The Mala Hotpot Investing Theory: Diversifying for the Right Mix

Imagine this: a flavourful broth simmering away in a pot. You can just hear it in the light bubbles breaking the surface, a soft whisper echoing years of tradition. A recipe handed down from generation to generation, woven between stories of youthful adventures and sombre hardships set in the time and place of our predecessors. The steam wafts in soft tendrils, beckoning you.

What’s the perfect combination, though? The magic of a mala hotpot is that it is all about you. How long you want your ingredients to simmer, how spicy your soup should be, it all depends on you.

When you really think about it, the mala hotpot experience is a lot like building a portfolio. There is no one right way to do it, just what’s right for you. While you are feasting on a hotpot meal with your loved ones this Chinese New Year, picture what your diversified portfolio will look like.

Some like it hot

We can break down the elements that make up the mala hotpot experience and draw parallels to investing. First, there’s the soup, which reflects your level of risk. Some can tolerate more risk and want the spice to burn a hole in their tongues, while some like a more subtle approach with a milder soup. Others might play it safe and choose a clear soup with no surprises. Your choice of soup will directly impact the flavour of the ingredients you put into it, much like how your risk profile determines your goals.

An example of a clear soup is CIMB Principal Life Bond Fund, which aims to provide regular income as well as medium to long-term capital appreciation through investments primarily in Malaysian bonds. For a slightly spicier experience, you could opt for mixed asset funds like RHB Asian Income or RHB Global Shariah Dynamic Income. 

If equities are more your flavour, spice it up with mix-core funds like RHB Global Shariah Equity Index Fund or RHB Sustainable Global Thematic Fund.

RHB Global Shariah Equity Index Fund focuses on large caps in the US equity market, and is benchmarked against the Dow Jones Islamic Market Titans 100 Index. The fund mirrors the index’s sector allocation, with a 45% allocation in the technology sector.

Meanwhile RHB Sustainable Global Thematic Fund is a SRI (Sustainable and Responsible Investment) fund which bases its investments on areas which are align with the United Nations Sustainable Development Goals. The fund’s portfolio is built around forward looking secular investment themes for example electric vehicles, digital health data, DNA sequencing and others. Both funds are broad base in nature which invest into global equity market.

Or, if you feel your spice tolerance is up to par, you can opt for investments in a single sector or country. RHB US Focus Fund is for investors with a medium to high risk appetite who are seeking capital gains from investments in smaller to medium-sized US companies. RHB Shariah China Focus Fund has a similar approach, but through investments in China shariah-compliant equities.

If you can’t decide what sort of soup you want, have them all! Divide your pot into three separate sections for Hot, Mild, and Clear soup, representing Aggressive, Moderate, and Conservative approaches. Still not right? Combine the soups to get the in-between levels of spiciness – Moderately Conservative and Moderately Aggressive. Explore the entire spectrum of spiciness to get the level you want.

Still, no matter which type of soup you choose, each type has been prepared with the utmost care, from stock that spent hours on the stove to reach balanced perfection. That’s how much care your fund manager takes in preparing your “soup”, putting their skills and experience into ensuring you meet your financial goals.

Diversified ingredients in your “pot”folio

The more varied your ingredients, the more delicious your hotpot.

The number of additional ingredients you put into your soup reflects the different types of investments or assets in your portfolio. For example, meat could represent bonds. A vital element in the mala hotpot experience, you can’t overlook the meat part of the meal. However, it can’t just be a meat hotpot. That would be sad and boring. What if the meat doesn’t taste as sweet as you envisioned? There would be nothing else to eat.

That’s where the vegetables come in. Lotus root, mushrooms, spinach, the humble kangkong - all the different assets that make up your portfolio. Are you thinking of diversifying into another region? How about some tofu? Each individual ingredient brings its own unique contribution, adding flavours and textures to the landscape of your soup.

Let the ingredients mingle for a while. How long you leave it in could represent your investment time frame. Whether it’s quick dip in a spicy soup, or a long and slow simmer in a clear broth, each method will bring about a different end result.

Before you eat your concoction, there’s the condiments. We cannot forget how important the dipping sauce is in the mala hotpot experience. While you can do without, who can really say no to a little extra something to take it to the next level? Tactical investments in a niche sector can boost your returns. They are the dipping sauce that you simply cannot discount.

The dipping sauces for your portfolio can be RHB Asia Sustainable Leaders Fund which is aimed at investors with a high risk tolerance who seek capital appreciation over the medium to long-term from investments in a diversified portfolio of Asian ESG-compliant companies. TA Asia Absolute Alpha Fund is another option. The fund’s objective is to generate long-term positive returns through investment in Asian equities and related instruments.

But wait, there’s more. A little dessert would help complete the mala hotpot experience. Investments are moving towards environmental, social, and governance, with a focus on low-carbon/fossil fuel-free assets. RHB Climate Change Solutions Fund provides a diversified exposure through a combination of of fundamental and sector-specific insights, using artificial intelligence, data, and research. The portfolio of between 50 to 100 stocks is developed through a combination of fundamental and sector-specific insights.

Since we are at the start of 2022, it’s a good time to reassess your existing portfolio to add more flavour, or give it a little kick. If it’s your first time building a portfolio, your Relationship Manager will be happy to show you how to best diversify your investments.

Your portfolio is your mala hotpot, and the combination of ingredients is up to you. The result is the fruit of your labour. Take a bite, and savour the taste!

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This article has been prepared by RHB and is solely for your information only. It may not be copied, published, circulated, reproduced or distributed in whole or part to any person without the prior written consent of RHB. In preparing this article, RHB has relied upon and assumed the accuracy and completeness of all information available from public sources or which was otherwise reviewed by RHB. Accordingly, whilst we have taken all reasonable care to ensure that the information contained in this presentation is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness and make no representation or warranty (whether expressed or implied) and accept no responsibility or liability for its accuracy or completeness. You should not act on the information contained in this podcast without first independently verifying its contents.

Any opinion, management forecast or estimate contained in this article is based on information available as the date of this podcast and are subject to change without notice. It does not constitute an offer or solicitation to deal in units of any RHB fund and does not have regard to the specific investment objectives, financial situation or the particular needs of any specific person who may receive this. Investors may wish to seek advice from a financial adviser/unit trust consultant before purchasing units of any funds. In the event that the investor chooses not to seek advice from a financial adviser/unit trust consultant, he should consider whether the fund in question is suitable for him. Past performance of the fund or the manager, and any economic and market trends or forecast, are not necessarily indicative of the future or likely performance of the fund or the manager. The value of units in the fund, and the income accruing to the units, if any, from the fund, may fall as well as rise.

A Product Highlights Sheet (“PHS”) highlighting the key features and risks of the Principal Lifetime Bond Fund dated 25 June 2021, RHB Global Shariah Dynamic Income dated 17 January 2020, Asian Income Fund dated 30 September 2019, TA Asia Absolute Alpha Fund dated 4 January 2021, RHB Shariah China Focus Fund dated 8 March 2021, RHB Sustainable Global Thematic Fund dated 8 March 2021, RHB Climate Change Solutions Fund dated 13 January 2022, RHB Asia Sustainable Leaders Fund dated 20 September 2021, RHB Global Shariah Equity Index Fund dated 16 November 2020 and RHB US Focus Fund dated 31 December 2021 Fund (“Fund”) is available and investors have the right to request for a PHS. Investors are advised to obtain, read and understand the PHS and the contents of the Information Memorandum and its supplementary (ies) (if) (“the Information Memorandum”) before investing. The Information Memorandum has been registered with the Securities Commission Malaysia (“SC”) who takes no responsibility for its contents. The SC’s approval and authorization of the registration of the Information Memorandum should not be taken to indicate that the SC has recommended or endorsed the Fund. Amongst others, investors should consider the fees and charges involved. Investors should also note that the price of units and distributions payable, if any, may go down as well as up. Where a distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from cum distribution NAV to ex-distribution NAV. Any issue of units to which the Information Memorandum relates will only be made on receipt of a form of application referred to in the Information Memorandum. The printed copy of prospectus and Product Highlight Sheet is available at RHB branches/Premier Centre and investors have the right to request for a Product Highlight Sheet. Investors are advised that investments are subject to investment risk and that there can be no guarantee that any investment objectives will be achieved. Investors should conduct their own assessment before investing and seek professional advice, where necessary and should not make an investment decision based solely on this update.

The Manager wishes to highlight the specific risks of Principal Lifetime Bond Fund are Returns not guaranteed, Market risk, Inflation risk, Manager risk, Financing risk, Credit and default risk, interest rate risk, Company specific risk, risk associate with investment in warrants, Risk associated with investment in structured products, Risk associated with investment derivative. The specific risks of Global Shariah Dynamic Income are Management Risk, Redemption Risk, Loan/financing risk, Risk of non-compliance, Returns are not guaranteed, Risk of Termination of the Fund, Inflation Risk, Investment Derivatives Risk, Shariah-compliant Equity Related Securities Risk, Market risk, Credit/Default risk, Currency Risk, Profit rate risk, Country risk, Reclassification of Shariah status risk, Unrated Shariah-complaint Securities Risk, Liquidity Risk, Shariah-compliant Equity Risk, Regulatory Risk, Risk of Use of Rating Agencies and Other Third Parties, Market Risk in Emerging and Less Developed Markets. The specific risks of Asian Income Fund are Management Risk, Liquidity Risk, Country Risk, Market risk in Asia, Credit Risk, Currency Risk, Equity Risk Investment grade, below investment grade and unrated debt securities risk, Risks relating to distributions, Emerging markets and frontier, Derivatives risk. The specific risks of RHB Sustainable Global Thematic Fund are Management Risk, Liquidity Risk, Currency Risk, Country Risk, Interest Rate Risk, General Risks, Country Risks-General , Management Risk, Certain Legal and Regulatory Risks, Cybersecurity Risk, Liquidity Risk, Market Risk, Currency Risk, Borrowing Risk, Loans of Portfolio Securities Risk, Taxation Risk, FATCA and Certain Withholding Risk, Investment Strategy Risks, Country Risks – Emerging Market, Focused Portfolio Risk, Allocation Risk, Turnover Risk, Derivatives Risks, OYTC Derivatives Counterparty Risk, Equity Securities Risk, REITs Risk. The specific risks of RHB Climate Change Solutions Fund are Management Risk, Liquidity Risk, Currency Risk, Interest Rate Risk, Fund Structure Risks, Regulatory Risks, Political Risks, Legal Risks, Management Risk, Concentration Risk, Derivatives Risk, Distribution of Capital Risk, Hedging Risk, Security Exclusion Risk, Thematic Risk, Equities Risk, Emerging markets Risk, Smaller Companies Risk, Currency Risk, Liquidity Risk, Market Risk, Sustainability Risk. The specific risks of RHB US Focus Equity Fund are General Risk, Investment Objective Risk, Regulatory Risk, Risk of Suspension of share dealings, Liquidity Risk, Derivatives Risk, Warrant Risk, Counterparty Risk, Custody Risk, Smaller Companies Risk, Initial Public Offerings Risk, Specific Risks linked to securities lending and repurchase transactions, Potential Conflicts of Interest. The specific risks of RHB Shariah China Focus Fund are Country Rik, Currency Risk, Market Risk, Particular Security Risk, Reclassification Risk. The specific risks of RHB Asia Sustainable Leaders Fund are Management Risk, Redemption Risk, Loan/Financing Risk. Risk of Non-Compliance, Returns are not Guaranteed, Risk of Termination of the Fund, Inflation Risk, Market Risk, Liquidity Risk, Financial Derivatives Risk, Counterparty and Issuer Risk, Interest Rate Risk, Equity Risk, Equity-Related Securities Risk, Currency Risk, Country Risk, Collective Investment schemes Risk. The specific risks of TA Asia Absolute Alpha Fund are External Investment Manager’s Risk, Equity and Equity-Related Securities Risk, Financial Derivative Instruments Risk, Currency Risk, Country Risk, Liquidity Risk, Concentration Risk, Risk of investing in emerging and less developed markets, Political and Economic Risk, Small Capitalisation Companies Risk, Settlement Risk, IPO Securities Risk, Counterparty Risk. The specific risk of RHB Global Shariah Equity Index Fund are Management Risk, Liquidity Risk, Currency Risk, Country Risk, Market Risk, Foreign Markets Risk, Foreign Exchange Risk, Shariah Restriction Risk, Stock Risk, Liquidity Risk, Risks Associated with Government or Central Banks’ Intervention, Prohibited Securities Risk, Taxation Risk, Withdrawal of the UK from the EU Risk, Risks relating to the index, Counterparty Risk, Derivatives Risk, Index Tracking Risk, Operation Risk.

This article has not been reviewed by the Securities Commission.

RHB Bank Berhad 196501000373 (6171-M) | RHB Islamic Bank Berhad 200501003283 (680329-V)

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