, fixed deposits, government and corporate bonds, etc. Returns on these investments won’t be very high as can be expected, since lower risk assets tend to offer lower returns. But when you average out the returns of all the instruments put together, you could potentially see better returns than the 2% fixed deposit rate.

REITs and equities are a little more volatile and hence more risky. But the idea is not to speculate on them to make your profit, but rather to reap steady payouts of good dividend and also on the growth of the stocks over the long term. The returns on them should be higher than the less aggressive funds above.

I think the suggested asset classes are quite sound. For someone like me who have no idea what to invest in right now, this seems like a good mix of a portfolio to get into. A note of caution for those who subscribe to the suggestions above, do exercise some caution when picking the funds or stocks to go into. Don’t just jump into the first money market fund of REITs you come across. Do a little bit of homework into each asset class to determine the rate of return and risk trade off that you are comfortable with.

What are you thoughts on the suggested asset classes above? Do you have more suggestions on what to invest in now?

To read more personal finance and money related articles, visit Penny Sense.

4 ways to invest for a steady stream of passive income

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During this period of economic downturn, many investors have suffered losses in all types of investments. No matter how diversified their portfolios are, the losses were inevitable in one form or another. The only hope is that there was a good mix of asset classes in there that could have helped to sustain huge losses.

Even for relatively safe investments like unit trust funds suffered. Before this economic crisis hit, many fund houses launched a suite of offshore and equity funds and we were all gamed like hungry investors. For those who have bought many equity funds, you will now see a lot of red in your fund statements. But not all funds are losers, fortunately. The more conservative ones have yielded rather good returns.

In the latest issue of Personal Money, the top 10 and worst 10 unit trust funds in 2008 were tabled and they are as follows:

Top 10 funds in 2008

Bond and guaranteed/protected funds have come out tops last year. And many of us wouldn’t have gone for bond funds as they were less interesting then. Does that now teach us a lesson that amidst all the sexier equity funds, we still need to put some eggs into safer and less sexy assets?

Worst 10 funds in 2008

Needless to say, equities did the worst of the lot, as can be expected. And I think this is where many of us got burnt. Well, perhaps not exactly burned just yet if you are still holding on to the funds. Wait it out, and wait for these funds’ performance to climb again when the economy recovers. After it has gone all the way down, there’s no where else to go but up!

So what kind of funds would you now think about going into? For a year now I’ve been interested in exchange traded funds (ETFs) but never made an attempt to lock in. There are only 3 ETFs in Malaysia so far, which are ABF Malaysia, FTSE Bursa Malaysia 30 ETF (FBM30etf) and MyETF Dow Jones Islamic Market Malaysia Titans 25 (MyETF-DJIM25). I’ve been eyeing the latter for over a year now. Now that the price has come down, it looks like an opportunity to invest.

ETFs slowly but surely gaining popularity domestically and in times like this, they are much safer bets than investing in stocks directly. In fact, today’s article in The Star wrote about them being the safer investments too.

For now, I’m not quite interested in purchasing unit trusts and will most likely make a start in investing in ETFs. What about you? Are you gamed in ETFs too?

To read more personal finance and money related articles, visit Penny Sense.

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• More Amanah Saham Malaysia (ASM) units for investors next week (3)
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• All that commotion on the ASM and ASW Wawasan 2020 quotas (5)
• Can the remaining 2 billion Amanah Saham Nasional units be opened to interested investors? (0)