The Truth About ASB's 5.5% Dividend
•By Mahersaham Team
Artikel ini juga tersedia dalam Bahasa Melayu
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On 18 December, Amanah Saham Nasional Bhd finally ended the nation''s anticipation by announcing an income distribution (dividend) of 5.5%, comprising 5.00 sen per unit and a bonus of 0.50 sen per unit for its flagship fund, Amanah Saham Bumiputera (ASB).
The dividend announcement was made by the Chairman of Permodalan Nasional Berhad (PNB), Tan Sri Dr. Zeti Aziz, for the financial year ending 31 December 2019.
Amanah Saham Nasional Berhad (ASNB) is a wholly-owned unit trust company of Permodalan Nasional Berhad (PNB).
The distribution totalling RM9.0 billion would benefit 10 million unit holders who collectively own 167.2 billion units in ASB.
This announcement drew mixed reactions from Malaysians as this dividend was the lowest return in the entire history of ASB dividend distributions.
Several days before the official announcement, there were already rumours circulating that the ASB dividend would be lower compared to the previous year.
As it turned out, the 2019 ASB dividend was indeed the lowest in its history.
Looking at the historical record of ASB dividends, there has indeed been a declining trend year after year.
Nevertheless, in the face of challenging domestic and international market conditions, PNB recorded a reasonable performance in 2019.
PNB Group Chairman, Tan Sri Dr. Zeti Aziz stated that the Kuala Lumpur Composite Index (KLCI) had declined by 7.2% since 16 December, making it one of the worst-performing indices in the world.
There were several factors contributing to the decline in dividend figures. Among them:
Due to financial market uncertainties and the ongoing US-China trade war, coupled with slowing global trade that affected external demand and export performance for regional markets, the market environment became increasingly challenging in 2019.
What made it worse is that ASB invests up to 70% of its funds in the domestic stock market.
By 2019, the ASB fund size had reached a staggering RM320 billion!
Managing a fund of that enormous size is no easy feat compared to managing ASB funds back in the 1990s.
Investment strategies need to be adjusted according to prevailing economic conditions.
Realistically speaking, a 7% return is not a sustainable figure for ASB.
PNB will continue to provide sustainable returns to its unit holders.
PNB will also continue to strengthen its investment portfolio through diversification strategies, more careful risk management, and improving internal efficiencies through a progressive organisational transformation plan.
This is the truth that many people do not understand.
ASB was established as an investment institution, not a savings institution.
It is similar to a unit trust, but the price per unit is fixed at RM1 = 1 unit.
ASB and ASB Financing are two different instruments, but both serve as medium to long-term investment vehicles.
ASB is not a shortcut to building wealth.
You would be missing out if you did not take advantage of ASB, as it is exclusive to Bumiputeras only.
How many non-Bumiputeras wish they could enjoy this privilege but are unable to?
ASB remains a solid place to invest for low-risk returns.
Name another investment instrument that offers higher returns with equally low risk.
When the 5.5% dividend was announced, whispers of terminating ASB financing certificates began to emerge.
If you have been using the "dividend rolling" technique for your ASB financing, it means you do not truly have the mindset of a real investor.
This is because ASB Financing is factored into the DSR (Debt-Service-Ratio) calculation, and if you fail to refinance, your credit health record will start to be affected.
Nevertheless, investing in ASB is still worthwhile.
This is because the risk of ASB investment is very low.
ASB Financing is also seen as a good way to cultivate a saving habit because it functions as a form of "forced saving."
Better than nothing.
ASB Financing is also more worthwhile compared to regular ASB savings.
Have you heard of using ASB Financing as a wedding fund, house deposit, or car deposit?
Yes, with a clear game plan, there should be no cause for worry even if this year''s dividend is announced at a lower rate.
A bit of advice for ASB agents: you are advised not to encourage people to take up ASB financing using the "dividend rolling" technique.
The concern is that customers will take on the maximum loan, and eventually they will have to "top up" money because they relied on the "dividend rolling" technique.
ASB Financing itself is not wrong. What is wrong is customers blindly taking on loans without considering their ability to repay.
No clear objective as to why they are doing so.
As an ethical consultant or agent, ensure that your prospects can afford the monthly financing payments within their means.
This message is also directed at agents from the insurance/takaful industry, stock market gurus, and property agents who have begun emerging with statements inviting people to join them.
There are also those who take advantage of the situation by promoting get-rich-quick schemes offering returns in just 2 hours!
It is truly sad how desperate some in our society have become.
Regardless of which financial product you represent, your duty is simply to provide accurate and above all HONEST information to customers.
The rest is up to the customer to decide whether to choose your product or not.
There is no need to take jabs at one another when promoting your respective products.
In investing, there is one very famous saying: "Don''t put all your eggs in one basket."
If you are not getting the returns you desire, you can diversify your investment portfolio by allocating your capital across several different instruments.
Simply put, park your capital in instruments that offer better returns.
Among the investment instruments available are:
3. Fixed Deposits
5. Investment-Linked Takaful/Insurance
And most recently, the first Shariah-compliant digital investment platform in Malaysia has been launched - Wahed Invest.
There are many more ways to invest.
Invest with knowledge, insyaAllah this is preparation for our golden years ahead.
There is no right or wrong answer.
It is up to you to choose which investment instrument is the best and most suitable for you.
Understand the risk before the reward.
The ASB dividend dropped to 5.5% due to the underperformance of both global and domestic stock markets, as well as challenging economic conditions that year which affected PNB''s investment returns.
Yes, ASB is still considered a good investment because its returns are still higher than bank fixed deposits and it is backed by the Malaysian government, making it a safe savings option.
Investors can diversify their portfolio by investing in stocks on Bursa Malaysia, property, unit trusts, Tabung Haji, and Shariah-compliant digital platforms like Wahed Invest for more varied returns.
It means do not place all your capital into a single instrument. Instead, spread your investments across multiple asset classes to reduce risk and maximise your overall return potential.
Beyond ASB, investing in stocks on Bursa Malaysia can offer higher potential returns - the first step is opening an investment account.
Open a CDS account today to start investing in stocks on Bursa Malaysia.
Download the free Mahersaham ebook to learn the basics of stock investing from scratch.
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