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Suhaila Mokhtar has asked you to create an investment strategy for her, including the selection of appropriate products for the detailed accounts. You have discussed with her that her accounts hold some non-shariah compliant assets. After going over the different issues associated with moving over the investment, she has decided that she would like the non-shariah compliant assets sold and re-invested in something else.
Solution Using the Security Selection Screen:
Click on Security Selection under the Implementation section. You will notice that information created on the detailed asset and liability screen is pre-populated. You now have the option to balance the current portfolios to the target portfolio.
One of the first things you will want to do is exclude Suhaila’s education investments from the product allocation process since it is a short-term account and needs to be available for her son’s education. To do this, click the checkbox beside the Education Investments account, and then click on the Update View button below.
We want to allocate a shariah-compliant Islamic Equity product called Maakl Al-Faid to Suhaila’s non-EPF account.
- Click on the Select button under the Choose Fund column, beside Suhaila’s non-EPF account.
- In the drop-down menu for Asset Class choose the Islamic Equity option.
- The fastest way to search for a fund is by Product Code using the radio buttons to the right.
- Use 432752 as the Description.
- Click Search.
- Click the Select button beside the product called Maakl Al-Faid.
In the detailed Asset Information screen, simply enter $60,000 in the Market Value field, since this is the amount of the account being allocated to this product. Click Save to return to the Security Selection screen.
You’ll notice also that in the second section of the Security Selection screen, the new Maakl product has been included for Suhaila’s non-EPF investments at a value of $60,000. All of the clients’ previous products currently have $0 allocated in the recommended account allocations.
Originally, Suhaila had $35,000 of her Prudana Wafi fund in her non-EPF account, and we are going to recommend that she keep $20,000 of this fixed income in place. To do this, scroll down to the second section, and under the Fixed Income – Prudana Wafi, for Suhaila’s non-EPF account, set the Recommended $ Amount to 20,000.
Similarly, Suhaila indicated that she wanted to get rid of any non-shariah compliant assets. In this case her Phillip Master First Ethical Unit Trust is non-shariah compliant. So in the Recommended column we would want to ensure this fund remains at $0 throughout the product allocation process and simply allocate other products appropriately.
Since the asset classes shown can vary wildly from the core and corporate websites, complete the allocation to match the target asset allocation.
TIP: a handy tool to help you complete the allocation is on the third section of the Security Selection screen. The first two columns identify the current and target asset allocation in terms of percentages and dollar amounts. The third column shows how much of each asset class you have actually recommended so far using the Security Selection screen, in dollars and percents. And finally, the last column shows the variance between the recommended portfolio and the target portfolio (red being a deficit, and black even or a surplus). So by looking at this last column, you can quickly see how much left of each asset class you should allocate.
After completing the “Security Selection”, click on the “+/-” button, as seen in the top, right hand corner. This will move your recommended portfolio of products to complete the target portfolio in the Asset Allocation screen. Thus the overall rate of return of the recommended products will be used in any reports you produce for Suhaila. Then return Home where your data summary will be displayed.