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A steady dividend payer with yield of 8.5% since 1990.

Friday, January 9, 2015

AK doesn't know everything, for sure. So, when faced with a question of whether to invest in a sovereign fund of another country even if it should be a neighbouring one, I must be honest to say that I don't have enough knowledge to even write a simple critique on it.

Here are the emails concerned:

Dear AK,

I have been a reader of your blog, since last year. Has been inspired by how you achieved the passive income from REITS!! Still in the learning curve, and paying tuition fee now.(having paper loss in Lippomall trust and Sabana)

Refer to the email subject, I think maybe it would be interesting to you on these few unit trust or fund managed by Malaysian supported investment firm? More details of this firm can be found in their official website http://www.asnb.com.my/index_e.php.

You can change to english version at the top right corner "versi english",

Just some background of these funds.

The firm was initiated by government in 1980s, they run several funds, some of them are open to all Malaysian, some of them are open only" Bumi - putera" (son of soil, a.k.a. Malays and Indigenous people from Sabah and Sarawak).

The first fund open only to Bumi-putera, has been producing dividend not less than 8.5% pa since its inception in 1990. The highest being 10~12%pa during the good years of Malaysia economy. This fund has serve well as passive income for the Bumi-putera.(long queue at the broker counter during long weekends, festive season, year end holiday etc)

In late 90s and early 2000, they have opened up few more new funds, which are open for all Malaysian, but as usual there are quota for each race. The other funds that are open to all Malaysian, generally produce return slightly less than the first fund, which are open only to Bumi-putera(OK, you know this is Malaysia).

I have attached the annual report for 1 of the funds I invested (AK did not include in this blog post), wish you to give some comment on their financial position. Report is in Malay, I have tries to put down as much as translation i could at the side for each main term in balance sheets and cash flow statement. Other comments from managers, auditor, I hope you can use google translator, if you find it important.

There are some interesting facts on these fund:- unit price is fixed at RM1, so NAV is unknown

- no sales charge, no cost for transaction(buying and selling)
- dividend are paid in new units
- upper limit of the fund is set at RM14bil(or 14bil units). It has not reach the limit yet.(Note: Some of fund has no upper limit, Ponzi Scheme??)
- payment of dividend might actually come from the fresh fund for the new units, as I found their dividend + interest + gain from selling stock, is barely enough to cover the distribution(again, it can be in the form of new units)

I am not an expert in reading financial statement(still learning), hoping you can enlightened me!


A follow up email:

Hi AK,

First of all, really appreciate your reply.

My siblings have been pouring money into these fund without knowing how actually it run. Kind of worrying me.

But it has not stop in paying dividend since its inception. Some time political will can not be measured using common financial terms.

It will be great if you can share it at ASSI. Hoping to get some answer from other readers.

Regards
K

If anyone should have any insights to share, please comment in the usual fashion. Thank you.

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