24 February 2006

"Top" Funds

Mr Wang will now give you a rather striking example of why you must be very careful when you read any advertisements, brochures or other promotional materials about where to invest your money.

Today we learn from the Straits Times that in the Edge-Lipper Singapore Funds Awards 2006, DBS Asset Management has won the following awards - "Best Overall Fund Group", and "Best Bond Fund Group".

Feb 24, 2006
DBS, Phillip and Lion Capital win big in yearly fund awards
Coming out tops is DBS Asset, rated best overall as well as for bond funds
By Gabriel Chen

DBS Asset Management (DBSAM), Phillip Capital Management and Lion Capital Management emerged as the top winners yesterday in The Edge-Lipper Singapore Funds Awards 2006.

Top honours went to DBSAM, which clinched the best overall fund group and best bond fund group, with returns as high as 35 per cent in some funds.....

Based on past experience, we can safely predict what will happen next. Like every other fund house that has won awards, DBSAM will proceed to advertise its victories. In its brochures and ads for its various funds, DBSAM will proceed to trumpet the fact that it had won this award, and that award, and that other award.

And in the promotional materials for DBSAM's biggest bond fund, DBS Shenton Income Fund, DBSAM will certainly point out that DBSAM had won the Edge-Lipper "Best Bond Fund Group 2006" award.

All of this is factually true. But then, so is this report, from the Business Times, just yesterday:
Business Times - 23 Feb 2006
S'pore's biggest bond fund downgraded
Shenton Income Fund loses two stars under Mercer rating

(SINGAPORE) Mercer Investment Consulting has downgraded Singapore's biggest bond fund by two notches, saying its credit resources 'are significantly below the calibre of most of its global peers'.

DBS Asset Management's $1 billion Shenton Income Fund (SIF) had a five-star rating that was suspended in mid-2005 - after almost the entire fixed-income team, led by former MD Lim Heong Chye, walked out.

The fund's rating has now been cut to three stars.

Mercer says its ratings, introduced in 2002, are 'forward-looking' and combine qualitative and quantitative assessment. It says qualitative evaluation receives by far the most attention. Funds with five-star ratings are believed to have the 'highest future performance prospects' against their peers.
DBSAM will be mentioning the Edge-Lipper awards in its promotional materials, that's for sure. But I don't think they will mention the Mercer downgrade, do you?


PC said...

"Past performance does not guarantee future returns"...

Sound familiar? *grin*

Anonymous said...


i guess now i know why my owner seems very well informed these days.. i caught him reading your blog a few times while i was pretending to get him to clean my litter tray.


Anonymous said...

finance is just a big scam, as far as the man on the street should be concerned.... caveat emptor.