Experts dispute 80% loss claim

finally!!! the expert da bukak mulut...

PETALING JAYA: Unit trust managers disagree with reports saying that 80% of EPF members who had invested in unit trusts had lost some RM600mil.

Federation of Malaysian Unit Trust Managers president Tunku Datuk Ya’acob Tunku Abdullah said that while there were investors who had lost money, the 80% figure quoted was unsubstantiated.

“The difference of RM600mil might not have taken into consideration factors which may have an impact in calculating returns.

“(These include) members redemption upon realisation of profits, switching-in with profits into other funds, conversion to ordinary accounts after reaching the age of retirement, death or other incapacitation,” he said in a statement.

He was responding to recent press reports that EPF contributors had suffered losses of RM600mil after investing in unit trusts.

Under the EPF’s investment scheme, the amount of savings that can be withdrawn should not be less than RM1,000 and not more than 20% of the amount exceeding RM50,000 in Account 1.

Tunku Ya'acob said based on international research agency Standard and Poor's (S&P) report, the average returns from Malaysian equity funds was 24% over seven years, 56% over five years and 26% over three years.

He said the hallmark of unit trusts was its mid- and long-term investment strategies for investors.

The S&P report indicated that the investments did deliver respectable returns over time, he said.

He said this was why the federation had always stressed on the importance of investors’ education and their understanding that investments in unit trusts were for the medium to long term and not for quick gains.

Tunku Ya'acob said unit trusts, though well regulated, do carry a certain amount of risk.

He said the equity market was rather flat last year and investors had probably not timed their investments correctly to boost returns.

He said to maximise returns investors were advised to practise dollar cost averaging in a consistent manner over the long term.

They also had to be savvy in recognising when to buy into suitable funds and perform switching in response to market conditions and personal circumstances.

Tunku Ya’acob said the current procedures relating to investments under the EPF’s Members Investment Scheme would remain unchanged pending any directive from the EPF.

Unit trust managers are concerned over the effects the claims of the losses would have on their business.

Avenue Invest Bhd executive director Danny Wong said it was too soon to see any impact, but if the figures were not clarified soon the industry could be affected.

He said he did not believe that the losses suffered were as high as had been claimed as Avenue Invest's long-term investment clients, including those investing with EPF funds, had been registering good returns.

He said, however, that only 1% of his client base consisted of those who withdrew money from the EPF for investing.

Prudential Unit Trusts Bhd chief executive officer Mark Toh said he, too, felt that those who invested via the EPF Investment Scheme would not have made losses over the long term (three to five years).

He said the 80% figure in the report about the EPF members’ losses should be verified.

http://www.thestar.com.my/news/story.asp?file=/2006/8/9/nation/15087693&sec=nation