OSK-UOB Dana KidSave

One of the most desired by an investor, is to achieve diversification in his or her portfolio and what better way to do so then by investing in a balanced fund. A balance in an investment portfolio is also fundamental to appease an investor in times of uncertainties and volatility. Such a balance can appeal to the investor of any age regardless of his or her objectives. Thus, with market uncertainties continuing to prevail over the Eurozone debt crisis and its contagion effect on the global economy, investors remain cautious with their investment choice, seeking to invest in low to moderate risk investments such as a balanced fund.

Hence, OSK-UOB offer you a Shariah-based fund with its balanced asset allocation strategy in equities and investments comprising sukuk, islamic money market instruments, deposits and collective investment schemes. The investment in equities will enjoy potential capital appreciation upswings while any downswings will be cushioned by its investments in the latter which are defensive in nature.

When making investments, the manager may invest up to 30% of NAV in foreign markets. The fund will invest in Shariah-compliant securities/instruments listed on or traded in Asia Pacific ex Japan markets, including Shariah-compliant securities / instruments of companies that are listed on or traded in non-Asia Pacific ex Japan markets (such as NYSE and LSE).

How about Sukuk ?

At lease BBB rating sukuk issued by Malaysian incorporated companies at the point of purchase by RAM Rating Services Bhd or equivalent rating agencies. Foreign sukuk issued by corporations and financial institutions must carry a rating of BB or higher by S&P or equivalent, whereas sukuk issued by supra-nationals, governments and their agencies need not be rated.

Click here to download prospectus

Source: OSK-UOB IM

How Does Different Tenures of SIBOR and SOR Affect Borrowers?

The following is a guest post by Property Buyer

As Singapore has been largely dependent on importation in maintaining a small and open economy, it has literally adopted a policy for the exchange rate that significantly affects import-based inflation. MAS or Monetary Authority of Singapore is responsible for regulating and managing the Singapore dollar valuation against its main trading partners and their related currencies. Based on this perspective, we can say that the world money market actually determines the rise and fall of the interest rate in Singapore. The interest rate fluctuates as a result of this undisclosed band between the MAS and its trading partners. This is relevant to how the US Dollar became a main component in the basket of currency between trading countries. To explain the strength of the Singapore Dollar, we can refer to the way the US Dollar works within the basket of currency. This simply explains how currencies between trading partners work. 

Explaining the framework of SIBOR or Singapore Inter-bank Offered Rate

When banks or financial institutions lend to each other, they usually refer to an interest rate to base their inter-borrowings. They use SIBOR as their inter-bank rate or inter-borrowing rate. The rate is actually set by the Association of Banks in Singapore. It is being announced daily at the start of the trading day to the public and mainstream media. For your information, SIBOR works similarly to LIBOR or London Interbank Offered Rate. Most home loan rates in Singapore use the SIBOR rate.

In Singapore, SIBOR are available in 1 month, 3 months, 6 months, and 12 months tenure. Usually the longer the tenure of SIBOR , the higher would be its rate.

Understanding the SOR or Singapore Swap Offer Rate

The expected forward exchange rate of the USand Singaporedollars is the SOR. The SOR is also used as the lending cost, where upon maturity, the SOR is being used as the rate of the Forex conversion with no bid and spread from the US to Singaporedollar. The banks love to use the SOR because they save more by using this rate. However, it demonstrates more volatility than SIBOR. The Association of Banks in Singaporeset the SOR as the currency swap for the US dollar even though its currency movement directly influence the volume of the contracts and trading. SOR is offered in terms of 1 month, 3 months, 6 months, and 12 months.

SIBOR and SOR pegged home loans

This refers to variable or market pegged floating loan packages offered by most banks using the SIBOR or SOR rates. The interest rate for these loans  is the spread + SIBOR or SOR.

How do you define bank spread?

The profit margin that banks or other financing institutions use to gain income on top of the SIBOR or the SOR rate is called the spread. For example the SIBOR rate is 1%, then the bank would like to gain 2%. The 2% is the bank spread. This means that the client would get the SIBOR + spread = 1% + 2% = 3% rate. A few years after the start of the loan, the bank usually changes the spread. The revision usually reflects an increasing bank spread as shown below 

Period	Interest Rate (p.a.)
First Year	0.75% + 1-Month SIBOR
Second Year	0.75% + 1-Month SIBOR
Third Year	0.75% + 1-Month SIBOR
Fourth Year	1.00% + 1-Month SIBOR
Thereafter	1.25% + 1-Month SIBOR

What are the benefits of using either a SIBOR or a SOR rate?

We would like to correct the misconception of most people. You must understand that although the two correlate with each other, the SOR tends to fluctuate more and can be above or below the SIBOR rate. Please take a look at Figure 1, 2, and 3 below for clearer explanation

Figure 1: 1-Month SIBOR/SOR for Jan 2012-Dec 2012

 Source: www.iCompareLoan.com

Figure 2: 3-Month SIBOR/SOR for Jan 2012-Dec 2012

Source: www.iCompareLoan.com

Figure 3: 3-Month SIBOR/SOR for Dec 2006-Aug 2012

Source: www.iCompareLoan.com

 Here is a piece of advice for those who are planning to apply for a housing loan: Always ask for the bank spread and evaluate the interest rate throughout the duration of the loan. Is the spread reasonable enough for you to take?

Differentiating the features of SIBOR and SOR

For both SIBOR and SOR,  their tenures are usually inversely related to their rates. For example, a 1-month SOR will be lower than a 12-month SOR.  This is because long term opportunities are more risky and normally incur higher opportunity cost.

A shorter tenure SIBOR is more volatile than a longer tenure SIBOR.

SOR fluctuates more than the SIBOR.

SIBOR tends to be preferred by risk-averse borrowers.

Recently banks started rolling out 1-month SIBOR packages which impact their administrative cost.

From Figure 4, we can see that the 1-month SIBOR is  lower than the 3-month SIBOR. Take a look at the historical trend for the last 20 years in Figure 4.

Figure 4: 1-Month and 3-Month SIBOR for Jan 1989-Dec 2012

Source: www.iCompareLoan.com

When is the right time to choose a 1 month or a 12 month SIBOR?

You must understand that choosing a shorter tenure SIBOR also means greater instability. The rates are being changed or modified in shorter intervals. This means that if you take the 1-month SIBOR rate, depending on the financing institution, you can get a change of rate in every 1 or 3 months. However, if you choose the 12-month SIBOR rate, you have the confidence that you will pay the same SIBOR rate for the next 12 months. You may find it beneficial to seek the advice of an expert before you decide which housing loan package to take. Free advice and loan package consultation may be obtained from http://www.iCompareLoan.com/or simply fill up an enquiry form at http://www.iCompareLoan.com/contact

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For more related articles, please visit the following websites:
www.PropertyBuyer.com.sg/articles
www.SingaporeHomeLoan.net
www.iCompareLoan.com

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We are a research-focused Singapore mortgage consultancy which helps you compare Singapore home loans either for new loans or refinancing. We use loan reports from Singapore's best loan analysis system (exclusive to us) at http://www.icompareloan.com/consultant/to serve our customers.
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New Fund: Hwang AIIMAN Select Income

After the successful performance of AIIMAN series and the superb proven track record of Hwang Select Income fund, it's natural for Hwang to launch this new fund by riding on the story of these.

What is the Hwang AIIMAN Select Income fund?

This is a Shariah-compliant mixed asset (conservative) income unit trust fund that seeks to provide investors with regular income stream through Shariah-compliant investments. It also serves as an alternative investment for investors looking to diversify their portfolio into the fast growing Sukuk market and attractive Shariah-compliant equity market.

What it offers you?

1. Potentially Stable Returns and Regular Income by investing in prudently selected Sukuk and quality dividend yielding equities.
   
   
   
2. Peace of Mind: Managed at Low Volatility rates. It aims to deliver positive returns at low volatility rates through various market cycles.
   
   
   
3. A Diversified and Shariah-compliant Investment. Potential for enhanced return due to the opportunity to tap into new attractive Shariah-compliant investment in view of growing demand for Islamic securities, growth fueled by ample liquidity in the Gulf Corporation Council (GCC) and Asia, coupled with the increasing sovereign Sukuk issuers.

Click here to download prospectus

Source: HwangIM

New Fund: AmAsia Pacific Leisure Dividend

Do you like to go on a holiday spree in Asia Pacific region? If yes, then this fund may suit your appetite. On top of that, you can expect some dividends from this new fund launched by AmMutual. Please read on.

The fund aims to provide regular income and to a lesser extent capital appreciation over the medium to long term by investing in equities and equity-related securities of leisure industry across Asia Pacific region.

To achieve its objective, the fund seeks will be investing 70%-98% in a diversified portfolio of equities related to leisure industry. Who were they? They may include issuers engaged in the design, production and distribution of products and services related to leisure industry. These companies operate in the following sectors within the leisure industry such as hotel, retail, publishing, advertising, beverages, audio/video, broadcasting radio/television, cable and satellite, motion picture, recreation services and entertainment, toy, gaming and tobacco.

Where were they?

These companies are listed in the Asia Pacific region, which includes but not limited to Australia, Hong Kong, Malaysia, New Zealand, Singapore, South Korea, Taiwan and Thailand. However, the fund will not invest into Japan.

Investment Strategy...

The investment manager combines top-down asset allocation process with a bottom-up security selection process. The asset allocation will be reviewed periodically depending on the macroeconomic, industry trends, respective country's economic and stock market outlook. The asset allocation decision is made after a review of macroeconomic trends in Asia Pacific economies. As for bottom-up security selection, the investment manager will focus on undervalued companies which demonstrate sound corporate fundamentals, which are expected to provide dividends yield above market average, and sustainable dividend yield on a medium to long term basis. Stock valuation fundamentals considered are earnings per share growth rate, return on equity, price earnings ratio and price to book multiples.

Click here to download prospectus

Source: AmMutual

3 Different Types of PRS Distributors

Finance Malaysia believes that after a series of publicity and roadshow by various parties, especially PPA and PRS providers, you should know what is Private Retirement Scheme (PRS) is all about. Since then, we received many inquiries on whom should potential contributor consult with and why?

It brings us to this topic, and hopefully by understanding the different types of PRS distributors, investors could make their decision confidently. There is no right or wrong. It's down to your own preferences and of course, the trust level you have on a PRS consultant. So, who are they?

1. PRS consultant
   This is the most common practice in town, whereby a PRS consultant representing one PRS provider. So, in this case, he/she can only distribute PRS from one company.
   
   
2. Institutional PRS adviser
   Basically, they are bankers whom also licensed to distribute PRS schemes made available by respective banks. Bankers may distribute schemes from more than one PRS providers.
   
   
3. Corporate PRS adviser
   Currently, only financial planning firms holding this kind of licensed, whereby they can represent and distribute products from more than one PRS providers. They are individual acting on behalf of clients to source for the most suitable schemes for contributors.

Please take note also that not all unit trust consultants can distribute PRS. ONLY those already get their PRS license can distribute. Under the guideline, he/she may represent a PRS provider, which differ from his/her existing unit trust company. Example, a Public Mutual unit trust consultant can holds a PRS consultant license by Manulife. In this case, he/she can ONLY distribute Manulife PRS to clients.

According to Alex Yeoh (email: alexyeoh@vka.com.my), a licensed financial planner with a corporate PRS adviser, thinks that each channel has its own advantages. In the end, clients would choose the one, who can give them the best service they want.

Finance Malaysia hopes the above info is useful for you to make informed decision. We believe service of adviser/consultant plays an important role in PRS distribution. However, if you intended to have different PRS funds from different PRS providers, it would be advisable to seek help from a corporate PRS adviser. It's more convenient, simple and effective. Thank you.

Schwartz's Quandary

Today's NYTimes features an interesting article by Nelson D. Schwartz headlined "Recovery in US is Lifting Profits, But Not Adding Jobs."  Surprise, Surprise!

The main tool for solving unemployment by the White House is to figure ways to make employees more expensive.  Businesses aren't dumb.  If you make a factor of production much more expensive, businesses will use less of it.  Machines aren't more expensive; outsourcing is not more expensive, but hiring American workers is much, much more expensive thanks to Obamacare and numerous "worker protection" rules, laws and regulations.

So, what to do?  Obama now suggests raising the minimum wage from $ 7.25 to $ 9.00 -- almost a 25 percent hike in the minimum wage.  That is in keeping with the philosophy of making employees more expensive.

The war on workers and the war on the middle class by this White House continues unabated.  Schwartz is puzzled by the "golden age for corporate profits" unaccompanied by meaningful increase in the demand for workers.  But why is there any surprise.  This is the predictable result of White House economic policy.

Three Cheers for Christina Romer

It has been somewhat of a puzzle that Obama's economists haven't rebelled at his Administration's assault on the US economy.   Economics is, after all, economics.  Finally!

In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage.  She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.

Romer is right that the minimum wage is not the way to go.  While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.