The annual Morningstar Malaysia Fund Awards are designed to help investors identify the retail funds that added the most value for investors within the context of their relevant peer group in 2015 and over longer time periods.
To help our readers better observe what makes a winner fund, we asked the winning teams to shed lights on some major changes they made to the portfolio over the course of 2015, how various risks affect their investment decisions and their investment team structure, etc.
Best Malaysia Large-Cap Equity Fund -- Public Sector Select
Key Stats
Inception Date: 13 November, 2007
Morningstar Rating (as of 2016-02-29):
Total Net Assets (Mil, as of 2016-01-31): 121.20 USD
Manager: Tan Yan Heong
Manager Start Date: 30 April, 2011
M: Morningstar Y: Yeoh Kim Hong, CEO, Public Mutual
M: Could you highlight any major changes you made to the portfolio over the course of 2015? Were there any particular holding(s) that drove the fund’s performance for the year?
Y: In view of the challenging economic outlook in 2015, our 2 winning funds namely Public Sector Select Fund (PSSF) and Public Ittikal Sequel Fund (PITSEQ) were overweight in sectors with more resilient earnings such as telecommunications, utilities, healthcare and export based manufacturing. They were underweight in banking and oil & gas stocks which were impacted by slowing loan demand and weaker oil prices respectively.
In terms of asset allocation, the two funds maintained relatively higher equity exposures in 1H2015 before trimming their equity weight in 3Q2015 amid the consolidation in the domestic market. The funds subsequently increased their equity exposures in 4Q2015 as the domestic market stabilised.
M: What is your outlook for 2016 specific to the markets you cover and how are you positioned to take advantage of opportunities and/or mitigate potential risks?
Y: Malaysia’s GDP growth for 2016 is projected to range between 4% to 4.5% with domestic consumption anticipated to moderate while a more competitive Ringgit would help to sustain exports and attract foreign investments. As the Malaysian market has experienced a large outflow of foreign funds last year, any stabilisation in oil prices or strengthening of the Ringgit may lead to an inflow of funds which will help underpin the local stock market.
Given the moderating economic growth outlook, PSSF and PITSEQ will continue to maintain a portfolio comprising growth stocks in the manufacturing and technology sectors and stocks underpinned by resilient earnings in the utilities, telecommunications, healthcare and consumer staples sectors.
M: Can you comment on the macro risks facing the global economy, including the US rate hikes, weaknesses in commodity prices and the significant headwinds facing the emerging world? How do these risks affect your investment decisions?
Y: A major risk facing the global economy is that Quantitative Easing measures and negative real rates implemented by selected central banks are ineffective in stimulating consumption and investment expenditure. This will lead to a prolonged period of below trend growth for the developed and emerging economies.
To ride out potential market volatility in the year ahead, we will look to hold a diversified portfolio across various markets in terms of asset allocation. Selected funds will also hold higher cash positions to capitalise on investment opportunities amid potential market volatility. Our focus on companies with strong cashflows and reasonable valuations in sectors with resilient earnings will also help us ride through the current macroeconomic environment.
M: How is your investment team organized? Have there been or do you anticipate any changes to the investment team or structure over the course of the year? Do you anticipate adding to the team in the near future?
Y: We currently have a team of 26 fund managers who are supported by a team of 31 analysts who are assigned to specialise in specific countries or sectors. There have been no major changes to our investment team over the past year. We evaluate our headcount on an on-going basis to ensure that we have adequate resources to undertake the management of our funds.
Click here to read other winners' Q&A.
