What’s Wrong with Kenanga Growth Fund?


Kenanga Growth Fund 2

I have written an article entitled “Are you still Holding Kenanga Growth Fund?”  asking fund holders to seriously reconsider their patronizing commitment.  It was released on September 4th 2017. To my surprise, it has attracted readers’ attention ever since after that day and it has landed on the top 10 best read article on my blog on a daily basis without fail, particularly true recently.

I was just wondering what has caused readers to search online for that fund information. One of the reasons I suspected was that Kenanga Growth Fund (KGF) investors have discovered that their long time starring fund is not performing as it used to be. For those who have invested into this fund 2 to 3 years ago have enjoyed a handsome returned for quite some time. However, they might have observed that their previous profits have been slowly eroded away recently.

Kenanga Growth Fund
Investors just invested in Kenanga Growth Fund  for a year or lesser are experiencing losses now

Worst of all, new investors coming in just for 1 year or less, are now seeing losses in their investment. They probably want to find out what’s wrong with this fund.

Unit Trust Performances

Unit trust sale agents or unit trust investment professional used to advise investors to keep their investment with certain fund for a long period of time, they will surely enjoy a good return. They normally advice investor to take a passive approach in their UT investment. Because they presume that fund houses will do their job in managing their funds. However, in this case, if you have found out that your investment losses are becoming intolerable, such an advice could be inappropriate to you.

To be fair and honest, in my current observation, I would like to update readers that even though KGF has been losing its investment value these few months, it has nothing to do with its fund management issue. Even though its fund size now has even grown larger than the time I released my article, but its performance can be still considered normal and good according to fund performance standard. I really want to give credit to its management team for doing such an extra ordinary job under such a gigantic fund size.

However, I do not want to presume its future performance promises though. As the saying “Past performance does not guarantee future performance” goes, I still remain doubtful whether KGF will be able to recover investors’ loses for the next few months or even a year from now.

Investment with Market Conditions

KGF has been mainly invested within Malaysia. Recent losses were merely a reflection of Malaysia market correction after a change of political regime. Malaysia government is now stabilized and ready to grow Malaysia economy for a blissful future. However, the global economic scenario hovering over Malaysia market might not be permissible.

Malaysia market recent drops were also contributed partly by the Asian market correction due to trade war initiated by the US.  Global market future outlook is becoming gloomy as the impending trade war is yet to escalation further.

Trade War 2
Trade war makes future global economy gloomy

For the US markets, as quarterly corporate earning reports are coming out these few weeks, most analysts expect these corporate reports to be good catalyst to propel US stock market to further heights because of the effect of corporate tax cut implemented early this year. However, I suspect whether this will be anything true to their wishes.

As many corporate reports in previous quarter has beaten analysts’ estimation due to corporate tax cut.  Analysts will turn up wiser this time and factor this corporate tax in and make their estimation figure a notch higher. Because all of them want to be wise and accurate in their prediction.

There was also a strange phenomenon happened in previous quarter corporate report. Stock prices went down even after corporate report beat analysts’ estimations instead of going up. This round, market indexes have already gone up even before corporate earnings have been released factually. What will happen if corporate earning report does not meet estimation because analysts have jacked up their numbers or merely meeting estimation? I am afraid market indexes will crash like crazy!

Malaysia Market Outlook

Malaysia market future outlook for the second half of 2018 has to look beyond local market condition. As the world economy is not promising anything, Malaysia market under which KGF is operating, does not promise anything as well.

Investors have to be reminded that even if you invest through unit trust, you are investing into the market, not into a fund house. No matter how good a fund house management team is, fund performances will go in tandem with market conditions.   We have to stay vigilant and response according to market changes. Though we do not rely on market timing, but market condition is something every investor has to pay attention on a consistent basis.

Unless you have the ability to bear the consequences even if market turns bearish on the second half of 2018 and enter into a decadal global economic recession from there on, you can just rely on Fund managers doing their job and do nothing about your losses currently with KGF. But I would be highly doubtful for your ability because you are now reading this article. It shows that you are concern with the negative performances of your investment with KGF.

If you have any other question, welcome to write a personal note to me (Please find my email address in the “Contact” above). I will be glad to interact with you for unit trust investment subject.

Thank you for reading this article!

 

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RISK WARNINGS

The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions.  This write up does not constitute sole advice for investment decision. Investors are advised to do further reading and research to make up individual investment preferences.

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