In the 1980s, soon after Dr Mahathir took over as Prime Minister, he thumbed his nose at the West and signalled a Look East policy, claiming that there was more to learn from and emulate the Japanese and South Koreans than the Western countries.
Today, the battle cry is different. It’s Go Global. Global this, global that.
Even in investments, the trend is to go global ever since Bank Negara Malaysia made a policy shift in 2005 to allow Unit Trust Management Companies to invest up to 30% of their Net Asset Value in foreign currency assets.
Today, when I turn to the business pages of the local newspapers, I see a long list of mutual funds that are already investing overseas.
I’m excited by this direction. At long last, we Malaysians have the opportunities to invest our money overseas. It creates a new perspective in diversifying our portfolio.
Now, it is no longer diversification within our local market but diversiication across countries. Theoretically, the fund managers can move millions of ringgits across stock exchanges around the globe to take advantage of investment opportunities.
Diversification is important because it helps you spread your risks. However, together with this new opportunity to invest globally, there are two risks that investors should pay closer attention to.
The first is country risk. If a fund invests in foreign markets, we are susceptible to risks specific to the country in which the fund invests. Such risks will include changes in the country’s economic fundamentals as well as its social and political stability.
The second is currency risk. Just like the stock market, currency rates also fluctuate. When a foreign currency moves unfavourably against the ringgit, the investment may face a currency loss.
So you see, while going global will bring in new investment opportunities, it also introduces new risks for the investors. You’d better tread carefully and not be easily swayed by a unit trust consultant’s over-eagerness in introducing new funds to you.
Here are the Unit Trust Funds that concentrate on investing overseas, as at 15 Sep 2006:
ALLIANCE UNIT TRUST MANAGEMENT BERHAD:
Allinace Global Equities (Global)
Alliance Global Bond (Global)
AMINVEST:
AmGlobal Property Equities (Global)
AmOASIS Islamic Equity (Global Islamic)
AmAsia-Pacific Property Equities (Asia-Pacific)
AmSchroder European Equity Alpha (Europe)
CIMB-PRINCIPAL ASSET MANAGEMENT BERHAD:
Asia Pacific Adil (Asia-Pacific)
Global Titans (Global)
Hidden Values (ASEAN and India)
HLG UNIT TRUST BERHAD:
HLG Asia-Pacific Dividend (Asia-Pacific)
HLG Global Healthcare (Global)
HWANG-DBS INVESTMENT MANAGEMENT BERHAD:
Hwang-DBS Global Property (Global)
Hwang-DBS Global Opportunities (Global)
ING FUNDS BERHAD:
ING Asiapac Capital Guaranteed (Asia-Pacific)
ING Global Real Estate (Global)
MAAKL MUTUAL BERHAD:
MAAKL Pacific (Asia-Pacific, excluding Japan)
OSK-UOB UNIT TRUST MANAGEMENT BERHAD:
OSK-UOB Global Equity Yield (Global)
OSK-UOB Asia Pacific (Asia-Pacific)
OSK-UOB Global Allocation (Global)
OSK-UOB Resources (Asia-Pacific)
PRUDENTIAL UNIT TRUSTS BERHAD:
Prudential Asia Pacific Equity (Asia-Pacific)
Prudential Global Leaders (Global)
PUBLIC MUTUAL BERHAD:
Public Far-East Select (Far East, excluding Japan)
Public Regional Sector (Far East, excluding Japan)
PB Asia Equity (Asia-Pacific)
Public Asia Ittikal (Asia, excluding Japan)
PHEIM UNIT TRUST BERHAD:
Pheim Asia Ex-Japan (Asia-Pacific, excluding Japan)
PACIFIC MUTUAL FUND BERHAD:
Pacific Asia Brands (Asia)
Pacific S&P Global STAR (Global)
RHB UNIT TRUST MANAGEMENT BERHAD:
RHB Dividend Valued Equity (Asia-Pacific)
RHB Global Islamic Portfolio Series 1 (Global)
Global Fortune (Global)
SBB MUTUAL BERHAD:
SBB Global Balanced (Global, excluding Malaysia)
SBB Asian Equity (Asia, excluding Malaysia)
SBB Global Growth (Global)
TA INVESTMENT MANAGEMENT BERHAD:
TA Global Asset Allocator (Global)
TA South East Asia Equity (South-East Asia)
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