Product Review Public Islamic Optimal Growth Fund

Key Product Feature
This fund invests into Malaysia stocks which are Shariah approved. The fund also has the flexibility to invest into Shariah approved’s debt instruments.

Investment Strategy
The Fund invests 50% into dividend paying stocks while another 50% into growth stocks.

Dividend paying stocks mean stocks that usually has very consistent and clear dividend paying policy. When a company pays dividend, there are 2 possible indication. One is that the company wishes to maximize the wealth of its share holder thus payout dividend to the investors secondly is that the company do not have any profit project to reinvest the monies, thus are pressured to pay out the excess earnings.

Growth stocks mean stocks that that retain the profit made in the previous years so that it can reinvest the monies in a high profit projects in order to maximize the investors in the long term. Please be careful that there are companies that retain earnings because they expect turbulence in the future economy thus wish to retain more cash in the account.

Therefore its extremely important for an analyst of fund manager to analyse the reason for a company paying dividend or not paying dividend. Its not the action but the intension that matters. No matter how thin you slice, there is always two side.


Target Investors
Aggressive investors because this fund has high equity exposure. Please take note also that Islamic fund doesn’t mean for Muslimin and Musliman only. Infact Public Mutual has launched few very successful Islamic products which the Investors are majority Chinese. One of the very good example is Public Ittikal.


Cost and Expenses
This is very similar to other Shariah local funds. But I foreseen this fund will have higher management expenses ratio (MER) meaning that the fund will spend more to manage the investor’s monies. This is because comparing to the older funds (before 2006), this fund will incurred a higher trustee fees (0.08%). If you refer to the older funds, the trustee fees are only (0.07%). Anyway if the fund manager intends to hold higher weightage in Islamic bonds for long term, thus the MER for the fund can be reduced but investor’s performance will be lesser too. Therefore I don’t think the fund manager will reduce the bond exposure for the sake of reducing MER. It will be more for the strategic view about the outlook on equity vs bond market.


Product Differentiation
The fund focuses its portfolio construction by looking into 2 main categories of stocks which are dividend and capital growth stocks.


Similar Products
Public Ittikal Fund

What We Like About It
At most time we can ensure there will be dividend stocks in the portfolio which are expected to be more resilience during choppy market. This fund is expected to pay very consistent distribution (used to be called dividend) to the fund’s investors.

What We Don’t Like About It
It is very similar to the other local Islamic funds and there are too many local funds in the market. We need foreign funds to achieve further diversification in our portfolio.