Category Winner: Best Malaysia Large-Cap Equity (Syariah) Fund - PMB Shariah Premier Fund
Inception Date: 1972-8-14
Total Net Assets (Mil) (2018-03-30): USD 18.02
Manager: Siti Rafidah Ghazali
M: Morningstar P: PMB
M: Can you highlight any major changes you made to the portfolio over the course of 2017? Were there any particular holding(s) that drove the fund’s performance for the year?
P: There was no major changes made to the portfolio in 2017. The Funds was invested in among the top 50 largest Shariah-compliant stocks in term of market capitalization. This strategy will be maintained moving forward. As stated in the Fund’s prospectus, the Fund may also invest in any of the next top 25 largest listed companies based on market capitalization. On top of that, the Fund also focus on companies that are stable with growth potential and/or have dividend yield of 3.0% or above.
In year 2017, among holdings that drove the Fund were Hartalega and TopGlove (rubber glove sector), Press Metal and Scientex (industrial products), Inari (technology) and MyEg (services).
M: What is you outlook for 2018 specific to the market you cover, and how are you positioned to take advantage of opportunities and/or mitigate risks?
P: 2018 bound to be a more volatile and challenging year as compared to 2017. We expect the market to be choppy in the first half 2018 due to uncertainty of 14th general election (GE14) outcome, before stabilize in the second half 2018. The five key themes that have been identified for 2018 are (1) beneficiaries of Ringgit strength; (2) GE14 plays; (3) China’s Belt Road Initiative & rail theme and China related stocks; (4) PNB transformation; and (5) small-mid cap sectors.
However, not all of the identified sectors or stocks related to the theme mentioned above are relevant to the investment strategy of this Fund as the investment of this Fund focuses on blue chips. Nevertheless, in general, we are overweight on construction, finance and power. We are reducing our holding in technology stocks as it was impacted by Ringgit’s strength and increasing weightage in some consumer stocks.
M: Can you comment on the major risks facing financial markets, such as rising interest rates and elevated asset prices? How do these risk effect your investment decision?
P: Recently we saw a concerted global sell-off in equities market in early February following declines in Wall Street due to investors’ concern on higher inflation, higher interest rates and rising US’s 10-year bond yield.
Apart from the above factors, the other major risks are weaker growth in major economies, global trade disruptions, geopolitical risks, possible trade war arising from protectionist policies and tightening financial conditions.
On our part, we will assess every risks and if the risk(s) affected our equities holdings we will reposition our portfolios according to the risks the market facing. For example, in March, President Trump has announced a new tariffs on steel and aluminum imports. The tariffs, which are 25% for steel imports and 10% for imported aluminum, prompted concerns about higher prices and a potential retaliation from China and other countries. Thus, we will analyze this issue and will determine its impact to the sectors and the affected listed companies and proceed with the necessary action.
M: How is your investment team organized? Have there been any changes to the investment team or structure over the past year? Do you anticipate adding to the team in the near future?
P: Our investment team consist of nine members which is divided into 3 units i.e. equity investment, fixed income investment and research. There have been no major changes over the past years. We plan to have another member to fill up the vacancy in fixed income which currently have two members only.
M: Can you highlight any areas where you feel that the investment team or the investment process can be improved upon?
P: Currently, we are satisfied with our current set-up, in terms of manpower and the investment process. The key word in managing the portfolio is discipline. If you have a good investment process but you allow sentiment to influence your decision making chances are you will not be able to achieve your objective.
View all Morningstar Malaysia Fund Awards 2018 articles here.