Lessons from the Winners of Investment Game

There was this investment game, Personal Money Investment Game, organized by Personal Money magazine and sponsored by Hwang-DBS Investment Management Bhd. Each participant was given virtual money worth RM100,000 for simulation of investment in local unit trust funds from August 2004 to July 2005.

There were more than 2,300 participants and the top 25 winners recorded annual returns ranging from 7.16% to 15.26%. The top four players registered returns of more than 10.00%. It is quite an impressive results for unit trust investments.

Question: how did they do it?
There was a good analysis of the games in the October 2005 issue of Personal Money. Generally,
Majority of the top 25 winners held index funds at one time or another. Index funds are the funds that track the performance of KLCI. In fact, all the top three winners were fully invested in index funds as at 29 July 2005, the game closing date. (The 1st, 2nd and 3rd winners, Mr Tan Leong Wah, Mr Teoh Yaw Meng and Mr Sia Jai Sung, each invested 100%, 99.3% and 100% of their portfolio in OSK-UOB KLCI Tracker Fund, respectively.)

Most of the winners realized a very important fact from the beginning: for a short investing period of one year, fees matter. Most of them invested in low fees fund like index funds and bond funds.

Mr Teoh Yaw Meng's story was interesting. He began with Bond funds and was at the 6th position in April 2005. He switched his entire portfolio in June2005 riding on the rise of KLCI and ended in 2nd place.

Most top winners adopted the strategies of buy and hold. They timed the market and seldom switch funds.

Coupled with right timing, low upfront fees and a little bit of luck (that their strategies work for the market conditions of the 12 months period of the investment game), they won.

The web site is still worth visiting even though the game was concluded. There is a full list of articles on investing in unit trust funds written by professionals.

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