Park Your Fund Strategically

Global economic news these several weeks seem to paint a bring hope that US and China going to settle their trade dispute in the month of March with deadline gracefully extended. Global markets especially US, Hong Kong and Asian markets have been factored in strongly and flying high in midair. However, there has never been a lack of cautious investor with reservation that anything can happen before the actual signing of trade agreement between these two largest world economies.

Even if this trade dispute is settled, there is still some major head winds coming against global economy outlook, such as Brexit issue, auto tariff between US and Europe, the risk of first quarterly report after the heat of corporate tax incentive annual cycle, the existing import tariff Trump has imposed against other countries etc. Therefore, the near future outlook does not seem to be very positive neither. 

Parking Your Fund Strategically

For unit trust investor, in order to gain substantially return, there must be at least a one-year horizon clearance on freeway for market run up. The annual return should be around 20% to worth the risk. For a yo-yo market running up and down with an annual return of 6% or less is not considered worth the effort. Because such a risky market will rob away your sweet and comfortable dream at night, and could even possibly make you a loser instead of 6% gainer.

After evaluating my son’s investment few days ago, I have realized that his fund was parked with RHB Money Market Fund. This fund is actually an excellent fund to park your capital in an uncertain market condition. It is also strategic in waiting for the right opportunity for sudden “attack” into RHB Gold and General Fund. This RHB Money Market Fund is also an excellent fund for its annual return of promising about 3.7% for a zero risk rating category (see Table A). That means there will be no risk at all in anyway getting down in the future. It is equivalent to a fixed deposit but the return is slightly higher.

Table A ~ RHB Money Market Fund promising a high annual return rate with zero risk rating

This fund is also in an excellent position to get ready to attack other global or regional funds when the right moment arises. Other strategic high risk funds such as RHB Big cap China Enterprise Fund, RHB GS-US Equity Fund, etc. are also available in this fund house family.

Adjusting Position

However, the current situation does not look that promising without uncertainty. Investing in gold related funds is also not quite certain for long term. No doubt gold related funds have risen substantially recently. But their boost was taken merely from the delay in interest rate hike. And this delay cannot be seen as anything for long term. Fed is only taking a “patient” stance in raising interest for now on. This might mean it can change any time if economic data in the US changes.

Considering such back drop, shooting the gold related funds might also need to take “patient”. The right moment might not possibly arrive even in a year or so. As a reason, I advised my son to switch his parking capital to AmBond immediately with free switching. Because AmBond is tentatively promising an annual return rate of 5.33% (see Table A).  In this way, if the opportunity of shooting gold related funds does not come, the AmBond Fund would yield a better return than fixed deposit or RHB Money Market Fund at least.


Chart A ~ Bond crisis rarely happened in the past

Even if gold opportunity arises, AmBond is also positioned to shot at gold related fund such as Precious Metal Securities. The only down side with this fund is that it comes with a risk rating category of 2. That means we have to be watchful. This is a bond fund that will be affected whenever there is a bond market crisis in Malaysia. But it’s rarely happened, possibly once in every two or three years (see Chart A).

Have you parked your capital into Fixed Deposit? If not, you may consider AmBond for a return even higher than FD. Parking into AmBond, not only for a higher return, but it is more strategic. It can be like a Crouching Tiger, Hidden Dragon as the Chinese saying goes, ready to attack at any time.  This is especially true for small capital fund with less than ten thousand.

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Disclaimer

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 conclude individual decision.

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