SUMMARY OF RECOMMENDED UNIT TRUSTS LIST 2017/18
Moving into 2017, both global equities and fixed income markets have performed well, and we believe investors have enjoyed decent returns thus far. As the calendar flips across first half of 2017, it is the time of the year again where we furnish investors with our list of Recommended Unit Trusts. Each year, we perform fund assessments and select the best performing funds from each category available to ensure that the list remains relevant and current to investors. For 2017, we have a total of 36 funds under 26 categories on our list, spanning across both equities and fixed incomes with exposure to a wide range of regions and countries across the world. Most of the funds on the list have demonstrated a strong long-term track record and 27 out of 32 Recommended Unit Trusts for 2016/17 have made it back to the list for this year, indicating the consistency of our fund recommendations as well as the quality of our recommended funds.
Our methodology of fund assessment is largely quantitative, where funds are assessed based on historical performances, risk and expenses (Click here for more information on our methodology). Apart from the quantitative analysis, we also consider qualitative factors in our analysis, including the fund house’s investment philosophy, the fund manager’s consistency in their investment approach, the stability of the management team, the investment team’s years of experience and the fund holdings among other factors.
The Core Equity segment remains mostly unchanged this year, with the only exception to Core Equity – Malaysia (Islamic) category. We have added Affin Hwang AIIMAN Growth Fund into the aforementioned category, given the fund has posted resilience performance over the recent years, while recording a lower downside deviation and expense ratio compared to those of its peers.
Within the Balanced Fund segment, we have added Eastspring Investments Dynamic Fund into Balanced – Malaysia category, as the fund management team has proven its capability in managing downside risks better compared to those of its peers, reflected by the fund’s low downside volatility.
Under the Supplementary Fund segment, we have removed Sector Equity - Asia ex-Japan Small to Medium Companies category from the list merely because there were no funds under these categories which we have the conviction to recommend to investors. At the same time, we have added two new single country equity categories, namely Single Country Equity – Singapore and Single Country Equity – India. For the former, we are recommending Nikko AM Singapore Dividend Equity Fund. This is also the first time that our partner, Nikko Asset Management Asia Limited, is being featured on our list, with its Singapore equity fund making to our recommended list due to the fund’s resilience performance. As for the Single Country Equity – India category, we have Manulife India Equity Fund emerging as the 2017/18 Recommended Unit Trust under this category.
The supplementary portfolio consists of sub-regional funds, country-specific funds as well as sector-specific funds, with the goal of enhancing a portfolio’s potential return. While these funds provide higher potential returns, investors should be aware that these funds may entail higher volatility. Thus, investors who seek to invest in funds under these categories should have a higher risk tolerance and longer investment timeframe.
This year, we have introduced a new segment – Private Retirement Scheme. Similar to the other segments, we have adopted the same methodology for the fund assessment process. Under the Private Retirement Scheme segment, we have introduced 3 new categories which are:
• Private Retirement Scheme – Conservative
• Private Retirement Scheme – Moderate
• Private Retirement Scheme – Growth
While there have been changes of funds within the categories, previously recommended funds should not be considered as sub-par investments because we have seen previously dropped funds making it back to the list. We note that the difference of scores between good funds is marginal for some categories, and with the fact that we had to be stringent in our shortlist, some good funds inevitably did not make the list.
With the huge array of funds available on our platform, the Recommended Unit Trusts list serves as a starting point for investors. Prior to making any investment decisions, investors should note that they should select a fund that would complement and sit well with their investment styles, philosophies and objectives.
The careful study of fund factsheets, prospectus and semi-annual/annual reports are essential reading for investors who are determined to take a more active role in selecting funds for their portfolios. Investors should consider the various merits and characteristics that individual fund possess in constructing their own portfolios. Likewise, having a suitable asset allocation and the exposure to regional markets across the globe for the purpose of diversification are also critical considerations for a successful investment.