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2014, AMIINCP:MK, bonds, fixed income funds, funds, fundsupermart, investing, investment, malaysia, mutual fund, mutual funds investment, OSKEMBF:MK, PHEINCF:MK, PRUBOND:MK, qe tapering
In the previous post on the rebalancing, I’ve shortlisted 4 possible fixed income funds that I would look into to increase my holdings of fixed income in my portfolio. Due to the recent OPR hike from Malaysian Central Bank of 25bps, the increase of this would most likely impact bonds with longer maturity period, thus one of the criteria is fund that focuses on short-middle term.
This particular fund has been rather consistent in return, and with a 1.35% expense ratio, my investment will most likely be break-even after the average inflation of 3.5%, and in years coming. The main reason I’m taking this into my view is because of the fund’s Directory of Portfolio Investment – James Lau. I’ve attended 2 of his sessions recently on the market outlook, and he has obviously impressed me with his experience and his willingness to share the end of bull run soon. Funds under his supervision has started pilling up cash reserves and wait for the next entry after the market has pullback. Besides, there’s a maximum 20% allowable asset allocation to focus on higher yielding instruments including equities, inclusive foreign countries investments.
Eastspring Investment Bond Fund(PRUBOND:MK)
This particular fund was a recommended fund from Fundsupermart, and my experience with Eastspring from the small-cap fund has made me to look into this. The expense ratio of 1.11% is lower on the Pheim Income Fund. From the portfolio study, this fund focuses highly on banks and financial institutions on its bond holdings. With the OPR rising, bringing up the interest rates, banks/financial institutions will be reporting a better business results. Traditionally, such event only affects the equities of banks, but since credit ratings is another factor that affect bond prices, and with good/better business results, banks with good credit ratings will be targeted. And with the cheap credit being pulled back soon (QE tapering), bond will again be in the limelight rather than equities, and with banks that’s reporting positive business outlook from the rising interest rates, their bond price will most likely go up.
RHB-OSK Emerging Markets Bond Fund(OSKEMBF:MK)
This fund carries an expense ratio of 1.57%, and act as a feeder fund into United Emerging Markets Bond Fund denominated in SGD. With SGD as the main currency, and looking at the outlook where SGD will most likely strengthening against MYR incoming years, this is a plus point to invest in this fund. Comparatively, this fund is more volatile than its others that I’ve covered in this post, due to the exposure to wider range of geographical regions and emerging markets. Looking into future, with QE pulled back soon in October, there will be higher volatility of the emerging markets when the credit is not cheap anymore. A simple thought to this is either to wait it out or start by accumulating units through regular investment.
This fund is by far with the lowest expense ratio, 0.82%. This fund is the one with short-middle term focus, and thus a better bet with the rising interest rates. Besides, it’s portfolio consists of mostly fixed income securities from banking / financial institutions. And it’s lowest grade in its holding is A, with majority of AAA grade at 47.76% of overall portfolio. However, it has been no income distribution for over 3 years, with the last round in Mar 2011. I would rate this as one of the lowest rating among all these 4 that I would invest in.
In my next post, I would go in depth which Fixed Income Fund i would invest in and what strategy / timing I would choose to do so as well.