Investment objective



All mutual funds are managed based on a specific investment objective. That objective will determine the role a specific fund will play in your portfolio, and how well it might fit with your overall investing strategy. The investment objective determines what types of stocks the fund's manager may decide to purchase. A fund may be broadly based, investing in both large- and small-cap companies in many different industries. Or it may have a much narrower focus, concentrating only on blue chips, for example, or stocks in a single industry.  Typically, mutual fund's objective will be either capital appreciation, income from equities/bonds, or both. For example, a equity fund might have both growth and income as objectives, or its primary objective might be capital appreciation, with income as a secondary objective. 

In addition to pursuing a fund's investment objective, a fund manager may adhere to a particular investing style. For example, a growth fund focuses on stocks that are growing quickly and that seem to have greater than average potential for appreciation in share price. By contrast, a value-oriented fund buys stocks that appear to be undervalued by the market relative to the company's intrinsic worth. Each may have growth as its investment objective, but they pursue growth in different ways. Some managers even blend the two approaches

Bond options

Investing has traditionally been share-market or equity based with an anticipation of hugh profits, but may also result in significant losses.  But fixed income investments such as bonds have long been regarded as a middle ground option for investors, and also as a play a role in portfolio diversification and capital preservation.  Though not as exciting as equities, bonds stable returns over a long term lives up to its reputation as ba safe heaven for money.  However bonds do have their inherent risk as other investments.  Bonds have an inverse relationship with interest rate, when interest rates go down, bond prices go up and vice versa.  Similarly it also has an inverse relationship with equities, when equity do down, bond go up and vice versa. 

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Shariah-compliant Funds

These are all types of fund (Equity, Bond, Money Market) that comply to Shariah requirements.

Shariah-compliant securities are securities issued by companies that are not involved in the following core activities :

- Financial services based on riba
- Gambling
- Manufacture or sale of non halal products or related products
- Conventional insurance
- Entertainment activities that are non-permissible according to shariah
- Manufacture or sale of tobacco-based products or related products
- Stockbroking or share trading in Shariah non compliant securities
- Other activities deemed non-permissible according to Shariah.

Aa  Shariah Committee or Shariah Adviser will be appointed to ensure that the funds operations and investments are in accordance with Shariah requirements.

Equity Fund

A equity fund is a specially aimed at achieving capital appreciation by investing in stocks and focus on companies that are making significant earnings or revenue growth.  Specific equity funds may focus on a certain sector of the market or may be geared toward a certain level of risk.

Growth: A growth fund invests primarily in the common stock of well established companies. This type of fund may invest for long-term capital gains and is not intended for an investor who seeks income.

Aggressive Growth: Like a growth fund, an aggressive growth fund will invest primarily in common stock for long-term capital gains. An aggressive growth fund may invest in the common stock of small companies, out-of-favor companies or companies in new industries. It, therefore, has a higher degree of risk than a basic growth fund. 

Index fund: Index funds invest in securities to mirror a market index, such as the FBM KLCI.   An index fund buys and sells securities in a manner that mirrors the composition of the selected index. The fund's performance tracks the underlying index's performance. Turnover of securities in an index fund's portfolio is minimal. As a result, an index fund generally has lower management costs than other types of funds.

Value fund:  This is a fund that invests in "value" stocks. Companies rated as value stocks usually are older, established businesses that pay dividends

Bond Funds

 Bond funds invest primarily in fixed-income securities issued by companies and governments. Most bond funds invest in debt instruments of companies and governments.

In general, a bond fund's investment objective takes into account both maturity, or the length of time until the principal is due on its bonds, and credit quality. Some funds invest in long-term bonds that mature in 10 to 30 years, others invest in intermediate-term bonds that mature in 4 to 10 years, and some invest only in short-term bonds that mature in 1 to 4 years. Most funds invest in government or corporate bonds that are of high credit quality, or "investment-grade." Those that focus on more risky lower-grade bonds are called "high-yield" or "junk" bond funds.

The total return for a bond fund consists of both interest income and price appreciation (or depreciation). Interest income, often expressed in percentage terms as "yield," is the interest paid on the bonds held by the fund. The actual value of the bonds can rise or fall, depending on market conditions. The prices of bonds tend not to fluctuate as greatly as those of stocks. 

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Money Market Fund

Mutual Funds which invest only in low-risk securities such as government securities, certificates of deposit, or commercial paper of companies. For that reason, they are usually considered very low risk. Since they are low risk, they pay very low dividends or interest that usually reflects short-term interest rates. Unlike mutual funds that are invested in stocks, money market funds usually try to keep the net asset value of (NAV) of each share at a dollar. Therefore, the value of the money market fund is dependent on the yield or interest rate, which does vary. It is very rare for the NAV to fall below a dollar, called breaking the buck, but it can happen if the investments do poorly.

Balanced Fund

Balance funds combine some of the traits of equity and bond funds in a single portfolio; providing both relative stability of bonds and comparative capital growth ability of stocks.  Balanced funds are designed to provide a balanced of medium to long term capital appreciation, with a proportion of annual income.  This is achieved through an asset mix of 60% equities and 40% bond/money market instruments. 

While most balanced funds have common portfolio characteristics and investment goals, their investment strategies may differ.  Diversification in asset allocation is achieved by shifting the relative market weightings in each asset class during different market conditions.  Hence, the value of the balanced funds will fluctuate along with the movement of the stock market, but they tend to be less volatile than a portfolio comprised entirely of equities. 

Investors with comparatively lower risk tolerance, and who desire or need regular income, will find this fund suitable.