The collapse in commodity prices are working their way through the economy, prompting fund managers to change their investment focus moving into 2016.
A survey of the top five performing Malaysian equity funds shows that only one fund is able to produce a double digit return. The CIMB Islamic Equity Aggressive Fund posted a year-to-date three-year return of 28.63%.
CIMB Principal Asset Management revealed that its underweight in the financials sector led to the fund’s outperformance. Its forecast for Malaysia’s GDP growth from 2016-2018 is at 4.5%-5.5%.
“We continue to be positioned in exporters (technology, gloves and furniture), ports and utilities. We remain underweighted in oil and gas,” the fund house said.
Singapore Unit Trusts (SUT) said in a disclosure that market sentiment remains fragile as concerns over Asian currencies and a weaker economic outlook added to market woes.
"Recent market movements reflected changes in sentiment rather than deteriorating fundamentals."
“The Singapore Malaysia Equity Fund now switches strategy to capital preservation mode in light of the sell-down in global markets. [The fund] continues to reduce weighting in Malaysia and increase exposure into strong Singapore stocks which provide stable yields,” SUT noted.
It added that the product favours technology, rubber and utilities in the Malaysian market and has completely exited the oil and gas markets.
Aberdeen Asset Management, which posted a three-year return of -11.09%, said that “persistent domestic economic and political woes, coupled with growing disenchantment with broader emerging markets” led to the Aberdeen Malaysia Equity Fund’s weak performance.
The fund house said in a research note that it remains convinced about Malaysia’s long-term prospects.
“Recent market movements reflected changes in sentiment rather than deteriorating fundamentals. At the corporate level, there are still plenty of sound and well-managed businesses,” Aberdeen AM said.
A snapshot of the top five performing Malaysian equity funds: