Fund manager Mr. Chen Fan Fai (of Kenanga Investment) sees KLCI grinding its way up for the rest of the year. Speaking at the Fundsupermart investment seminar in KL today, he prices the market as more or less fairly valued at 15x PE, 2.2 PBV, with dividend yield around 4 %. He is cautious of the debt crisis in Europe and slowing down of US and emerging economies. If and when the endgame comes in Europe (e.g. some countries leaving the union), perhaps in the next year or two, this would result in a financial contagion causing the market to fall off the cliff. His funds are positioned with risk management by seeking shelter in defensive stocks and presently holds 20% in cash. The sector he favors include consumer, healthcare and reits. He also foresees some weakness when the general elections are announced due to the uncertainty, which will be compounded if the opposition were to win. Award-winning Chief Investment Officer at AmInvestment Ms. Goh Wee Peng also sees a challenging time ahead. OSK's Mr. Ho Seng Yee recommends investor include global emerging markets bond fund in their portfolio to achieve a long term equity-like returns with bond-like volatility.
*most benchmarks used by unit trust funds are price indices which do not include dividend returns. Thus the returns are actually less. For example, a KLCI index should be added around 3% per annum to reflect the true returns. This means if a fund underperforms the KLCI index, the underperformance is actually worse as the dividend yield has not been included in the index.
