Q  : I heard that funds that are ‘Actively Managed’ reduces our portfolio returns in the sense that capital gains are being reduced by the increase in commission. Please Clarify?

A : The term ‘Active Fund Management’ simply means a portfolio asset allocation management strategy employed by a fund manager (’manager’). An actively managed portfolio is commonly distinguished from benchmark neutral allocation management in other words, passive portfolio management. In an actively managed portfolio, the manager does not depend on the weighting of a particular stock as it intends to outperform the benchmark instead of merely replicating the benchmark.

The Manager may use the fundamental based or tactical asset allocation approach to “actively” select a specific stock, which, in the opinion of the manager is capable to enhance the returns of the portfolio as compared to merely replicating the stock universe of a prticular benchmark. In actively allocating the assets, transactional cost may be inccured more frequently compared to passive portfolio management.

Going Back to basics….

As with all investments, the choice of investments should meet your investment objective(s), match your risk appetite and investment horizons. Be it for short term capital gains or longer term wealth accumulation, your decesions should be benchmarked against your expected returns. As such, you will need to understand the vehicle before deciding as each fund has a defined investment objective, strategy, level of risk and performance benchmark.

Article source/about:

The sun 29 Jul 2008/ Hwang DBS Investment Management Berhad is one Malaysia’s leading management companies for more info log on to www.hdbsim.com.my.

About Me :

Im the Unit Trust Consultants for CIMB Wealth Advisors Berhad who can sell the Hwang DBS Unit Trust Funds as 3rd party funds. Interested just contact me at 019-3649613 or email murtaza@cimb-wealthadvisors.info