A lesson not to follow the herd

PUBLISHED : Sunday, 20 January, 2008, 12:00am
UPDATED : Sunday, 20 January, 2008, 12:00am

Fund manager who took bad advice now relies on his own strategy

As a fund manager, Gerry Ng Joo- yeow has adopted the same investment approach for customers as he has for himself. The strategy is simple - choose a balanced portfolio, invest regularly and hold for the long term.

But even this professional fund manager has had his dark days. The chairman of the Hong Kong Investment Funds Association once lost more than half of his initial investment in a fund following bad advice.

Mr Ng was born in Malaysia and studied in Singapore and Britain before training professionally as a chartered accountant with PricewaterhouseCoopers in London. He came to Hong Kong in 1990 and later moved to JF Asset Management. In 2005, he switched to Baring Asset Management as managing director of the Asia division.

When did you first start to invest and how well did you do?

I first started to invest when I was at university in Britain. That was between 1983 and 1986, when there were a lot of British government-owned companies being privatised and many IPOs.

My first investment was very small. I invested only about GBP100 to GBP200 in the IPO of British Telecom. I remembered I earned a small amount of money from it because the IPO was doing reasonably well.

What lesson did you learn from it?

The experience was that it seemed the IPO was easy money. At that time, I did not understand much about investments, and I took only a short-term view of holding the stocks for a few months.

After more investments, I learned to study the markets before I invested and that I should not just follow everyone else.

What is your investment strategy?

As fund managers, we have a lot of restrictions, and we need to get the company's permission before investing in certain stocks.

If our funds have invested in certain stocks, we cannot purchase them. To comply with such regulations, I do not invest in individual stocks but in mutual fund products.

I divide my portfolio into several parts. One portion contains conservative options, such as long-term deposits which are for emergency cash needs. Then I have property investments in Hong Kong and one in my hometown in Malaysia. This is for my family and retirement.

I make monthly investments in different fund products. I pick regional or individual country funds and hold them for the medium term, such as three to five years. Regular contributions help cope with short-term vagaries. Another long-term investment is my pension fund.

About 10 per cent of my portfolio is invested in more risky funds for short-term gains. My definition of short-term is six months to one year.

What returns do you get from your personal investments?

On average, I get about 10 to 20 per cent returns. The type of returns one gets from the A-share market on the mainland, where investments doubled last year, is not common. The challenge for many first-time investors there is that they have never faced a difficult market.

In Hong Kong, investors are more sophisticated. We experienced the Asian financial crisis in 1997 and the bursting of the dotcom bubble in 2000.

Hong Kong investors know that what goes up can always go down, so they have more reasonable expectations about their returns.

What is your portfolio composed of?

I hold about 15 funds including fixed-income funds, absolute funds, regional and individual stocks funds, as well as a property in Hong Kong and a property in Malaysia. I invest mainly in Baring's fund products, but I also look at other companies' mutual funds to diversify my investments.

What was your best investment decision?

In recent years, mainland investment mutual funds were the ones which were volatile but also offered high returns of more than 50 per cent.

What was your worst investment decision and how did you get out of it?

I bought into a fund investing in the Pakistan stock market. This was an early investment when I started my career as a fund manager at JF.

I did not really understand the market, but I bought it just because everyone said it was a good buy. Eventually, the fund performed poorly and I got back less than half of my investment.

I learned a lesson from it: I should not just follow others but I should understand the market before making an investment.

Are you a spender or a saver?

Having two children means you have to spend a lot - tuition fees, books, clothing. My two children are my priority in investing. I have a regular savings plan in which I set aside money every month to prepare for their future overseas education.

When I spend, I like to use credit cards instead of cash because I can track my spending.

What is your personal investment strategy this year?

I wish to take a slightly more cautious view as the market is likely to have a correction this year. I invest more in balanced funds, which have a combination of both stocks and bonds.

Do you think you are rich or poor?

I think I have a comfortable life. I can support my children's education and take them on holidays. If 100 is the best and zero is the worst, I think I score 60 to 65.