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Thursday, August 7, 2014

Side stories - Seeking improvement in fund management

As I am not a professional fund manager, I am always on lookout for tips to manage a fund professionally. In the Personal Money edition this month, I found something interesting in an article by Tho Li Ming which goes by the title "Different Approach to Managing Funds".

The article is basically about a boutique fund management company called Golden Touch Asset Management. So, the interesting parts of this article are:
1) high net worth individuals are defined as those who have assets between RM 250k und RM 5mil
2) the fund targets returns of 15% to 25% for the high net worth clients.
3) the fund has 1% annual management fee and 10% profit-sharing fees. This profit-sharing fees ensures that the company's goals are aligned with those of their clients. (this is worth implementing for Huat Fund once the size of Huat Fund reaches 200k)
4) no call warrants as it is deemed to be too risky.
5) in a positive investing climate, the fund holds between 60% to 70% in equities and carries 15 to 20 stocks.
6) stock selection is not the top priority for the fund. The weightage and timing of buying and exiting stocks are just as important for them. The stock selection are done through judicious buying and selling. "We dont want to be the first ones into a stock, but rather the second or third because we know there will be interest in the stock by then. We dont pick stocks we love but stocks we know everybody else will."(Something new worth considering for future transactions)

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