It is usually the end of the year when our investors take a look back into PRS funds to decide which funds to contribute into for tax relief purposes. Since the introduction of PRS back in 2012, the additional tax relief incentive has been serving as a plus for investors who are looking to complement their retirement savings via PRS. On top of that, the PRS Youth Incentive which was initially launched in 2013 will end on the last day of 2018, if the government does not further extend it during the 2019 budget announcement next week.
Hence, in this article, to aid investors in the PRS fund selection process, we will review the PRS funds’ performance on our platform.
|Figure 1: Performance Comparison for Conservative PRS Fund
Over the past 3 years, on average, the conservative PRS funds that listed on FSM platform delivered a 3-year annualized return of close to 4.0%, ranging from +1.8% to +5.5%.
The top performing conservative PRS fund based on 3-year annualized return was AmPRS - Conservative Fund - Class D. The fund invests into a well-diversified portfolio comprising of fixed income instruments, equities REITs and liquid asset like cash and cash equivalent.
Thanks to the respectable 3-year performance, the fund also posted the highest 3-year Sharpe ratio of 0.94 as compared to the peers’ average of 0.31. The fund manager has consistently held more than 10% of equities exposure in 2017 which in turn contributed to the outstanding 3-year performance of the fund as compared to some of the funds that have purely fixed income exposure.
|Figure 2: Performance Comparison for Moderate PRS Fund
For the balanced category, our recommended fund - Affin Hwang PRS Moderate Fund was the top performing fund in the category for 3 consecutive years.
The fund invests into 5 collective investment schemes which are Affin Hwang Select Asia Pacific (ex Japan) Balanced Fund, Affin Hwang Select Bond Fund, Affin Hwang Select Dividend Fund, Affin Hwang Select Asia (ex Japan) Opportunity Fund and Affin Hwang Bond Fund.
As of end September, the fund invests about 45% into fixed income instruments while about 44% in equities and the remaining in money market instruments. For country allocation, the fund invests mostly in Malaysia (37%) while having some foreign exposure like China (19.2%), Singapore (8.0%), Hong Kong (6.3%) and so on.
Since the fund has a rather significant exposure in China as compared to its peers, the recent correction in the Chinese equity market was one of the factors that led to the rather disappointing performance over the 1-mth, 3-mth and 6-mth period.
|Figure 3: Performance Comparison for Growth PRS Fund
For the growth category, on average, the PRS funds delivered 3-year annualized returns of 4.9%. Among all, CIMB-Principal PRS Plus Asia Pacific ex Japan Equity – Class C recorded the highest 3-year annualized return of 9.4% due to the superior return from the Asia ex Japan equities in 2017.
However, in term of 3-year sharpe ratio, AmPRS – Asia Pacific REITs – Class D has emerged as the top performing fund due to its higher resiliency during market downturn. The fund invests into a collective investment scheme – AmAsia Pacific REITs – Class B (MYR) which mainly invests in Singapore (21.56%), Australia (19.44%) and Japan (12.88%).
Whenever we talk about retirement, most of us will think that the day is still far away and the planning for it can be delayed, especially the youth. However, one should be aware that it will never be too early to start their retirement planning as the earlier you start, the more you can benefit from the compounding effect.
For investors who wish to start building their nest-egg today, click here to check out the latest
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