Tuesday, 7 July 2015

Does Malaysia really need another fund?

Article in The Malaysian Insider:

"VCAP Asset Managers launches fund to invest in blue chips"

With so many GLFs (Government Linked Funds) already, do we really need another fund?

Given the recent events, would it not be better to freeze all existing funds launches and pay more attention to the very backbone of Malaysia? In other words, to significantly shore up the institutions, in terms of transparency, responsibility, independence, etc.?

Also, would it make more sense to redeem some government loans with the money, instead of dabbling in the local share market, something that is best left to private players?

One snippet of the above article (emphasis mine):

"But because this is an actively managed fund, hopefully you'll get decent outperformance above and beyond blue chip returns"

Can the CEO of VCAP give some facts regarding the possible outperformance?

It is a well known fact that in the US the large majority of the actively managed funds underperform their respective benchmark. Would this be any better in Malaysia?

I personally believe in two extremes:
  • Passively managed funds, investing in a basket of shares with the lowest possible management fee (a small fraction of one percent): ETFs.
  • Actively managed funds, run by fund managers with a long history of outperformance; often these managers have a contrarian, maverick streak in them.

VCAP is a unit owned by Khazanah, KWAP and PNB, the words "contrarian" and "maverick" do not exactly come into my mind when I think about them.

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