Unit Trust Funds

I don't have faith in unit trust funds/mutual funds products in Malaysia, seriously.

Imagine you walk into a bank, sit down in front of the investment customer support counter and start to talk with one of the staffs about your desires to make more money out from your savings. The chances are you will have similar conversation like below:

(P/S: Eddy is pretending dumb)

Eddy: I heard about making money by "buying" unit trust funds.

Staff: O yes (Taking out a products brochure), this is our bank offering

Eddy: Wow, there are so many of them. Which one should I buy?

Staff: Basically, all of them are good products (*bang head). It really depends on your specific goals

Eddy: I have RM 10k and which is the best for me?

Staff: Are you a high risk taker? Aggressive? How fast you wanna make money?

Eddy: (Duh! Of course I wanna make money fast lar) I can take risk.

Staff: Emmm.. Then you might (wth, might???) buy this product. The fund actually buy into China mainland bluechips.

Eddy: I heard China market is slumping now

Staff: Well.. err... Then this is a good chance to buy, if you miss the boat previously.

Eddy: (WTH)

Eddy: How much I can earn if I "buy" RM10K?

Staff: The return is non guaranteed because it will be based on the actual performance. However, if the market perform well, then you can earn much higher than lots of other investments like FD (WTH!)

(Ok, at this point, if he never shows you the historical chart, most probably the fund is badly performed)

(Remember, there is always reason why these salesman are pushing for a particular fund, perhaps to meet sales quota)

Eddy: Do you personally buy into any of the funds?

Staff: Of course, I buy in little bit too.

Eddy: (I doubt so)

Ok, the above conversation is fictionous, but I did once bought an Islamic Syariah compliant fund with one of the Malaysia's leading bank in year 2005 and then suffered from losses about 25% of total capital and only recovered during mid-2007 when I sold them break even with my purchase price. Sucks, even time deposit saving outperformed these losers.

My point is most of the sales representatives are incompetent and not in any position qualified to give advice on fund investment. Of course, there are qualified investment professionals but good chance is they only serving high net worth individuals or corporates, not entertaining retail customers like you and me.

I disgust dollar averaging strategy as adviced by most "salesman". Blind monthly contribution is not really my cup of tea. I prefer seasonal dollar averaging particularly when the stock market is slumped. Buy low sell high, it is as easy as that. Why put money in fund when the fund price is high? Higher get higher? Why you want to trade such a big downside risk for a marginal upside reward? Think twice.

One comment about a Malaysia bank, the one starts with 'P' and its funds won lots of awards, is please remember unless you really study and understand the mechanics of their fund manager investment strategy, else no matter how good they are as beautified by these awards, they are really only "Juara Kampung". And yes, you are right about "Putting money in Juara Kampung is better than putting in other Kampung Losers".