Perfect Time for Realignment


Realignment

As the global market just have had a major correction last week, it is also a wonderful opportunity for UT investors to reflect your investment and fund selection.  This is also a good opportunity because equity markets throughout the whole world is also climbing slowly at this moment.  During this long holiday break, also another starting of this new lunar calendar year, let us take a look for global investment.

Fundsupermart has also introduced a list of good funds with discounted sale charges. Still it is also up to individual investor to choose your own selection based on your investment objective and appetite. As for me, I will do a recommendation here particularly for those who desire to have a higher return, with active management and risk managed portfolio. Those who do not wish to keep watch their portfolio shall not place their consideration with this recommendation. This recommendation is particularly useful for those who have gone through online training course with The Treasure Hunters .

Investing in a Global Perspective

From a macro global perspective, there are often times investors ask me shall they invest in US markets European or Japanese market? My standard answer is these matured markets would still have their potential for growth. However, if you want a higher growth target, you should choose to avoid these advanced economies. You may want to consider Graph A for their simple performance comparison in the past one year.

Advanced and emerging
Graph A ~ Performance comparison between advance countries and China market

Nikkei 225 represent Japanese economy, while SP 500 represent US economy. Hang Seng Mainland 100 represents China market. Amont all these indexes, the performance of Hang Seng Mainland 100 has not even outperformed advanced economies represented by the above two indexes, but even far ahead, out running MSCI Emerging Market index.  From this chart, you can see the choice is obvious.

From regional or individual country perspective, I specifically choose China as the leading country for various reason. China is often time being called the second largest world economy just below the US. In fact, in certain aspect, China has over taken US in certain statistic according to Wikipedia. In terms of manufacturing power, infrastructure, and innovative initiatives and others, China is doing much better than the US without Western counterpart consenting it.  China has been slowly evolving itself from a copying economy to become a leading innovative hub, especially in the green energy innovation or even in AI development, just listed for examples.

Second reason, political environment in China is much more stable and getting more efficient as the time gets by. The current leadership is led by a strong but humble and pragmatic leader President Xi Jinping. His recent proposal of One Belt and One Road initiative is also taking roots in many Asian countries as well as creating global interest.  While US is retreating itself from the world economy by American First agenda,  China over taking the US for global influence economically is just a matter of time sooner if not later, though economic analysts might have different views.

But yet market valuation for China is much cheaper than those advanced economies. Part of the reasons is that China market has gone through a large correction recently in 2015. It is now slowly rising from its bottom.  Do you think there is any reason not to invest into China for the best future profit?

China Fund
Chart B ~ China Fund Selection Comparison

The best fund to consider investing in China available from Fundsupermart.com.my platform is RHB China Big Cap Enterprise Fund. You may take a look for the comparison between the three available funds, namely Pacific Focus China Fund and Manulife Equity China Fund in Chart B.

Greater China Region

However, there are times Chinese political climate is very unpredictable, they will from time to time push out policies unexpectedly to control certain economic activities which cause market to draw back substantially.  Therefore, investors are advised not to fully concentrate on China market alone but to diversify it among a broader regional market related to China. This region is called Greater China, which composed regions from Hong Kong, China and Taiwan. Interesting, even though Hong Kong and Taiwan economic activities are closely related to China, but their market behaviors or market trends sometimes do not necessary correlated.  This can serve as an advantage to mitigate risk investing in single market.

1 yr greater China
Graph C ~ Greater China Fund Selection

There are a few Funds available in Fundsupermart (FSM) platform as offering investment in these 3 regions. There are Manulife Greater China Fund, Eastspring Investment Dinasti Fund, and CIMB-Principal Greater China Equity. Out of these three, Eastspring Investment Dinastic Fund and Manulife Greater China Fund seem to be preferred. Please evaluate their performances in the past on Graph C.

Emerging Market Economies

When we do investing, we choose to buy low and sell high in order to take the difference for profit. Looking at potential growth of certain economies is a major consideration for investment. One of the geographical perspective which should not run away from our radar should be the emerging market potential. While the terms emerging market has its term vaguely used as broad as any country which is growing under the sun, any funds labeled themselves with the title “emerging” has a broad and unlimited scope to consider, countries like China, India, South Africa, Russian, Argentina, Brazil, Mexico, South East Asia countries like Indonesia, Vietnam, Malaysia are all included. It is like a mixture of all good foods. It is then up to individual fund house selection that makes it works for profit.

Currently these emerging countries are suppressed in their market valuation because of their individual conditions. Such as Russian economy is under UN economic sanction for political reason, Brazil is under recession crisis, South Africa is under domestic economic problem etc. Possibly these conditions might be treated as temporary. Once these conditions are over, performance of these countries will fly like rocket. Nevertheless, this sector should be treated as watch and see list for this while, invest modestly, instead of heavily.

There are numerous funds available in FSM platform targeting emerging markets. These are such as Eastspring Investment Global Emerging Market,  Global Emerging Market Opportunities, and TA BRIC and Emerging Market Fund.

1 yr Emerging
Chart D ~ Emerging Market fund selection

 

As a comparison, looking at Chart D, the starring fund would probably be between Eastspring Investment Global Emerging Market and Global Emerging Market Opportunities.

Make Effort to Construct Risk Portfolio

Out of the above recommendation, you will still need to make your own study to choose only one fund for each group, aside from China Fund. I purposely put it in this way, so that you can make your own effort and in case you have profited at the end of the year 2018, you will celebrate your own effort. As I said before in elsewhere, I like to teach people how to fish as a trainer, but not as a charity worker in giving out fish. Because I believe people work it out for their own profit would enjoy greater satisfaction than relying others to give you fish.

While having said so, I would give you a final reminder. After selecting your fund choice, you have to consider constructing your risk portfolio with a bond or money market fund with you. All of the above recommended funds do have a good stabilizer within the same fund house. This is the most important aspect in UT investment. I think those who have invested in the past 2 months or more would know how important it is after your investment portfolio has gone through the big market correction last 2 weeks.  If you do not know about risk management, you may go through other blog that I have written before, or enroll the online training course in The Treasure Hunters.

Fund Assessment
Fund Recommendation for 2018

I believe this will be a wonderful opportunity for new investment bet or realignment. All global markets have gone down and lied low. So far no economic crack has been found until now. Markets will resume its bullish trend when it opens next week. US market will still be close on Monday for President Day, a public holiday. Greater China markets are also closed on Monday for Lunar New Year festival holiday. You will be given ample time to study and invest before market opens Tuesday or even later days before 3 pm (China market will open only by 21st February).

Happy investing!

 

 

 

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