Last Updated on December 9, 2024 by Chin Yi Xuan
What is PRS, and how can I find and buy the best PRS fund?
Private Retirement Scheme (PRS) is an initiative that the Malaysian government introduced to encourage Malaysians to invest for their retirement.
In return, Malaysians can enjoy personal tax relief of up to RM3,000 whenever they enroll or top up their PRS account. As of Budget 2025, this relief has been extended until 2030.
However, how can one know which PRS fund to invest in?
In this guide, I’ll cover a simple guide on how you can find the best and invest in PRS fund for yourself!
Table of Contents
Step-by-step: Screen for PRS funds using the FSMOne Fund Selector Tool
For unit trusts and funds, I usually refer to FSMOne’s Fund Selector Tool as it has one of the most comprehensive fund coverage in Malaysia.
Even better, it is free to use!
Step 1: Head on to FSMOne Fund Selector Tool, and filter for PRS funds
Click the below button to access FSMOne Fund Selector Tool. I’ve customized the button to go directly to PRS funds:
On the site, you’ll notice that the funds have been filtered specifically for PRS funds:
Step 2: Sort your PRS funds by various criteria
One thing I appreciate about the FSMOne Fund Selector Tool is the ability to sort the funds according to different criteria:
(a) Sort by Year-To-Date (YTD) and Annualized Performance
To find out the top-performing PRS funds in the past, you can sort the funds according to their performance at different timeframes.
Example:
- If I’d like to sort for the top-performing PRS funds this year, I’ll sort by ‘YTD’.
- If I’d like to sort for the PRS funds with the highest average return in the past 3 years, I’ll sort by ‘3y’.
(b) Sort by Calendar Year Performance
You can also compare the funds’ performance according to a specific year in the past:
(c) Sort by 3Y Sharpe Ratio
Sharpe Ratio is one of the most useful metrics when researching a fund’s performance.
Essentially, Sharpe Ratio helps us compare the risk-adjusted performance between funds. Simply put, we can use Sharpe Ratio to decide if a fund’s risk is worth the return.
How to use Sharpe Ratio:
- Sharpe Ratio is best used to compare funds with similar asset classes and geographical exposure.
- Generally, a fund with Sharpe Ratio >1.0 is considered good as it shows that the fund provided excess returns relative to the risk it experienced.
- Meanwhile, a Sharpe Ratio <1.0 is less ideal as it (generally) indicates that the return was not enough to compensate for the risk.
Example:
Principal Islamic PRS Plus Equity – Class C and Kenanga OnePRS Growth Fund are both funds with exposure to Malaysian equities.
Given their similarity, one can use Sharpe ratio to compare their risk-adjusted performance:
(d) Sort by 3Y Volatility
Funds can also be sorted by volatility.
Essentially, funds with lower 3Y volatility have a track record of providing more consistent returns over time rather than chasing short-term performance.
(e) Sort by Asset Class and Geographic Sector
Aside from performances, it is also useful to know the underlying asset class and where the funds are geographically invested in.
(i) Under Asset Class, you’ll know WHAT a fund is investing in:
- Equity: Mainly stocks. Generally higher potential return but is more volatile and risky.
- Fixed Income: Exposure to debt instruments like bonds, Fixed Deposits, and money market funds. Generally lower potential return but is less volatile and risky.
- Multi-Asset/Balanced: A mixed exposure of asset classes such as equity and fixed income. These funds generally strike a balance between returns and volatility/risk.
(ii) Under Geographic Sector, you’ll know WHERE a fund is investing in:
- Malaysia/Malaysia-focused: Mainly exposure to assets in Malaysia
- Asia: Mainly exposure to assets in Asian countries.
- Asia ex-Japan: Mainly exposure to assets in Asian countries, excluding Japan.
- Global: Gain exposure to global assets.
Step 3: Click on a specific PRS fund to learn more details
Example of information that I’d like to know about a fund:
#1 Holdings: What does the fund invest in?
#2 What are the fees involved when I invest in this fund?
To note:
- All PRS funds under FSMOne have 0% sales charges.
- Fund manager fees include annual management fees, trustee fees, and expense ratios. These fees are deducted directly from the fund’s Net Asset Value (NAV) and no additional payment is required.
- PPA fee charged by Private Pension Administrator (PPA) Malaysia
6 Tips to find the best PRS Funds
Here are my 5 general principles for finding the ideal PRS fund:
- #1 Positive past 3y, 5y, or 10y performance.
- #2 Funds that are diversified across different geographical regions or sectors (eg. Global). In other words, I prefer funds that are not dependent or focused on just a single country/region (eg. Malaysia or Asia focused) or sector
- #3 Funds with lower 3Y volatility – which indicate that returns are generated consistently over time.
- #4 Sharpe Ratio higher than 1.0 (if not, as close to 1.0 as possible) while comparing funds with similar geographical traits or asset exposure.
- #5 Relatively low fees/charges
The goal is to strike a balance between the 5 variables above while researching for your ideal PRS fund.
Tips #6: Check out Target Date Funds (TDF)
Target Date Funds (TDF) are unique funds that will, over time, adjust & optimize the assets according to their risk nature.
All you have to do is to decide your optimum retirement timeframe.
As you approach retirement, TDF fund managers will adjust the fund holdings and invest in more stable and less volatile assets.
The Principal RetireEasy and Principal Islamic RetireEasy series are Target Date Funds with different retirement timeframes. As of time of writing, the respective timeframes are 2030, 2040, 2050, and 2060:
Fund comparison feature in FSMOne Fund Selector Tool
What if you have multiple PRS funds that you’d like to compare side-by-side?
The fund comparison feature in FSMOne is designed just for this:
Step 1: Select the funds that you’d like to compare, then click ‘Compare Now’
Step 2: Compare important information for selected PRS funds
Important info such as past performance, asset class & geographical exposure, and Sharpe Ratio I(and more!) can be compared:
How to invest in PRS funds (+🎁 Promo)
One of the best ways to invest in PRS funds is through FSMOne, as you get access to a vast selection of PRS funds from 7 PRS providers (AIA, AmInvest, AHAM Asset Management Berhad, Manulife, Principal, Kenanga, RHB).
FSMOne PRS Campaign 2024: Enjoy RM40 FSMOne Cash Account! (ending 15/12/2024)
From 1 October 2024 to 15 December 2024, enjoy RM40 FSMOne Cash Account Credits when you invest in PRS Funds via FSMOne!
- Receive RM40 worth of FSMOne MYR Cash Account credits when you invest a minimum gross investment amount of RM3,000 in one PRS Fund in a single transaction via FSMOne from 1 October to 15 December 2024.
- Participating PRS Providers for this campaign include:
- AHAM Asset Management Berhad
- Kenanga Investors Berhad
- Manulife Investment Management (M) Berhad
- Principal Asset Management Berhad
- RHB Asset Management Sdn Bhd
- All cash payments and completed forms must reach FSMOne by 11am, 15 December 2024.
Check out the section below for a step-by-step guide on how to buy your PRS fund from FSMOne.
Step-by-step guide to buy your PRS fund from FSMOne
Prerequisite: Firstly, start by opening your FSMOne account HERE. Skip to Step 2 if you already have a FSMOne account.
- Select ‘Personal Account’
- Key in your personal details and create your FSMOne account username & password.
- Key in your tax information
- Verify your identity by taking a photo of your IC
- Enter your address and upload a supporting document (eg. utility bill, bank statement) as proof of your address:
- Enter your employment details. You will also given an option to open a CDS account with FSMOne, which allows you to trade stocks. There will be a fee of RM10 to open a CDS account, which will be refunded upon successful account activation:
Step 1: Log in to your FSMOne account and click on “Trade”
Step 2: Look for Unit Trust and click “Buy”
Step 3-4: Under ‘View By’, select Private Retirement Funds and choose Private Retirement Funds
Note: This step only appears during the initial subscription process.
Step 5: Fill in the investment amount and payment method (FPX/Cash management fund/Cash account)
Step 6: Fill in the information and Sign
Note: This step only appears during the initial subscription process.
Step 7-8: Click View Cart and proceed to Check out
(you may add more Funds or proceed to view the Cart, check the details and proceed to check out)
Step 9-10: Agree on Terms and Proceed to make payment
You may click the links to the terms and conditions and check out to proceed to make payment from your personal bank account as we do not accept third-party payments or cash deposits
Step 11: Order completed and click Pay now
Only for PRS Funds from Manulife, AIA, AmInvest, click download PRS Form to complete your transaction.
Step 12: Select your preferred bank and complete the payment
You may select your preferred bank account to proceed to make FPX payment
PRS Frequently Asked Questions (FAQs)
Ques: What is my tax incentive for investing in PRS?
Ans: You get to enjoy personal tax relief up to RM3,000
Ques: Who can invest in PRS?
Ans: PRS is open to individuals aged 18 and above, including both Malaysians and foreigners.
Ques: Can I withdraw/sell my PRS funds?
Ans: Your PRS contributions are allocated to sub-accounts A and B, with different withdrawal conditions:
- Sub-account A (70%): Can be withdrawn upon reaching retirement age of 55.
- Sub-account B (30%): Can be withdrawn once a year (1 year after your subscription), subject to a 8% tax penalty.
Ques: Can I transfer my existing PRS fund to another PRS provider?
Ans: Yes, transfer to other PRS provider is allowed after 1 year from the first subscription date. A RM25 PPA transfer fee per request and other related transfer fees (if applicable) will be incurred.
Ques: Can I switch my PRS fund?
Ans: Yes, you can switch between funds of the same provider without any fees or restrictions on the number of transactions.
Disclaimers
All materials and contents herein shall not be construed as an offer or solicitation for the subscription, purchase or sale of any fund, product or services. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons.
Investors are advised to read and understand the contents of the prospectus, product highlight sheet (PHS) and relevant disclosure documents before investing. The prospectuses, PHS and relevant disclosure documents can be obtained from FSMOne Malaysia website. Investors should compare and consider the fees, charges and costs involved before investing. Investors are advised to understand the risks involved in relation to the products or services and further conduct his/ her own risk assessment and seek professional advice, where necessary. The unit trust fund’s prospectuses have been registered and lodged with the Securities Commission (SC), however this does not amount to nor indicate that SC has recommended or endorsed the product. Past performance is not indicative of future performance. Opinions expressed herein are subject to change without notice. Some funds, products or services may not be suitable or available to all investors, and are only made available to Sophisticated Investors (as defined in Capital Market and Services Act). The contents herein have not been reviewed by SC. Please read our full disclaimer in the website.
