Hong Leong Asset Management Bhd (HLAM) continued its winning streak, winning eight awards at the 2021 Refinitiv Lipper Fund Awards. It won the Best Equity Group (Provident) award for the second year in a row.
Hong Leong Dana Makmur won the Best Equity Malaysia (Islamic) award for the three and five year categories and the Best Equity Malaysia (Provident) award for the three year category. The Hong Leong Asia-Pacific Dividend Fund won the Best Equity Asia-Pacific ex-Japan (Provident) award in the three-year and five-year categories.
Hong Leong Growth won the Best Equity Malaysia Diversified (Provident) award in the five-year category, while Hong Leong Dividend won the Best Equity Malaysia Income (Provident) award in the five-year category.
Hoo See Kheng, CEO of HLAM, said that over the past few years, the company’s funds have performed well despite many uncertainties and difficult macroeconomic events. He believes that consistency in their approach and investment strategy was key to achieving long-term, sustainable fund returns that meet client expectations.
âA competent and highly motivated investment team is also essential to ensure that the investment process is executed well in order to deliver the desired return of the fund,â he says.
The past year has certainly been an unprecedented and eventful one. All asset classes experienced a correction when global economies were forced to lock in. The world has seen negative oil prices, Covid-19 outbreaks, an increase in retail investor participation in global stock markets, and the unexpected change of government in Malaysia.
âIn a challenging investment environment that was very dynamic and changing almost every month, we closed the hatches and made an even greater effort to research investment opportunities and identify potentially poorly valued companies by investors.
âDespite the logistical difficulties caused by the lockdown, we persevered to establish regular engagement with the management of various companies, an exercise that was more relevant given the rapidly changing economic and geopolitical climate,â Hoo explains.
âGiven that the Covid-19 recession and the economic recovery that followed had very different impacts across sectors and companies, we believe that a thorough understanding of business fundamentals and an accurate assessment of the outlook of the company were essential in driving the outperformance of HLAM funds. ,” he adds.
The exceptional performance of the fund is a testament to HLAM’s belief that a bottom-up stock selection strategy is the ideal investment approach for the local market. This strategy has stood the test of time and will continue to be very effective in creating sustainable performance for funds, Hoo says.
âWhile we recognized that much of what happened in 2020 was very unusual, we did not see the need to change our approach to investing, which has served us well in the past.
âIn fact, using the same active fund management and the same high conviction approach has proven to be very effective for us. We intensified our research efforts to capitalize on some of the buying opportunities that presented themselves amid extreme volatility.
âWe believe that it is essential to have a thorough understanding of the company and a knowledge of its business prospects, especially in an economic environment which tends to lead to very divergent prospects between different sectors and sectors,â says -he.
Hoo adds that the team found themselves in uncharted waters last year with very little historical context to refer to. âHowever, we believe that when the fundamentals and outlook of a company remain intact, the stock price will ultimately reflect the intrinsic value of the company. We also maintained our discipline in assessing the valuation of the company at all times, carefully weighing upside potential against downside risks before investing in it.
âOnce again, we stuck to our belief that a bottom-up stock selection strategy is the ideal investment approach and we were constantly on the lookout for opportunities.
âSo the funds were well invested throughout the year, even during the sharp drop in March. We took advantage of the strong price disruptions to establish positions in well-managed companies that were trading at very attractive valuations, âhe said.
For example, the company has invested in selected export stocks, particularly companies in the technology and manufacturing sectors, to capitalize on changing consumer spending habits. These stocks benefited the company’s award-winning funds last year.
As for 2021, Hoo says the firm is positive on the outlook for equities. The current deployment of the vaccine has proven to be very effective against Covid-19 and he expects life to gradually return to the pre-pandemic times.
âThe generous fiscal stimulus and accommodative monetary policies by the central bank should continue to support equity valuations. For our funds, we prefer the export sector as we expect it to benefit from improving external demand. “
According to Hoo, recent global economic data points to a robust economic recovery. âWe believe the risk to the economic recovery is a resurgence of the pandemic, although the likelihood seems low at the moment due to the vaccine rollout, which shows promising results.
âHigher than expected inflation leading to tighter monetary conditions is also one of the risks to watch, but the likelihood is low at the moment,â he says.
Over the next 12 months, Hoo expects interest rates to remain low nationally and globally. He believes savers would look for investment opportunities that could provide better returns than current deposit rates. âInvestment products such as unit trusts with a consistent and proven track record of performance would continue to do well over the coming year.â