The effect of the fall in the stock market is now showing in dividends declared by unit trusts. After the EPF declared dividends of 4.5% (lowest in so many years), PNB now declares its lowest ever payout for the ASM. However PNB has been able to declare a reasonable dividend rate for its fixed-price equity income fund. The 6.25% dividend declared is so much higher than that offered by fixed deposit takers.
KUALA LUMPUR: Permodalan Nasional Bhd (PNB) declared the lowest ever payout for Amanah Saham Malaysia (ASM), 6.25 sen per unit for fiscal 2009, as it decided to keep some money for a rainy day.
It could have paid 7.92 sen but decided on the lower figure, ASM's lowest since the fixed-price equity income fund was launched in 2000.
The payout is still more than double the current 12-month fixed deposit rate of 2.5 per cent.
"We still have a reasonable amount of cash. The ASM fund size is 7.6 billion, of which 2.1 billion is in cash and this can be used to buy good stocks," said PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman yesterday.
PNB had to contend with a stock market that fell some 40 per cent last year as investors worried a recession would hurt corporate earnings.
Hamad declined to predict how PNB would fare for the year till March 31 next year, but said it would strengthen its investment portfolio. Since last year, the purchase of ASM units has risen by a quarter.
PNB chairman Tun Ahmad Sarji Abdul Hamid said 402,513 unit holders who subscribed to 7.21 billion units of ASM would benefit from the total payout of RM407.58 million.
Last year, a record payout for ASM was declared with income distribution of 7.8 sen, compared with 6.8 sen in 2007. ASM made a gross income of RM440.73 million for fiscal 2009.
Meanwhile, ASM transactions nationwide will be halted from March 25 to 31 for the calculation of income distribution.
Wednesday, March 18, 2009
Tuesday, March 17, 2009
Global meltdown hurt performance, says EPF
This article is from The New Straits Times. The lower rate of dividends declared will cause the amount at retirement of contributors to be reduced.
This dividend rate is however better than most other saving institutions but not as good as those declared by some other investment vehicles such as PNB and government bonds. Contributors who moved their EPF savings into Unit Trusts suffer paper losses instead of getting any dividend.
KUALA LUMPUR: The Employees Provident Fund (EPF) has declared a dividend of 4.5 per cent for 2008, its lowest since 2003, and warned members not to expect more than that for this year.
The EPF's dividend was 5.8 per cent for 2007, 5.15 per cent in 2006, five per cent in 2005, 4.75 per cent in 2004 and 4.50 per cent in 2003.
"Up until September last year, the EPF was doing well in equities. However, with the global financial meltdown, our performance in equity investments recorded a drop of less than 20 per cent, which impacted our dividend pay-out.
"This, however, compares better with that of the Kuala Lumpur Composite Index, which was down approximately 40 per cent from the end of December 2007 to December 2008," EPF chairman Tan Sri Samsudin Osman said in a statement.
Net income for the year was RM14.26 billion, after deducting allowances for the diminution in value of equities and doubtful debts, dividends for withdrawals, investment expenses, operational expenses, and death and incapacitation benefit payments. This represented a decrease of 15.47 per cent over 2007's net income of RM16.87 billion.
EPF made allowances of RM4.69 billion for the diminution in value of both overseas and local equities, compared to only RM520 million in 2007. Of the 2008 provision, RM3.20 billion was allocated for overseas equities.
"The fundamentals of the companies we invested in remain strong and we are confident that this provision will be written back once recovery takes place," said Samsudin.
As at Dec 31 2008, the EPF's total investment funds had grown by RM28.99 billion to RM342 billion compared to RM313.01 billion a year ago.
The three main contributors to EPF's record gross income of RM20 billion in 2008 were loans and bonds (RM6.78 billion), equities (RM6.67 billion), and Malaysian Government Securities (RM4.94 billion).
Dividends will be credited to members' accounts on March 23.
"We are bracing ourselves for a tough year ahead as the effects of the global financial crisis continue to be felt.
"However, we believe that in every crisis, there is opportunity to be seized. The key is to remain vigilant and continue delivering results for the benefit of our members through our prudent investment strategy."
This dividend rate is however better than most other saving institutions but not as good as those declared by some other investment vehicles such as PNB and government bonds. Contributors who moved their EPF savings into Unit Trusts suffer paper losses instead of getting any dividend.
KUALA LUMPUR: The Employees Provident Fund (EPF) has declared a dividend of 4.5 per cent for 2008, its lowest since 2003, and warned members not to expect more than that for this year.
The EPF's dividend was 5.8 per cent for 2007, 5.15 per cent in 2006, five per cent in 2005, 4.75 per cent in 2004 and 4.50 per cent in 2003.
"Up until September last year, the EPF was doing well in equities. However, with the global financial meltdown, our performance in equity investments recorded a drop of less than 20 per cent, which impacted our dividend pay-out.
"This, however, compares better with that of the Kuala Lumpur Composite Index, which was down approximately 40 per cent from the end of December 2007 to December 2008," EPF chairman Tan Sri Samsudin Osman said in a statement.
Net income for the year was RM14.26 billion, after deducting allowances for the diminution in value of equities and doubtful debts, dividends for withdrawals, investment expenses, operational expenses, and death and incapacitation benefit payments. This represented a decrease of 15.47 per cent over 2007's net income of RM16.87 billion.
EPF made allowances of RM4.69 billion for the diminution in value of both overseas and local equities, compared to only RM520 million in 2007. Of the 2008 provision, RM3.20 billion was allocated for overseas equities.
"The fundamentals of the companies we invested in remain strong and we are confident that this provision will be written back once recovery takes place," said Samsudin.
As at Dec 31 2008, the EPF's total investment funds had grown by RM28.99 billion to RM342 billion compared to RM313.01 billion a year ago.
The three main contributors to EPF's record gross income of RM20 billion in 2008 were loans and bonds (RM6.78 billion), equities (RM6.67 billion), and Malaysian Government Securities (RM4.94 billion).
Dividends will be credited to members' accounts on March 23.
"We are bracing ourselves for a tough year ahead as the effects of the global financial crisis continue to be felt.
"However, we believe that in every crisis, there is opportunity to be seized. The key is to remain vigilant and continue delivering results for the benefit of our members through our prudent investment strategy."
Sunday, March 1, 2009
Problems in Compound Interest
This article from The Star interests me from the point of view of students at USIM who are taking The Actuarial Science & Risk Management Program and The Financial Mathematics Program. It involves practical problems in compound interest. Students can prepare spreadsheets showing the numerical computations involved and provide arguments to support or disagree with the proposal. They can even provide mathematical solutions.
Sunday March 1, 2009
It pays to continue paying the same amount
PETALING JAYA: Should houseowners take advantage of the lower base lending rate (BLR) and enjoy more disposal income with lower monthly home loan repayments? Or should they pay the same amount and complete their loan repayments faster?
Financial planners urge homeowners to opt for the second option if their income level has not been affected by economic downturn.
By shortening the tenure of their loan repayment period, they pay significantly less interest in the long run.
Based on the expected reduced BLR of 0.4% which comes into effect next week, a borrower with a RM200,000 home loan over a tenure of 20 years stands to save more than RM19,000 if he continues to pay the same amount.
On the other hand, he will save only close to RM11,000 if he reduces his monthly payment in keeping with the lower BLR (see chart).
Bank Negara Malaysia reduced the Overnight Policy Rate (OPR) from 2.5% to 2% on Tuesday to allow for more disposable income in the hands of the public, which translates into a lower BLR. This follows a cut in OPR by 75 basis points to 2.5% last month.
Financial planner with MAAKL Mutual Rajen Devadason says individuals who still have their jobs and normal income levels should maintain their monthly repayment sum as each ringgit channelled towards the home mortgage will reduce the interest component.
“However, for those in dire straits, maintaining the loan tenure while reducing the monthly payments will help them reduce their monthly outflow of cash. So, what to do depends upon the current circumstances of the individual,” he adds.
Sunday March 1, 2009
It pays to continue paying the same amount
PETALING JAYA: Should houseowners take advantage of the lower base lending rate (BLR) and enjoy more disposal income with lower monthly home loan repayments? Or should they pay the same amount and complete their loan repayments faster?
Financial planners urge homeowners to opt for the second option if their income level has not been affected by economic downturn.
By shortening the tenure of their loan repayment period, they pay significantly less interest in the long run.
Based on the expected reduced BLR of 0.4% which comes into effect next week, a borrower with a RM200,000 home loan over a tenure of 20 years stands to save more than RM19,000 if he continues to pay the same amount.
On the other hand, he will save only close to RM11,000 if he reduces his monthly payment in keeping with the lower BLR (see chart).
Bank Negara Malaysia reduced the Overnight Policy Rate (OPR) from 2.5% to 2% on Tuesday to allow for more disposable income in the hands of the public, which translates into a lower BLR. This follows a cut in OPR by 75 basis points to 2.5% last month.
Financial planner with MAAKL Mutual Rajen Devadason says individuals who still have their jobs and normal income levels should maintain their monthly repayment sum as each ringgit channelled towards the home mortgage will reduce the interest component.
“However, for those in dire straits, maintaining the loan tenure while reducing the monthly payments will help them reduce their monthly outflow of cash. So, what to do depends upon the current circumstances of the individual,” he adds.
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