ASNB Advertisements

I was at Maybank and I saw an ASNB advertisement and their consistent distributions of 6-8% per year. Looked attractive at first, but it took me a long time to realise that distribution does not equal return. ASNB has 2 types of funds - which are fixed priced and variable priced.

Fixed price will always be priced at RM1 per unit, but the actual value of the fund may be higher or lower depending on the value of the underlying companies that the fund invests in. For the past 3 years, funds investing in our Malaysian share market were not doing so well. When my Public Mutual fund was only making me 2-3% per annum for the last 3 years, I felt strange that ASNB's funds could deliver consistent 7% per annum. So I went to have a look at one of the annual report for ASNB's fixed priced fund. It turns out that the equity per unit of the fund is only RM0.70, hence the RM1 price tag makes that fund overpriced.

ASNB's variable priced funds aren't so bad, cause they at least are able to disclose their funds' returns along side the distributions. You see, in a good year, the performance of some funds have seen 20-30% growth while some years it may even make losses. For one of ASNB's variable priced funds, the distribution seems consistently positive every year, but the returns fluctuated like crazy.

Distribution is like taking what is rightfully yours, and saying that it is yours again. If someone gives you something that is already yours, its not giving, its just a trick, a marketing trick. It is the same concept for dividends given by companies, but difference is that dividends will reduce a company's capital, which is good when a company is not thinking much about expanding.

What matters more than distributions, I believe are the returns, which is dependent on the performance of the underlying companies that the funds invests in. Unfortunately, ASNB has chosen to emphasise on distributions instead of actual fund returns in their advertisements.