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 2016 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 2016, how various risks affect their investment decisions and their investment team structure, etc.
Best Malaysia Bond Fund -- Public Islamic Bond Fund
Key Stats
Inception Date: 15 August, 2001
Morningstar Rating (as of 2017-02-28): 
Total Net Assets (Mil, as of 2017-02-28): 105.47 USD
Manager: En. Zaharudin bin Ghazali & Lum Ming Jang
Manager Start Date: 30 April, 2006；30 April, 2009
M: Morningstar PMB: Public Mutual Berhad
M: Could you highlight any major changes you made to the portfolio over the course of 2016? Were there any particular holding(s) that drove the fund’s performance for the year?
PMB: Public Islamic Bond Fund (PI BOND) adopted a long duration strategy for the most part of 2016 amid the low interest rate environment. However, the fund reduced its portfolio duration at the beginning of 4Q2016 in anticipation of an increase in the Federal funds rate at the end of the year.
In terms of asset allocation, PI BOND remained relatively well-invested in government issues, government-guaranteed and corporate sukuk with higher credit ratings during the year.
M: What is your outlook for 2017 specific to the markets you cover and how are you positioned to take advantage of opportunities and/or mitigate potential risks?
PMB: On the domestic front, the Malaysian economy is anticipated to be underpinned by sustained consumer spending and investment spending backed by the ongoing implementation of infrastructure projects for the coming year.
On the external front, reflationary measures undertaken by the U.S. and Chinese governments to spur growth in their respective economies may continue to underpin energy, commodity and basic material prices which have rebounded from their lows.
PI BOND will continue looking for opportunities to invest in selected sukuk with attractive risk-return trade-offs, mainly in sectors with good cash flows such as infrastructure, utilities, telecommunications and healthcare.
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?
PMB: Looking ahead, growth in the global economy is expected to remain uneven with the Europe and China economies seeing a moderating growth outlook, while growth in the U.S. is forecast to remain resilient amid the new administration’s reflationary measures. The divergence in monetary policies between the U.S. Federal Reserve Bank and other major central banks may potentially lead to increased volatilities in global financial markets.
On the fixed income front, we will closely monitor developments in global and domestic bond markets and maintain sufficient liquidity to rebalance our bond portfolios if necessary. We continue to favour issuers which have strong financial positions and good operating cash flows while avoiding issuers which are highly geared.
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?
PMB: We currently have a team of 23 fund managers who are supported by a team of 30 analysts specialised 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 ongoing basis to ensure that we have adequate resources to undertake the management of our funds.
M: Can you highlight any areas where you feel that the investment team or the investment process can be improved upon?
PMB: Members of our investment team seek to constantly improve themselves through continuous learning and development of their skill sets.
We also look to continuously upgrade and improve our workflow and processes as well as identify and employ best practices that will help to improve our efficiency as a team. To expand the scope of markets under our coverage and also to deepen our insights within the respective markets, we will continually look to strengthen the team with individuals who possess the appropriate skill sets.
Click here for other winners' Q&A.
