Unit Trust

[WhiteStone]

This fund is quite incredible no red color since inception wow. No wonder moomoo,Webull and others are using this as their Cash Fund. It used to be Lion Global Enhanced Liquidity but it has lost favor since this year. Last year quite ok.

Indeed. With the current high interest rate environment, this fund has a pretty good yield now considering the risk.

 

[sohguanh]

It has often been said most actively manage mutual fund aka unit trust do worst than a passive index tracking ETF. While this is true it is not 100% absolute. So would like to start off sharing mutual fund where it can beat the benchmark index it is set out for. This post is not to promote or sell the fund.

First off. Allianz Oriental Income Fund. It has beaten the benchmark index it set for itself for quite a while. The only downside I see is the sole star fund manager Stuart Winchester 13+ years managing this fund and gain 153.92% to date if he should resign there could be an exodus of investors funds from this fund. Wonder if Allianz has put in a second fund manager to learn the ropes and step in if necessary.

Past year where almost all equities mutual fund is bleeding red, this fund is not spared either. However you can check the magnitude of decline it has suffered. It is quite good compared to other peers. That is, red color but lesser red than deeper red color haha

Look at it's top 10 holdings there are some "foreign" stock names for me wonder how he pick his stocks. And to keep doing that for 10+ years is commendable. He should train someone to takeover once he retired.

 

[sohguanh]

This fund is available in Endowus but is the accumulating version. Search other platform providers for their dividend distribute version if you want. This fund is very strange for me although it seem not to beat the index thoroughly or convincingly but it manage to get itself out of super red color (that is lesser red color) in last year red galore mutual funds arena.

United Global Durable Equities is the fund. It has a pretty high expense ratio but if the fund managers can prove it is doing hard to beat index I guess one can consider to take a look. I try to look for the fund managers but cannot find so strange. Other UOBAM funds they will put hmm....

This is global fund but look at their top 10 holdings quite a few of "foreign" stock names for me also. It's benchmark index is MSCI AC World Index they are comparing with.

When a global theme fund does not have the familiar AAPL,MSFT,GOOGL,AMZN etc it invoke curiosity in me. What stocks are the fund managers picking to beat the benchmark index? Hmm

 

[sohguanh]

Asia Ex Japan small to medium companies is the theme. It is not easy to beat the index I would think as I believe small to medium companies listed in stock exchanges numbered in the thousands and tens of thousands? It require good stock picking skills from the fund managers.

Endowus pick PineBridge Asia ex Japan Small Cap Equity Fund but I do not fully agree with their analysis. It beat and get beaten by index along the years. A "better performing" similar theme fund for me would be Nikko AM Shenton Emerging Enterprise Discovery Fund SGD. And this is not a coincidence it is also picked by FSM as their recommended fund for Asia Pac small to medium companies.

Since it is small to medium companies I guess the top 10 holdings fo each fund will differ a lot from each other which is logical. Pinebridge fund managers pick China,India,HK,Taiwan while NikkoAM fund managers pick Taiwan,India,S.Korea,China. Note they place China way below which I would think should be top spot. Hmm...

 

[sohguanh]

Just a pause before I got more to share. Last year was a good test on the mutual fund performance as in a super bear market we can see how the fund managers work hard for their monies. In a good bull run any mediocre fund manager can eke out good returns. It is only in a super bear market we see how they perform wonders. So I think this year 2023 review 2022 mutual fund performance is good and excellent timing.

I am still looking for a good performing China (Greater China) mutual fund but yet to find one so far. All are in super red color none of the fund managers can perform magic miracles. Even the China ETF I have are bleeding red color. If any readers find any China (Greater China) mutual fund that is lesser red in color can share.

I suspect the reason no fund managers can do it well is becuz their top holdings are basically that same whole batch of familiar China stock names we know so far. Wonder if there are exceptions hmmm

 

[BBCWatcher]

This is great information if you have a time machine available. But “Past performance is not necessarily indicative of future results.”

How about backtesting this idea? Go look at the top performing unit trusts over the decade ending March 31, 2013. Pretend you bought the top 3 of those top performing unit trusts. Then check to see how they’ve done from April 1, 2013, through March 31, 2023. Would you have netted more (after expenses) than just buying a comparable index fund?

 

[sohguanh]

This is great information if you have a time machine available. But “Past performance is not necessarily indicative of future results.”

How about backtesting this idea? Go look at the top performing unit trusts over the decade ending March 31, 2013. Pretend you bought the top 3 of those top performing unit trusts. Then check to see how they’ve done from April 1, 2013, through March 31, 2023. Would you have netted more (after expenses) than just buying a comparable index fund?

My posts is not to say I get more returns or not. My original intention was to "correct" the common knowledge that actively managed mutual fund fare worst than a passive index tracking ETF. There are exceptions and I list down those exceptions so any interested readers are aware.There are exceptions just they are small in numbers and take some time to find them.

Just to update I have both mutual fund and ETF in my portfolio as I like diversification and always try to minimize duplication of stocks among them as much as possible. The mutual funds I have shared earlier top holdings are different from my corresponding similar themed passive ETF actually.

 

[sohguanh]

For quite some time I was looking for a Europe themed mutual fund and not sure if I found one this year. BGF European Fund A2 SGD Hedged is one I have found. It's benchmark index is MSCI Europe and it has beaten it just ok. It has a sibling called BGF European Focus Fund A2 SGD Hedged and they are all managed by the same fund manager. For Europe excluding UK and benchmark index MSCI EMU there is BGF Euro-Markets Fund A2 SGD Hedge

Again I seldom research a lot on Europe themed mutual fund so these three came to my attention recently. Previously there is one called Allianz Europe Equity Growth Cl AT Acc H2-SGD but their benchmark index is different it is S&P Europe LargeMidCap Growth and it did not beat the index so well.

Anyone with Europe themed mutual fund which can beat their benchmark index can share?

 

[sohguanh]

For some countries really no mutual fund outdone the passive index ETF in their benchmark. So I will go for ETF. I use Webull so I buy USD 5 each txn slowly accumulate.

iShares MSCI Australia EWA
iShares MSCI Canada EWC
iShares MSCI India INDA <- there are a few mutual funds on India but somehow I don't find them beating the passive index. if there are please share the fund name
iShares MSCI Indonesia EIDO
iShares MSCI Latin America 40 ILF
iShares MSCI Thailand THD

 

[BBCWatcher]

My posts is not to say I get more returns or not. My original intention was to "correct" the common knowledge that actively managed mutual fund fare worst than a passive index tracking ETF.

Most of them fare worse, yes. I don’t think anyone argues that there aren’t outliers over particular time intervals. But that’s exactly like saying if you hand a bunch of monkeys a mechanism to pick stocks then one lucky monkey will pick stocks better than the others. So how do you pick the lucky monkey in advance? If you’ve got a reliable method to pick the top performers before they deliver their top performances, fantastic, please let us know! Or don’t less us know, go place those bets, and quickly become a billionaire.

 

[Mephist0pheLes]

Just a pause before I got more to share. Last year was a good test on the mutual fund performance as in a super bear market we can see how the fund managers work hard for their monies. In a good bull run any mediocre fund manager can eke out good returns. It is only in a super bear market we see how they perform wonders. So I think this year 2023 review 2022 mutual fund performance is good and excellent timing.

The Active-Passive Debate: Bear market Performance:
There is no evidence that active managers on average are able to produce better performance than index fund during bear market.
The paper also found that outperformance in one bear market has no relation to outperformance in subsequent bear markets. Indicating that fund that outperformed in one market is most likely due to luck rather than skill.

My posts is not to say I get more returns or not. My original intention was to "correct" the common knowledge that actively managed mutual fund fare worst than a passive index tracking ETF. There are exceptions and I list down those exceptions so any interested readers are aware.There are exceptions just they are small in numbers and take some time to find them.

You will always find mutual fund that outperform the index in any particular year, jus like there is always a chance of rolling a die and get a value of more than 3.5. The question is how to find the funds that will outperform in the future? Certainly not by looking at how they did historically.
Based on the 2022 mid-year SPIVA persistence score card, out of the 489 funds in the 2020 top quartile, NOT A SINGLE fund remains in the top quartile in the next 2 years. Other studies have similar results, top performing funds today don't stay at the top.

The paper, On Persistence in Mutual Fund Performance, also looked at persistence of mutual fund and has a damning remark: The results do not support the existence of skilled or informed mutual fund portfolio managers.

Paraphrasing Ben Felix, head of research at PWL, if you are rich and want to gamble on an actively fund beating the market, go ahead. But if you are average household saving/investing for retirement or other financial goals, there's really no reason in investing mutual fund for that tiny chance of outperformance.

 

[sohguanh]

The Active-Passive Debate: Bear market Performance:
There is no evidence that active managers on average are able to produce better performance than index fund during bear market.
The paper also found that outperformance in one bear market has no relation to outperformance in subsequent bear markets. Indicating that fund that outperformed in one market is most likely due to luck rather than skill.


You will always find mutual fund that outperform the index in any particular year, jus like there is always a chance of rolling a die and get a value of more than 3.5. The question is how to find the funds that will outperform in the future? Certainly not by looking at how they did historically.
Based on the 2022 mid-year SPIVA persistence score card, out of the 489 funds in the 2020 top quartile, NOT A SINGLE fund remains in the top quartile in the next 2 years. Other studies have similar results, top performing funds today don't stay at the top.

The paper, On Persistence in Mutual Fund Performance, also looked at persistence of mutual fund and has a damning remark: The results do not support the existence of skilled or informed mutual fund portfolio managers.

Paraphrasing Ben Felix, head of research at PWL, if you are rich and want to gamble on an actively fund beating the market, go ahead. But if you are average household saving/investing for retirement or other financial goals, there's really no reason in investing mutual fund for that tiny chance of outperformance.

For every mutual fund or ETF supporters there will be distractors this is normal. What I have highlighted is there are exceptions and I list down. Some funds have been going beating the index for years if you take a look.

Motherhood statement like such give sweeping statements ignoring exception. Possibly they are ETF supporters and anti-mutual fund for all I know.

I am not a hardcore mutual fund supporters as I do buy passive ETF too when I cannot find mutual fund that beat the benchmark index.

But I do find a pattern among those mutual funds that beat the index is fund managers pick stocks that are not in the index. This can explain why it can beat but these belong to minority of mutual funds as it take a lot of risk and acumen or whatever of the fund managers. Year 2022 they showcase their skills. Most fail but some do it much better than others.

 

[Mephist0pheLes]

For every mutual fund or ETF supporters there will be distractors this is normal. What I have highlighted is there are exceptions and I list down. Some funds have been going beating the index for years if you take a look.

Motherhood statement like such give sweeping statements ignoring exception. Possibly they are ETF supporters and anti-mutual fund for all I know.

I am not a hardcore mutual fund supporters as I do buy passive ETF too when I cannot find mutual fund that beat the benchmark index.

But I do find a pattern among those mutual funds that beat the index is fund managers pick stocks that are not in the index. This can explain why it can beat but these belong to minority of mutual funds as it take a lot of risk and acumen or whatever of the fund managers. Year 2022 they showcase their skills. Most fail but some do it much better than others.

one year of outperformance in a bear market is hardly conclusive. i only know there are way more studies with data-backed evidence across mutliple decades that MF dont beat index on average, and there are no good way for investors to tell a good MF (if they exist) from a bad one.

 

[tangent314]

These "exceptions", as you call them, lead to the well known phenomenon called Survivorship Bias.

https://en.wikipedia.org/wiki/Survivorship_bias#Business,_finance,_and_economics

 

[sohguanh]

one year of outperformance in a bear market is hardly conclusive. i only know there are way more studies with data-backed evidence across mutliple decades that MF dont beat index on average, and there are no good way for investors to tell a good MF (if they exist) from a bad one.

If you have spent some time to look into the factsheet of the mutual fund I have posted they are not for one year. Some is up to five years or more. But of cuz one could argue the stats are faked then I got nothing to say. I am just sharing exception exist and this give readers some info. Passive ETF is not always 100% winner. Which is why I have both mutual fund and ETF in my portfolio.

 

[sohguanh]

These "exceptions", as you call them, lead to the well known phenomenon called Survivorship Bias.

I am not sure it is the same. I have corresponding articles against passive ETF investment but I don't share becuz I don't want to turn it into a mutual fund Vs ETF war here.

I repeat my original intention is to bring awareness there exist funds that beat benchmark index. With this info, each reader is free to make their decision. I know I am all for mixture of both and never hardcore on only one of them.

 

[tangent314]

You're still not seeing that you are yourself falling into the survivorship bias trap. No one here is denying that out of 1 million people that roll a 6 sided dice 6 times, approximately 21 will get roll 6 sixes. If we make them roll again, 3-4 of them will roll another 6. Does that mean that these people have a special ability to roll only 6s forever?

The other issue is, there is no practical value in funds that can beat the terrible indices that they are benchmarked in. If you want to convince people that we should buy a particular fund instead of IWDA, you have to find us funds that will beat MSCI World index. We aren't really interested in a fund that outperforms its own index by ~7% annualized over 5 years if it still falls behind the MSCI World Index by ~0.75%

 

[BBCWatcher]

I‘d even go a little farther than Tangent314 has: we’re probably not interested in outperforming the MSCI World Index only a little if we have to assume much bigger portfolio risk to do it.

 

[sohguanh]

The other issue is, there is no practical value in funds that can beat the terrible indices that they are benchmarked in. If you want to convince people that we should buy a particular fund instead of IWDA, you have to find us funds that will beat MSCI World index. We aren't really interested in a fund that outperforms its own index by ~7% annualized over 5 years if it still falls behind the MSCI World Index by ~0.75%

All along I never intend to promote any fund as that is individual reader choice. All I want to share to readers is there are mutual funds that can beat the benchmark index. Aware there are exceptions and with this info decide for yourself if you should all into passive ETF, all into mutual funds, or a mixture of passive ETF and mutual funds.

I am not like those on social media that like to promote certain stock ABC, ETF DEF, mutual fund GHI if that is what you are looking for.

 

[sohguanh]

Just to add some to the mix. Mutual funds have evolved along the years. Nowadays one can find mutual fund which explicitly state they got no benchmark index to beat. For such mutual fund, there is no way you can compare to any corresponding passive ETF.

One fund I share would be Nikko AM Singapore Dividend Equity SGD. In the document is below paragraph
"
^ With effect from 1 November 2017, the benchmark for the Singapore Dividend Equity Fund (i.e. Straits Times Index) has been removed and there will no longer be any benchmark for the Fund. This is because pursuant to the investment objective of this Fund, this Fund is managed on a total return basis and as such, it does not seek to outperform any benchmark. Prior to 1 July 2001, the benchmark was DBS 50 Index
"

While this seem to be in the minority, I am not surprised years down the road, more mutual funds removed their benchmark index. This is then a new ball game as one usually like to compare the mutual fund with passive ETF and decide. By not measuring to any benchmark index how does one compare?