ICAPITAL.BIZ Bhd. (Stock Code: 5108 ICAP) is listed in the KLSE on Oct 2005 as a company under the Closed End Fund section.
Closed Ended Fund vs Unit Trust Fund
A closed-end fund has a fixed amount of units. For instance, ICAP has a fixed 140 million units available. It will still be capped at 140 million units no matter how many people sell or buy it. In this case, the buy and sell price do not depend on the NAV but actually depends on supply and demand.
An open-ended fund doesn’t have a fixed amount of units. It can be 13 million units today and down to 10 million units the next day, depending on how many people have bought or sold the funds. The price that you buy or sell an open-ended fund is based on the NAV of the fund, which is calculated daily by the fund companies.
For instance, when you buy a Public Mutual fund, you are buying from Public Mutual directly at the NAV + entry fee (6.5%). If you sell, you are selling to Public Mutual directly at the NAV + entry fee (6.5%). But you don’t need to worry whether there are buyers or sellers available, Public Mutual will always buy or sell to you.
Since ICAP is also a fund, it also has its own NAV. But instead of being calculated and published daily like other mutual funds. ICAP NAV is calculated on every Wednesday and will be published end of Thursday on icapital.biz and klse.com.my.
Why We Need to Know the NAV
Logically, ICAP should be bought or sold around the NAV. So if the NAV is RM1.80, buy and sell should be around that amount. As a buyer, you want to buy it as low as possible. If the NAV is RM1.80 and you pay RM2.00 to buy it, you are actually paying a premium to buy it. It is OK to pay a premium to buy a good fund. When you buy a mutual fund, you need to pay 6% to 7% entry fee as well which is also a premium. However, this stock is trading below its NAV today which I find it is a good time to get it at this discounted price. No speculation for this stock, it is just the matter or worth it or not.
Even though this ICAP is not subjected to high entry fees but it is still has annual fund management fee of 1.5% to the NAV. Anyway, all mutual funds in Malaysia charge an annual management fee and 1.5% is the most commonly used. The fee is paid quarterly at 0.375% each (1.5% / 4) based on the NAV.
Another concerns is ICAP is taxed at the statutory tax rate of 27%. Compare with other types of funds. In long term, ICAP’s performance will be affected by taxation compared with other funds which have tax advantages.
Closed Ended Fund vs Unit Trust Fund
A closed-end fund has a fixed amount of units. For instance, ICAP has a fixed 140 million units available. It will still be capped at 140 million units no matter how many people sell or buy it. In this case, the buy and sell price do not depend on the NAV but actually depends on supply and demand.
An open-ended fund doesn’t have a fixed amount of units. It can be 13 million units today and down to 10 million units the next day, depending on how many people have bought or sold the funds. The price that you buy or sell an open-ended fund is based on the NAV of the fund, which is calculated daily by the fund companies.
For instance, when you buy a Public Mutual fund, you are buying from Public Mutual directly at the NAV + entry fee (6.5%). If you sell, you are selling to Public Mutual directly at the NAV + entry fee (6.5%). But you don’t need to worry whether there are buyers or sellers available, Public Mutual will always buy or sell to you.
Since ICAP is also a fund, it also has its own NAV. But instead of being calculated and published daily like other mutual funds. ICAP NAV is calculated on every Wednesday and will be published end of Thursday on icapital.biz and klse.com.my.
Why We Need to Know the NAV
Logically, ICAP should be bought or sold around the NAV. So if the NAV is RM1.80, buy and sell should be around that amount. As a buyer, you want to buy it as low as possible. If the NAV is RM1.80 and you pay RM2.00 to buy it, you are actually paying a premium to buy it. It is OK to pay a premium to buy a good fund. When you buy a mutual fund, you need to pay 6% to 7% entry fee as well which is also a premium. However, this stock is trading below its NAV today which I find it is a good time to get it at this discounted price. No speculation for this stock, it is just the matter or worth it or not.
Even though this ICAP is not subjected to high entry fees but it is still has annual fund management fee of 1.5% to the NAV. Anyway, all mutual funds in Malaysia charge an annual management fee and 1.5% is the most commonly used. The fee is paid quarterly at 0.375% each (1.5% / 4) based on the NAV.
Another concerns is ICAP is taxed at the statutory tax rate of 27%. Compare with other types of funds. In long term, ICAP’s performance will be affected by taxation compared with other funds which have tax advantages.
What makes ICAP so interesting vs other mutual funds in Malaysia?
As ICAP has low diversification about 15 stocks, its performance will not rely too much on what the overall market is doing. Whereas an mutual fund that holds too many stocks will not be able to outperform the market in a large margin in the long run. But an intelligently value investing portfolio that focus only on a few well researched stocks can easily outperform the market by a large margin in the long run.
On to of that ICAP has a good proven performace record and also the infamous fund manager Mr Tan Teng Boo who is also the founder and managing director of Capital Dynamics Sdn Bhd. Capital Dynamics is the fund manager of ICAP.
Endorced / modified the article from ahyap.com
Comments:
This is one of my favorite counter but this solely for long-term or mid-term investment just like you buying the mutual funds.
On to of that ICAP has a good proven performace record and also the infamous fund manager Mr Tan Teng Boo who is also the founder and managing director of Capital Dynamics Sdn Bhd. Capital Dynamics is the fund manager of ICAP.
Endorced / modified the article from ahyap.com
Comments:
This is one of my favorite counter but this solely for long-term or mid-term investment just like you buying the mutual funds.
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