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PRS Fund Performance Review October 26, 2018
In this article, to aid investors in the PRS fund selection process, we will review the PRS funds’ performance on our platform.
Author : Jerry Lee Chee Yeong


PRS Fund Performance Review

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.

Conservative

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.

Moderate

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.

Growth

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%).

Conclusion

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 PRS promotion up for grab!


This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund's prospectus, product highlight sheet (PHS), and if necessary, consulting with financial or other professional advisers. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Amongst others, investors should consider the fees and charges involved. The relevant prospectuses have been registered and lodged with the Securities Commission. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should be highlighted of the fact that the value of their investment will remain unchanged after the distribution of the additional units. All applications for unit trusts must be made on the application form accompanying the prospectus. The prospectuses and PHS can be obtained from Fundsupermart.com. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.