In our quarterly Fund Discovery Series, we discuss current market conditions and offer suggestions and strategies to diversify your portfolio.
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The global economic downturn that many had predicted earlier this year failed to materialise. The fears surrounding inflation and rising interest rates have largely subsided, the waters have calmed, and we now have a clearer view of what lies ahead of us in the capital markets.
In Malaysia, inflation eased to a six-month low of 2.4% in June, although core inflation remained at 3.1% year-on-year. The bear market for global stocks seems to be nearing the end, but before we get too excited, the Federal Reserve has warned that it may still hike its interest rates in the months to come.
Let’s look at the money flow in Q2 before we reveal our fund selections for Q3.
Chinese equities continued to attract the bulk of funds, with Singaporean dividend equities garnering significant attention. It’s interesting to note that a substantial portion of funds, around 70%, went into money market funds.
On the contrary, we saw a noticeable outflow from global and technology-related funds. This outflow is particularly evident in equity funds when compared to the inflow figures. We see this as a sign that investors were leveraging market conditions to strategically rebalance their portfolios, making the most of profit-taking opportunities.
We’ve picked some funds that you could include as part of your overall strategy in Q3. These are potential diversification ideas for equities, mixed, and fixed income funds that you can further discuss with your Relationship Manager, who can help you determine which of these would best suit your goals and risk profile. As with any investment, these funds carry risks, so we advise you to conduct your own research and discuss your options with a professional.
Technology plays a leading role in the art of problem-solving and its evolution is crucial in tackling the world's sustainability challenges. As the next generation prioritises sustainability, the realm of sustainable technology offers extensive investment prospects.
This fund aims to provide capital growth over the long term by investing in Shariah-compliant technology companies that play a role in the development of a sustainable global economy.
Technology sustains long-term growth. The pace of innovation is relentless, introducing fresh opportunities in new areas. From blockchain and IoT to established domains like cloud computing, e-commerce, and AI-driven platforms like ChatGPT, technology offers diverse avenues for investment and expansion.
Following the recent correction within the technology sector in August, the door is open for investors to enter and capitalise on the potential for long-term growth.
The fund’s advisor, Janus Henderson Investors, is a UK-based team of sector experts with more than 80 years of collective experience in navigating technology's hype cycle. Their investment philosophy emphasises valuation discipline as the cornerstone of bottom-up research.
Continuing in the realm of technology, an alternative fund worth considering is the RHB Pacific Technology Fund. The fund aims to provide capital growth over long-term by investing in a collective investment scheme.
In Asia, inflation seems to have peaked, potentially leading to Q4 2023 rate cuts. This is typically beneficial for equity markets. Beyond Hong Kong/China, the fund provides exposure to Taiwan, Korea, Japan, and other parts of the Pacific equity market, rendering it highly diversified.
The ripple effect of enthusiasm in AI in the US has had a palpable effect on Asia’s semiconductor chain. Key semiconductor players like TSMC, Samsung, Tokyo Electron, and SK Hynix performed formidably in the first half of 2023. As long as AI continues to grow, the chain will benefit. And although global sales of semiconductor manufacturing equipment are expected to decline this year after a bumper 2022, a rebound is anticipated next year.
With a robust diversification across Asia's technology sector and subsectors helping to spread the risk, the fund is well-positioned to seize opportunities in the electric vehicle and robotics spaces.
In line with our strategy to broaden portfolios beyond China, India shows plenty of promise as an investment destination. That’s why this fund continues to feature in our picks.
The fund aims to achieve long-term capital growth through equities and equity-related investments of companies covering different sectors of the Indian economy.
India stands out on the global economic stage, with the IMF projecting the nation’s growth to reach 6.1% by the close of 2023, outshining its peers. S&P Global and Goldman Sachs even envision India becoming the world's third-largest economy by 2030, thanks to its booming technology sector. Reinforcing this promising narrative, India's technology sector is set to elevate its revenue by $245 billion by the end of 2023, as forecasted by Nasscom.
India's appeal lies in its role as an attractive alternative to the China +1 strategy. Apple's decision to shift production of its iPhone 14 to India has paved the way for other multinational companies to follow suit. Driving the growth of India’s economy is its financial sector, which is poised to benefit from the central bank’s decision to hit the pause button on interest rate adjustments, bolstering net interest income and margins. In addition, the country’s projected wage growth is a promising sign, particularly benefiting the fund’s key holdings in the consumer discretionary sector.
These positive narratives cement India's status as a burgeoning economic powerhouse, charting a path toward sustained growth and influence on the global economic map.
The health science sector is another area that we have included in our quest to expand beyond technology. Incorporating the sector enriches our diversification strategy by tapping into unwavering demand, tech-led evolution, and regulatory stability. This strategic choice aligns with our commitment to robust portfolio management in a dynamic investment landscape.
This fund feeds into the Blackrock Global Funds (BGF) World Healthscience Fund, which invests in shares of companies whose predominant economic activity is in healthcare, pharmaceuticals, medical technology and supplies and the development of biotechnology.
We don’t have to look further than our own backyard to find opportunities. In the ever-changing world of investments, Malaysia stands out as a land of exciting potential, presenting a combination of positive signs that attract astute investors.
The FBMKLCI, representing the top 30 companies in Malaysia, offers an enticing prospect. There’s more than meets the eye because despite initial appearances, this index doesn't fully reflect Malaysia's strong economic path. A clear example is the substantial 5.6% GDP growth in Q1 and 2.9% in Q2 this year, highlighting the country's robust economic undercurrent.
Surge in Investment: A remarkable upswing in Foreign Direct Investment (FDI), escalating by RM14.1 billion, culminated in an unprecedented Q1 2023 total of RM893.2 billion. With the aim of achieving a 20% FDI target and the ambitious Domestic Direct Investment (DDI) growth projections, these promising figures are backed up by MITI's commendable achievement of over RM230 billion in committed investments and more than RM10 billion in trades thus far.
Monetary Resilience: Malaysia's monetary policy remains steadfast and supportive, steering clear of the excessive tightening observed in some developed economies. This accommodating approach underscores Malaysia's dedication to nurturing a growth-driven and economically favourable environment.
Strategic Resource Allocation: The fund's prudent asset allocation across the Asia mirrors the prevailing optimism in the continent.
Anticipating Post-Election Clarity: Post state-level elections, the investment landscape in the Malaysian equity funds much clearer. With that behind us, investor confidence is returning, offering a more defined outlook for Malaysia.
We hope this list of picks helps you in your diversification strategy. Get in touch with your Relationship Manager today to discuss investment ideas!
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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 presentation, 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 article 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 article 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 RHB i-Sustainable Future Technology Fund dated 30 May 2023, RHB Pacific Technology Fund dated 29 March 2021, RHB Manulife India Equity Fund dated 25 January 2022, Affin Hwang World Series – Global Healthscience Fund dated 3 April 2019, and AHAM Select Opportunity Fund dated 30 December 2022. (“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 the RHB i-Sustainable Future Technology Fund are Fund Management Risk, Redemption Risk, Loan/Financing Risk, Risk of non-compliance, Returns are not guaranteed risk, Risk of termination of the fund, Inflation Risk, Market Risk, Liquidity Risk, Islamic Financial Derivatives Risk, Shariah-Compliant Equity-Related Securities Risk, Profit Rate Risk, Default Rate & Credit Risk, Technology-related Companies Risk, Sustainability Risk, Smaller Companies Risk, Currency Risk, Country Risk, Concentration Risk, Reclassification of Shariah Status Risk. The specific risks of RHB Pacific Technology Fund are Investment Risk, Equity Risk, Technology Related Companies Risk, Emerging Markets Risk, Concentration Risk, Smaller Companies Risk, Currency Risk, Liquidity Risk, Risk Associated with High Volatility of the equity market in Pacific Region, Derivatives Risk, Political, Economic and Social Risk, Market Risk, Hedging Risk, Leverage Risk, Low Level of Monitoring Risk, Legal, Tax and Regulatory Risk, Valuation Risk, Custodial Risk, Counterparty Risk, People’s Republic of China Tax Risk Consideration, Early Termination Risk, Cross-class Liability Risk, China Market Risk, Risk associated with Foreign Shareholding Restriuctions on China A-Shares, Risk associated with Short Swing Profit Rule, Risk associated with China Connect, Risks associated with Investments in Stocks listed on the SME Board and/or the ChiNext Board of the SZSE and/or the Science and Technology Innovation Board of the SSE, Risks associated with the Equity-linked Notes and Participation Notes, Risks associated with Collateral Management and Re-investment of cash collateral, LIBOR Discontinuance or Unavailability Risk. The specific risks of the RHB Manulife India Equity Fund are Manager’s Risk, Market Risk, Liquidity Risk, Country Risk, Currency Risk, Small-Cap Risk, Natural Resources Sector Risk, Taxation Risks, Financial Derivative Instruments other than for Investment Purpose Risk, Foreign Exchange Risks, Liquidity and Volatility Risks, Emerging Markets Risks, Political and Regulatory Risks, Custodial, Clearance and Settlement Risk, Credit Downgrade Risk, Macroeconomic Risk Factors, Global Commodity Prices Risk, Oil Price Risks, Government Policy Risks, Risk of Price Controls, Risk of Stock Market Controls, Geopolitical Risks, Labour Market Risks, Environmental Regulation Risks and Swing Pricing Risk. The specific risks of Affin Hwang World Series – Global Healthscience Fund are Concentration Risk, Liquidity Risk, Country risk, Currency Risk, Regulatory Risk, Target Fund Manager risk. The specific risks of AHAM Select Opportunity Fund are Stock Specific Risk, Credit and Default Risk, Interest Rate Risk, Warrants Investment Risk, Country Risk, Currency Risk, Regulatory Risk and other general risks are elaborated in the Information Memorandum.
This article has not been reviewed by the Securities Commission Malaysia (SC).