Professional Documents
Culture Documents
Lecture 2
1-1
Chapter 3
Investing In Mutual
Funds and ETFs
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Mutual Funds
A mutual fund is a professionally-
managed type of collective investment
scheme that pools money from many
investors to buy securities.
A mutual fund has a fund manager that
trades (buys and sells) the fund's
investments in accordance with the
fund's investment objective.
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Mutual Funds
The price of a unit reflects its total Net Asset
Value, commonly referred to as NAV (the
funds assets less its liabilities, divided by the
number of units in issue).
Unlike stocks, whose prices are subject to
change at each trade, the funds NAV is
calculated only at the close of each days
trading. Hence the funds unit price is quoted
in major newspapers on the following
Business Day.
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Mutual Funds in Malaysia
Also called Unit Trust in Malaysia
Mutual fund industry is regulated in Malaysia
by Securities Commission under the
Securities Commission (Unit Trust Scheme)
Regulations 1996.
There are currently more than 500 funds in
Malaysia managed by 39 fund management
companies: Eg: Public Mutual, RHB
Investment, OSK-OUB, TA Investment.
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Benefits of Investing in Mutual Funds
Diversification
Liquidity
Hassle Free
Affordability
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Exchange Traded Funds (ETF)
An investment fund listed and traded on a
stock exchange.
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Why invest in ETF?
Diversified Exposure
Cost Effectiveness
Simplicity
Transparency
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Why invest in ETF?
Diversified Exposure:
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Why invest in ETF?
Cost Effectiveness:
Lower annual management fees for ETFs as compared to
unit trusts makes ETFs more economical to buy and
maintain in the long run.
Liquidity:
ETFs are listed on the Main Market of Bursa Malaysia.
Just like trading stocks, buying and selling ETF units are
done on its current market price with one transaction.
Trades can be done online or through stock brokers.
Transparency:
Investors know exactly which stocks or underlying
assets is held in the ETF by visiting the ETFs website,
provided by its manager.
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Open End Fund vs Closed End Fund
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Open End Fund vs Closed End Fund
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Performance of Funds
Reported on a regular basis in the popular press
and websites
Example: Personal Money Magazine
www.fundsupermart.com.my
capital gains
Average annual return reflects the mean
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Hedged Fund
An aggressively managed portfolio of investments that
uses advanced investment strategies such as
leveraged, long, short and derivative positions in both
domestic and international markets with the goal of
generating high returns
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Chapter 4
Financial Markets
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The Role of Financial Markets
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Markets in New Securities
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Investment Banking
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Secondary Markets
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Stock Exchanges
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NASDAQ
An American stock exchange
The world's first electronic stock market and
the first stock market in the world to start
trading online.
It has more firms listed than NYSE
The most popular electronic exchange in the
world. More trading volume than any other
electronic stock exchange in the world
Famous companies listed on Nasdaq includes
Apple, eBay, Dell, Microsoft, Yahoo, Facebook
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Stock Exchanges in Malaysia
Bursa Malaysia is the only stock exchange in
Malaysia.
Bursa Malaysia has over 1,000 listed
companies
Companies are either listed on Main Market or
ACE Market.
Main Market for larger capitalized companies
ACE Market for high growth and technology
companies.
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Equity Market Indicators
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Equity Market Indicators
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Equity Market Indicators
NYSE and NASDAQ Composite Indices
Value-weighted indices of broad markets
Nikkei 225 Average
Price-weighted index of 225 actively-traded stocks
on the Tokyo Stock Exchange
FBM KLCI
Consist of 30 largest eligible companies by market
capitalisation
Computed based on free float adjusted market
capitalisation.
This means a stock with higher free float will gain
greater weightage in the index.
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Operating Hour Bursa Malaysia
Pre-Opening 8:30 am
Opening and Continuous Trading 9:00 am
Close 12:30 pm
Lunch
Pre-Opening 2:00 pm
Opening and Continuous Trading 2:30 pm
Pre-Closing 4:45 pm
Trading at Last 4:50 pm
Close 5:00 pm
Pre-Opening
Morning Session: 8:30am to 9:00am
Afternoon Session: 2:00pm to 2:30pm
During Pre-Closing:
Orders accepted will be displayed however
matching will not be done:
Matching will be done at 4:50 during Trading At
Last based
Theoretical closing price (TCP) based on
orders entered will be calculated and
displayed
Trading at Last
Time: 4:50pm to 5:00pm
Number of Share
Amount
Commission
Clearing Fees
Stamp Duty
Due Date
The End
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Tutorial Questions
Chapter 3
Questions: 1, 2, 3, 9, 12
Chapter 4
Questions: 2, 14, 15 16
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