It’s always such a wonderful feeling to receive a comment, a LIKE or even just a postback link from a fellow blogger. Recently, Stephen made a comment and asked some questions on the overall blog at here. Instead of replying directly, I’m thinking of doing a post would be more appropriate.
NAV Price of Amanah Dividend Trust Fund
Dividend fund typically has a lower NAV, this is simply because the design of the fund where most of its return will be in the form of dividend. And in mutual fund world, these returns will be income distribution, and it’s up to the investor and the investing platform that to either cash it out, or reinvest back to the fund.
Comments on portfolio selection
- Amanah Dividend Trust Fund – Equity/Income; Malaysia + Asia ex-Japan; Medium-High Risk
- Kenanga Growth Fund – Equity; Malaysia; Medium-High Risk
- Philip Master Equity Growth Fund – Equity; Malaysia; High Risk (Medium – Small cap)
- CIMB-Principal Asia Pacific Dynamic Income Fund – Equity; Asia ex-Japan; High Risk
Depending on the eventual allocation, the overall portfolio risk I would rate it as medium-to-high. To be fair, this is purely a subjective view, and below is my mental note to drive the rating;
- High concentration of Malaysian market
- Most, if not all are equity / growth based funds
- Geographically diversification limited (Malaysia + Asia ex-Japan)
There’s no right or wrong on the portfolio allocation, it’s all up to the investor whether being able to bear the risk, thus identifying one’s own risk appetite is the most important step of all. On a side note, risk appetite will change, it’s normal, and I would group those factors into 2 (1) internal, and (2) external.
For internal cause, it can simply because one’s start to understand oneself better. Through the investing activities / processes and experience, one figures he is willing to take more risk for possible higher returns. This realization of whether this factor is in play is rather subjective, the indication can be just anxious feelings on the newly purchased funds, checking it daily…etc. That usually meant you can’t stomach that risk well. If that happened, I would suggest to go for something you can sleep well at night.
On the external factor side, this is usually surrounding / environment driven. An example will be career stabilising with extra cash to invest, or one is going into retirement mode which usually translate to lower risk appetite.
Actions I would do on this portfolio
Here’s what I would do personally to lower down the risk, the strategy shouldn’t differ much from my own portfolio.
- Increase geographical diversification, throw in 1 / 2 developed market funds to balance the risk out. I would put ~20% of the overall portfolio into developed market funds. Be careful if the developed fund is investing in small-cap, typically these funds will swing more, because it’s more active.
- Increase fund type diversification, add income based funds. Depending on risk appetite, I will usually have at least 30% income based funds in my overall portfolio.
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