Is it SAFE to Invest in Private Retirement Scheme (PRS) ?

This is one of the common question asked by potential PRS contributors. First, I want to emphasis that PRS is a long-term investment for the purpose of retirement planning. In investment case, long-term means you already using the most powerful method to reap a good return. Anyway, many contributors still want to treat PRS as some kind of short-term investment. I got the answer for you.

Basically, PRS is very similar to unit trust investment. The underlying structure and investment philosophy were the same actually. No wonder many people perceived PRS is another unit trust scheme. Yes, you're correct to a certain extent.

Under the guidelines, each PRS providers must at least launched their core funds for investors to select, namely Growth, Moderate and Conservative. To make things simple, we only discussed these core funds because I believe most of us only invest in core funds. From these core funds, growth fund is the most aggressive one. In other words, the most risky one, with the aim of getting better return than the other two.

Asset Allocation of Core Funds under the guideline by Securities Commission of Malaysia

Is it really so risky?

Let's us examine even deeper now. Again, under the guideline for PRS growth fund, only maximum of 70% of NAV can be allocated to equities, while the balance was in fixed income/money market instruments. If you're an unit trust investor, you will know that this is almost like a balance fund type of asset allocation. For your information, for normal unit trust equity fund, equities exposure was between 70% - 98%. Meaning, the maximum equities exposure for PRS Growth fund equals to the minimum of an equity fund. Not so risky, right?

Of course, if you want higher equity exposure for your PRS portfolio, you can opt for those non-core funds, which can go as high as 98% in equity exposure. Then, the next question was "Is it risky to invest now?"...

It all depends on your perception. If you think that Malaysia market is too expensive now, you may opt for those funds with foreign exposure. Currently, from the 4 PRS providers whom already launched their schemes, some can invest into foreign countries. Some are fund-of-funds, some are foreign funds. Coming soon, more variety of PRS funds will be offered, such as property fund, commodities fund...

This is a guest post by Alex Yeoh in the series of Private Retirement Scheme. For more PRS info, you may contact Alex Yeoh (email: alexyeoh@vka.com.my), a licensed financial planner, whom representing multiple PRS providers. Thank you.

Exclusive Interview: YUMI WONG

Malaysia's upcoming popular model, Yumi Wong is the name you can't forget in the near future. She is pretty, famous and most important is very young. At the age of 23 only currently, she already features in many tv commercial, magazines, one of the most sought after model in town, and as an ambassador of many companies. Read to know more about Yumi:

1. When were you started to join the modelling/entertainment industry? And, how?
   Still remember that when I am still in school, one of my friend got a freelance job and she needed someone to accompany her. She asked few of our friends on trying to get the job, while I'm like no harm, just try. But, in the end, only I myself got the job. This is how I started by becoming a freelancer and keep doing it until making it as my career.
   
   
2. What's your BEST achievement so far?
   Best achievement? Hmmm, I won't say that I had any great achievement so far because I think that although I have been in this industry for few years, it was only recently it became a career for me. This is just the beginning for me actually. So, I would say that the best achievement is the support and trust from the people, clients and sponsors.
   
   
   
3. We believe your fans would like to know your plans for 2013. Can tell us abit?
   My plans in 2013 is... stop gaining weight! Lol ~ and of course in 2013, other than getting better for whatever I'm doing, I would love to do more acting, learn better acting skills, and show my fans the different side of Yumi. Stay tune ya...
   
   
4. It's awesome that you have so many followers via Facebook, Twitter, Instagram... Any words to them over here?
   Yes! My words to them is: "Thank you so much for supporting me all this while. Without you guys, Yumi will never be able to make it until here today. I will work harder, learn more new things and never let you guys down. Love you all ~ XOXO"
   
   
5. Since your schedule was so tight, how do you juggle between your time and work?
   Arrg ~ this is very hard! But right now, most of the time I will spend on my work. For whatever activities, work come first for me because I think that I'm still young, still able to work more, as long as I got enough time to rest. Yup, I will spend my day just for working. Anyway, my job is quite fun after all.
   
   
6. Finally, how are you going to manage your personal financial matters? Are you a shopaholic?
   Well, shopping is what every girls' activities all the time! It was like breathing, and we can't stop or change it!!! But, I myself will only shop for what I need, I don't like wasting stuffs. As long as it still can be use, I will not buy a new one to replace it. So, my answer is YES I did shopping sometime, but not a shopaholic at all. And, I am quite a good money saver (I think).

Finance Malaysia blog hereby thanks Yumi for the interview and sincerely wishes her to be the next TOP international model from Malaysia, and successful in whatever things she venture into. If you want to know more about Yumi and her latest updates, you may "Like" Yumi Wong Facebook fan page.

What are the TAX benefits from Private Retirement Scheme (PRS)?

According to Securities Commission of Malaysia, tax incentives are provided to both employers and individuals for the first 10 years from assessment year 2012; in addition to the tax deduction permitted for EPF contributions:

Amount of Tax Savings by individuals for PRS contributions

For Individual:

Tax relief of up to RM3,000 per year will be given for contributions made within that year. This is on top of existing tax relief already enjoyed by taxpayers. How much can you save from tax? Let's look at the table above which illustrates the amount of tax saving an individual get after personal tax relief and RM6,000 EPF + Life Insurance tax relief. Assuming maximum RM3,000 PRS relief, the amount of tax saving depends on your level of income. For high tax bracket individual, you can save up to RM780 annually!!!

For Employer:

Tax deduction on contributions to PRS made on behalf of their employees above the statutory rate of up to 19% of employees' remuneration was granted. Example, if an employer already making 12% EPF contributions to his employees, the employer may choose to reward their employees by contributing into employees PRS account for up to another 7%.

Vesting Schedule to Retain Employees?

Yes, employer can use PRS as a tool to retain employees by adding a "vesting schedule" clause. Currently, there are a few available vesting methods: by length of service, job rank, or by age. Unlike EPF, if an employee leaves before vesting, the employer can access to the un-vested portion of contribution already made. Likewise, for EPF, employee take the full amount when they left. With PRS vesting schedule, employee may think twice before switching jobs.

In conclusion, there are tax incentives for every tax payer, employee or employer. Ultimately, enough retirement funds was the key objective of PRS. On top of that, a tax exemption is also provided on income received by the funds under the PRS.

This is a guest post by Alex Yeoh in the series of Private Retirement Scheme. For more PRS info, you may contact Alex Yeoh (alexyeoh@vka.com.my), a licensed financial planner, whom can distributes products from multiple PRS providers. Thank you.

How Private Retirement Scheme (PRS) works actually?

Many people are still in the dark on how actually Private Retirement Scheme (PRS) works. In order to clear everyone's mind, we hope this post was timely for those who may want to entitle for extra tax relief of up to RM 3,000 given by PRS before 31st December 2012. To further explain the whole scheme, Finance Malaysia Blog was glad that Alex Yeoh, a licensed financial planner is able to share with us on this matter.

By Alex Yeoh,

First we must know that PRS is a voluntary scheme for the purpose of retirement saving. For ease of understanding, let us look at the picture above which explain the process into two parts. Initially, contributions were made by us into the PRS fund that we select. It was as flexible as  normal unit trust investments (shown in upper part). Contribute anytime any amount as you like, without any specific intervals. As simple as that.

When can I withdraw the money?

Each time, your contributions were split and maintained in sub-accounts A and B similar to EPF way (shown in lower part). 70% of contributions will go to Account A, which can be withdrawn upon reaching retirement age, which is currently at 55.

Meanwhile, the balance 30% into Account B, which can be withdrawn after one year, subject to 8% tax penalty. Take note that you can withdrawn from Account B for whatever reason. Although lump sum withdrawal are permitted, contributors are encouraged to retain their savings for continuous investment under the respective schemes.

Why 8% tax penalty?

The said 8% tax penalty was to discourage contributors to withdrawn their money prior to retirement age. We must understand that PRS is meant for retirement savings. Moreover, the 8% tax penalty was deducted from withdrawal amount to pay back Inland Revenue Board (IRB). Why? Because IRB is the one who gave you tax relief on contributions made initially. Otherwise, loop-hole was existed with everyone just want to take advantage of the tax relief and  withdrawn their money after that. Agree?

For more PRS info, you may contact Alex Yeoh (email: alexyeoh@vka.com.my), a licensed financial planner, whom can distributes products from multiple PRS providers. Thank you.

New Fund: OSK-UOB Multi Asset Regular Income Fund

As investor continue to seek safe investment havens, i.e. investments that are more stable and/or of lower risk and with regular income, OSK-UOB Investment Management see opportunities in the Asia and Asia Pacific (ex Japan) region. Hence, they are now offering investors a fund that utilizes a multi-asset strategy to generate potential regular income and capital growth in a fund that invests in three yielding assets i.e. bonds, equities and REITs (real estate investment trusts) from the Asia and Asia Pacific (ex Japan) region.

The Fund is suitable for investors who:

1. seek regular income and capital growth over medium to long term;
2. are willing to accept moderate risk in their investments; and
3. wish to benefit from investment exposure in the Asian and Asia Pacific (ex Japan) region.

Tactical Asset Allocation?

Of the fund's investments, the External Investment Manager will initially invest in accordance to the allocation stated in the table below. However, for the purpose of tactical asset allocation, the manager may deviate from the stated allocation by a 10% variance for each asset class depending on the market conditions to achieve medium to long term returns.

Thus, this Fund's portfolio will be structured as follows:

• 65% - 98% of NAV
• Investments in Asian (ex Japan) debt instruments / bonds, Asia Pacific (ex Japan) dividend equities and Asia Pacific (ex Japan) REITs.
• 2% - 35% of NAV
• Investments in liquid assets including money market instruments and deposits with financial institutions.

What's the composite benchmark for this fund?

• 50% JP Morgan Asia Credit Index Total Return Composite (RM);
• 30% MSCI AC Asia Pacific ex Japan Index (RM);
• 20% MSCI AC Asia Pacific ex Japan REITs Index (RM).

Distribution Policy:

Depending on the level of income generated at each relevant period, the fund will declare distributions, if any, to unit holders QUARTERLY.

Click here to read fund's prospectus

Source: OSK-UOB Investment Management

Falling into a Dividend Trap? (Dec 2012)

No doubt, many investors prefer only invest in dividend-based counters. Malaysia is famous and already been recognized as one of the hottest spot for those looking for high dividend yields counters. But, things may changed. Why?

First, how do we calculate dividend yields? It's dividing the one year dividends declared by share price. Normally, yield which is higher than 5% was considered attractive. Just when everyone looking to hide their money from risks, yet aiming for higher returns than putting into fixed deposit (3% p.a), dividend counters seems to be their preferred selection.

Should we follow the "professionals"?

Yet, many investors just follow the winds (fund managers, analysts, consultants...) to invest based on the past 6 months, 1 year or 2 years track records. Yes. It's proven track records. But, where we are heading to is more important, right?

If you read the newspaper which published out-dated yields data, good luck. It's was based on last year dividends divided by average share price for last 365 days. For me, it's totally irrelevant for us to make decisions.

On the other hand, what we noticed was the share prices of dividend counters had moved up a lot since second half of last year. Although they have come down abit lately, we must ask the following questions before bargain hunting.

• Are we jumping in too late now?
• Are we taking more risks now?

Think about it and start to reconsider your decision again.

Personally, I believes this was not the right time to invest in dividend based counters. Nothing to do with their fundamentals or businesses as they are well-manage, profit generating companies. The problem is their share prices have already gone up a lot, which does not justify with the word "attractive yield" currently. Same goes to dividend based local unit trust funds. If really want to search for high dividend investments, you can still find it handy overseas, not Malaysia. Happy Investing!!!

ETP update: 10 Key Achievements (Nov 2012)

Below is the 10 key achievements highlighted by CEO of Pemandu, that demonstrates the positive inroads of the ETP:

1. Projects will be implemented within the 12 focused National Key Economic Areas (NKEA) and also implement 51 Strategic Reform Initiatives (SRI) to ensure competitiveness will flourish.
   
2. Whilst Malaysia's GNI per capita was only US$6,700 in 2009, it grew dramatically by 45% in 2011. (Target is US$15,000 by 2020)
   
   
3. GDP grew by 5.3% year-to-date. This is significant, considering Singapore's growth of only 1.3% while neighboring countries recorded the following GDP growth:
• Thailand 3.0%
• South Korea 1.6%
• Taiwan 1.0%
• Hong Kong 1.3%
  
4. Economy continues to grow to reach new GDP and GNI records in 2011, with Government achieved its highest revenue in history with RM185 billion in 2011, allowing the Government to implement many programmes, including those under GTP such as BRIM1 and BRIM2.
   
5. Private investment continues to achieve robust growth. As of Sept 2012, private investment grew by 25.5% yoy, reaching a new record of RM112.2 billion.
   
   
   
6. Domestic private consumption continues healthy growth of 8.2% year to date, an evidence of growing disposable income by Malaysians.
   
7. FTSE Bursa Malaysia KLCI market capitalization scaled new historic high on 1st Nov of 1,675.69 points, with market capital Rm1.46 trillion.
   
   
   
8. Consistent delivery of fiscal deficit reduction from 6.6% of GDP in 2009, 5.6% in 2010, 4.8% in 2011 and further reductions are planned in 2013 and beyond. Debt ceiling was capped at 55% of GDP.
   
   
   
9. Recognition of Malaysia's tremendous progress by external parties such as World Bank (ranking in Doing Business), AT Kearney's FDI confidence index, IMD World Competitiveness Yearbook, WEF Global Competitiveness and CNN ranked KL as 4th best shopping cities.
   
10. Achievements against the KPI were at 123% in 2011 and 94% this year

Source: etp.pemandu.gov.my (summarized by Finance Malaysia blog for ease of reading)

EPF Flexible Age 55 Withdrawal

As all of us know, Employees Provident Funds (EPF) is meant for our retirement savings which helps us go through our golden years. However, statistic shows that most of the contributors opted for full withdrawals at age 55 and finished it all within a period of 10 years.

In addressing this issue and encouraging contributors to keep their savings longer, EPF has launched a campaign to promote awareness on their "Flexible Age 55 Withdrawal Scheme". How flexible is it? If you're one of the to-be-retiree, then this post more than relevant to you. Read on and share this with other contributors if you think that this might be useful for them.

How does "EPF Flexible Age 55 Withdrawal Scheme" works?

By opting the scheme, contributors could withdraw part of their savings at any one time or make monthly withdrawals or a combination of both options. This is how flexible it is where you can vary the frequency and withdrawal amount anytime. In other words, withdraw only when you need it, otherwise, just left it with EPF to continue accumulate with compounding dividends for a longer period.

To elaborate further, the eligible combination withdrawal method are as follows:

1. Withdrawal of a partial amount of your savings & retain the balance in your EPF account
2. Withdrawal of a partial amount of your savings & transfer the balance for monthly payments
3. Withdrawal of a partial amount of your savings & transfer a partial amount for monthly payments while maintaining the balance in your EPF account;
4. Transfer your entire savings amount for monthly payments.

Members can submit the application within 6 months before age 55, according to the date of birth. However, payment will be made within 5 working days after reaching the age of 55.

Withdrawal Amount Eligibility

Minimum withdrawal amount for partial withdrawal is Rm2,000. Meanwhile, let's have a look at Monthly Payment Withdrawal as below:

• You may choose monthly payments with the minimum amount of RM250.00 per month for a minimum period of 12 months.
• The minimum amount that can be transferred as monthly payments is RM3,000.00.
• You need to determine the total monthly payment amount, the amount per month, the number of months and the payment commencement month.
• The EPF will transfer the total withdrawn amount into a special account. Crediting will be made into your bank account every month according to the amount and number of months applied.
• Payments will be made on the 25th of every month.
• The number of months for the monthly payments do not go beyond your age of 75 years.
• You may cancel this withdrawal any time.

Is it very troublesome?

In order to opt for the said withdrawals, you would need to prepare the following documents only:

• MyKad
• For payment via direct crediting to member’s bank account:
• Bank passbook or Saving/Current account statement
• Owns an account with the panel bank appointed by EPF
• The bank account must still be active
• Your identification number matches with the bank’s record
• Payment is made in Ringgit Malaysia
• Otherwise, payment will be made via banker’s cheque

Should you have any enquiry or require additional information regarding this withdrawal, kindly contact:

• Any EPF Office nearest to you;
• The EPF Call Management Centre (CMC) at: 03-8922 6000
• Customer Feedback: http://enquiry.kwsp.gov.my

Source: EPF website

What is US "Fiscal Cliff" actually?

When everyone thought that US and the world will be better if Obama won his presidential re-election again, world equities markets today declines with US being the most serious market by dropping more than 2%. What's the reason? Answer: Fiscal Cliff ?

Hmmm... Then, what is fiscal cliff actually which many of us on the street do not even heard about this new term before. No worry, Finance Malaysia blog did his homework over here. Share this out if you like.

Understanding Fiscal Cliff...

The US fiscal cliff refers to the effect of a series of enacted legislation which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit. With Obama retaining the presidency, it sends the signal that it's US government policies will pretty much stay the same as previous 4 years. Ben Bernanke will stay as Fed chairman, which also meaning that the open-ended liquidity and bond buying programs will continue, fueling risk taking appetite of equity and fixed income markets for the foreseeable future.

Budget deficits, projected through 2022. The "CBO Baseline" shows the effects of the fiscal cliff under current law. The "Alternative Scenario" represents what would happen if Congress extends the Bush tax cuts and repeals the Budget Control Act-mandated spending reductions beyond the end of 2012.

However, Obama has to resume his duties in a very likely divided congress, with Republicans controlling the House and Democrats controlling the Senate. With this political deadlock and the looming "Fiscal Cliff", that's the reason why US market sink this morning.

Good or Bad?

If you understand it, the so called "Fiscal Cliff" is not something bad, in which its purpose is to reduce budget deficit of US. What investors worried was the measures being taken will slow the already slow growth rate of US economy, subsequently the world economies including Asia. But, without the intention of reducing budget deficit of US, would you be more confident? Of course NOT, because US would never able to not walk out from the brushes. Right?

By now, you should be able to understand the term. Meanwhile, some analysts have argued that "fiscal slope" or "fiscal hill" would be more appropriate because while the cumulative economic effect over all would be substantial, it would not be felt immediately but rather gradually as the weeks and months went by. Hahaha...

Launching of Association of Financial Advisers (AFA)

31^stOct 2012 would be a historic day for Malaysia financial planning industry with the launching of newly formed Association of Financial Advisers (AFA) at Lanai Kijang, Bank Negara Malaysia. From now onwards, AFA will effectively represent all the Licensed Financial Advisers and Corporate Unit Trust Advisers (CUTA) Firms. The association is approved by Registrar of Societies on the 16th August 2012 with the support from Bank Negara Malaysia.

In conjunction with its launching, AFA also held its inaugural financial advisers conference titled “Charting New Frontier – FA the Future”. During the conference, audiences were empowered with up to date practices by Bank Negara and Securities Commission. Then, an interesting forum on the Future of Malaysia Financial Advisers Industry was discussed with everyone attentions. How we benchmark ourselves with other countries? We heard some success stories from Singapore and Hong Kong.

It was a successful milestone event for financial planners and CUTAs judging by the numbers of financial practitioners who attend the event. Product manufacturers, such as insurance and unit trust companies, started to realize the potential influences of financial planners and CUTAs in distributing their products and services. This signifies the bright future of financial planning industry moving forward, in line with the Capital Master Plan 2 by Securities Commission of Malaysia. There is no better time to be a licensed financial planner now.

This is a guest post contributed by Alex Yeoh, a licensed financial planner with VKA Wealth Planners. Finance Malaysia is glad to have Alex's input on financial planning matters. You may contact him via alexyeoh@vka.com.my

New Fund: AmTactical Bond

Still remember one fund called AmDynamic Bond fund? If yes, you definitely knew the superb performance of that bond fund, which had became the flagship fund for AmMutual for past years. However, it was sad that, since few months ago, no more subscription was being allowed for AmDynamic Bond fund because it has reached the maximum limit set by regulators. In other words, too hot the demand for that fund. Then how?

Because of that reason, AmMutual is proud to launch another new fund, AmTactical Bond fund, which was managed by using the same strategy, but with a little bit more flexibility. The Fund aims to provide income and to a lesser extent capital appreciation by investing primarily in bonds.

How Flexible is it?

The Fund seeks to achieve its objective by investing primarily in sovereign, quasi-sovereign and corporate bonds including convertible bonds. There is NO minimum rating for a security purchased or held by the Fund.

To construct the portfolio of the Fund, the Investment Manager will analyse the general economic and market conditions. The Investment Manager will also analyse and compare securities in terms of expected returns against assumed risk by analyzing credit rating and duration of the securities, where the Investment Manager will select securities that will deliver better returns for a given level of risk. In addition, the Investment Manager may also consider securities with a more favorable or improving credit or industry outlook that provide potential capital appreciation. The Fund’s investment is subject to active tactical duration management, where duration of the Fund will be monitored and modified according to interest rate outlook without any portfolio maturity limitation.

Asset Allocation

• 70% - 98% invested in bonds;
• 0% - 28% invested in other permitted investments; and
• a minimum of 2% will be invested in Liquid Assets.

AmTactical Bond is suitable for investors who:

• are willing to assume risks associated with investing in securities with long duration (i.e. there will be no portfolio maturity limitation) and low credit ratings (i.e. there will be no minimum rating for the securities purchased or held by the Fund); and
• have an investment horizon of more than three (3) years.

Click here to download the prospectus

Source: AmMutual

New IPO: Astro Malaysia Holdings

The Return of a Pay TV Giant!!! Astro Malaysia Holdings (AMH) is poised to list on Bursa's Main Market on 19th Oct with a market cap of RM15.6bil. The largest pay-TV operator in Malaysia has a de factor monopoly, commanding a 99% market share. Are you excited, again?

Background

AMH is the leading media entertainment group in Malaysia with 3,100,000 customers and one of the largest in South East Asia. It is primarily engaged in the creation, aggregation and distribution of content over multiple delivery platforms including TV, radio, publications and digital media within Malaysia.

What's the different from the then delisted entity?

Recall that Astro All Asia Networks (AAAN) was the one taken private in 2010 by its single largest shareholder Astro Holdisngs SB. Meanwhile, AMH is effectively the domestic media business arm of previously-listed AAAN.

How good was Astro Malaysia Holdings?

• A monopoly in the pay TV segment with 99% market share
• A capital intensive industry, creates a high barrier for new entrants
• A buffet of content with presently 156 channels of which 68 are home grown channels. The increase in broadcasting capacity to 180SD and 102 HD channels with the launch of Measat-3B in 2014 will help boost ARPU and subscriber base.
• Multi platform content distribution would enable the group to reach out to more customers

After the good things, let's have a look at some potential risk that AMH may face:

• The group is subject to extensive regulation with its license subject to renewal;
• The group’s exclusive satellite rights would end in 2017;
• Its business is dependent on its infrastructure namely MEASAT-3 and MEASAT-3A and the launch of MEASAT-3B in 2014. Any failure to its existing satellites or delay in launching MEASAT 3B would interrupt its business operations;
• Competition from incumbent IPTV player such as Hypp TV and the highly anticipated Asian Broadcasting Network could erode its market share. However we foresee this as a longer term threat.
• Escalating rate of subscriber churn rate may decrease the group’s profitability given the presence of illegal set up boxes in the market such as skybox;
• Unable to source or procure content at reasonable rates.
• Its IPTV and OTT services may be affected by disruptions, delays and other difficulties from third-party network and broadband service providers just to list a few.
• Exposure to foreign currency risk since the purchases of setup boxes, international content cost and transponders lease payments are mainly denominated in USD would impact its operations.

Then, how attractive is the pricing? Is it expensive? Based on different valuation method, below is the fair value given by various research houses:

Source: Various including research report from TA and OSK.

New Fund: TA Total Return Fixed Income Fund

Just another new fund from TA Investment Management (TAIM)? Think again... In fact, this is the first bond fund launched by TAIM and it will take on the other bond funds in the market with a "Wow" effect. Why? Believe me, you gonna put this fund into your radar of unit trust investment. And, you will know why after reading this post.

The TA Total Return Fixed Income Fund is a feeder fund which invests a minimum of 95% of its NAV into the PIMCO Funds: Global Investors Series plc - Total Return Bond Fund (SGD Hedged) and the balance in liquid assets. What? PIMCO !!! Yup, it's the leading global investment management firm, especially on fixed income investment.

5 Reasons Why you should invest into this Fund?

1. Total Return Strategies, Global Diversification & Flexibility
   It aims to maximize the total return, consistent with preservation of capital and prudent investment management by investing 2/3 of its assets in a diversified portfolio of fixed income instruments of varying maturities.
   
   
2. Higher Potential Returns at Lower Risk
   The core bond investment fund is broadly diversified to include all fixed income asset classes. Target fund is 90%-100% invested in investment grade bonds.
   
   
3. Proven Consistent Track Record
   The Target fund has recorded consistent and positive annual returns since launch, even amid the prolonged crises across the globe.
   
   
4. High Recognition
   Superbly high ratings have been assigned by independent investment research providers, such as Morningstar, Lipper and S&P.
   
   
5. Expert Management --- PIMCO
   Once again, it was managed by PIMCO, has been investing money on behalf of a wide range clients including over 70% of Fortune 100 companies. PIMCO has a history of long-term performance in both bull and bear markets, with benchmark-like risk.
   

By investing into this fund, now you can leverage on the expertise of PIMCO to diversify your investment portfolio to include fixed income. It's superb track record already spoke for itself, in which we should rest assured with.

Source: Fund prospectus

Should we learn from Robert Kiyosaki from now on?

When news broke out that "Rich Dad, Poor Dad now a Bankrupt Dad", everyone was so excited to share it out to their circles of friends. Maybe thanks to the interesting news title created to attract the attention of us. In fact, it succeed (because it reaches Finance Malaysia attention now). Well, since we're a financial related blog, we must blog about this hyped news without second thought. Should we learn from Robert Kiyosaki from now on?

About the Bankruptcy...

According to UK dailymail, "the financial guru behind New York Times bestseller Rich Dad, Poor Dad has filed for bankruptcy on one of his companies after losing a $24 million judgement." Read carefully... It's on one of his companies, not under his own name. Meaning, Robert Kiyosaki didn't bankrupt. Then, what's the difference?

The liability of the debt was limited to the extent of the company only. It's doesn't affect the other business or on Robert Kiyosaki personal either. Doesn't it a smart move by Robert? Should we learn from him on this matter?

No doubt, there was nothing wrong for Robert to do it that way. He saved $24 million by simply closing down one of his companies. However, in terms of business ethic, he should not practice that way. Some more, he was rich enough to pay for it (we assume). Agree? This might be an interesting debate between personal interest and business ethic. Don't you think that we should learn from someone whom can be a role model in good personal value also? This world is not about money only. Let's look at the example below to differentiate it.

This is the activities we did to look for money:

Money with ethic => Being employed or doing business ourselves

Money without ethic => Robbery, burglary, kidnap...

Plantation: Start of a sector 'SELL-OFF' or CPO prices to recover? (Oct 2012)

While CPO prices have declined 20% over the past one-month to M$2,300/t, share prices of our upstream plantation universe have not reacted materially moving by -8% to +3% (-3% to +3% for our top picks) Key question hence is whether this raises the risk of a further sell-off in plantation stocks or will CPO prices recover?

Key reasons for the CPO price fall:

1) High inventory levels amid the current high output season.

2) Some easing in demand (though not materially) mainly from slower bio-diesel production.

3) Softening crude oil prices.

4) Better soybean supply prospects with improved weather.

Will CPO prices weaken further?

CPO’s price competitiveness to soy-oil and crude oil is now at its best since the previous economic crisis in late-2008. CPO's price discount is currently at US$340/t to soy-oil (spot) versus its historical mean discount of US$160/t. CPO at current spot levels of M$2,300/t is also already discounting crude oil prices at US$72/bbl based on the bio-diesel breakeven support (spot crude oil price: US$112/bbl).

Hence, we see limited downside risk at these levels and expect CPO prices to recover by 1Q13 as inventories are drawn down during the low output season by end-2012/early-2013 and with substitution demand likely to kick in given the extreme tightness in soybean supply. This is until palm oil and soybean supply recovers from 2Q13 with prices to ease again from then.

The ratio of CPO price (in US$/t) to crude oil price (US$/bbl) has fallen to 7.3x, the lowest level since the previous economic crisis in late-2008 (historical mean ratio of 9.2x). This reflects palm oil's increased competitiveness versus crude oil in the bio-diesel segment.

Stock recommendations...

We maintain UWs on AALI, IOI, LSIP and GENP and would look to sell these stocks now. Quality stocks like KLK (Neutral) may also be vulnerable short term due to rich valuations. Our key OWs - BWPT, SIME, FR and SIMP are implying 2013E CPO prices of M$2,600-2,700/t at current levels (higher than spot) and could succumb to near term selling pressure – we would look to accumulate on weakness given the support of young plantations and strong volume growth longer term, while SIME remains a defensive large cap play with valuation support.

Source: J.P.Morgan research report