Morningstar recently announced the winners for the 2023 Morningstar Fund Awards – Malaysia. Of the five awards given out, KAF Investment Funds Berhad won two.
| Morningstar Category Awards | Winner |
| Best Asia-Pacific Equity | KAF Jade Fund |
| Best Malaysia Large-Cap Equity Fund | KAF Core Income Fund |
Congratulations to KAF Investment for winning the Best Asia-Pacific Equity award with KAF Jade Fund, and Best Malaysia Large-Cap Equity Fund with their KAF Core Income Fund.
Smart Investor had the opportunity to interview Chue Kwok Yan, Chief Executive Officer cum Chief Investment Officer, KAF Investment, to learn more about their winning funds.
Smart Investor: Congratulations on winning the Morningstar Award! Can you share with us what the recipe for your success is?
Chue Kwok Yan: This is a very difficult question indeed, as there are so many critical ingredients required to win such a coveted award that it is difficult to describe in such a short space. At the most basic level though, we believe that the building block is our people. We have successfully assembled a group of very talented individuals who share the same vision and work ethics that operate seamlessly in a close-knit team.
The huge diversity of background in our team is also by design where each member is able to contribute different viewpoints that is useful in navigating the drastically different investing circumstances over the past few years. Collectively, these allow us to formulate the right strategies for each unique circumstance.
SI: What are the strategies that you used in 2022? How was the fund positioned to mitigate risks and optimise opportunities?
CKY: Even after having managed money over the extreme market conditions of the past few years would not have prepared portfolio managers for 2022. The simultaneous fall in asset prices made our job very difficult especially for long-only funds. Previous approaches were untenable, and we had to start from a clean slate.
The breakthrough came when we accepted the correlation in asset prices on the downside. We mitigated risk by decisively cutting high valuation stocks to a minimum and hid in value stocks. This helped us weather the downshift for most of the year while we were able to take positions from a bottom-up stock selection basis towards the 2H of 2022 that fortunately worked well for us.
SI: 2022 was a bad year for most investments; how has this affected your investment strategies for both the short- and long-term?
CKY: It is not just the bad year for investments in 2022 but the series of extraordinary events over the past few years that has made a lasting impression on us. In a sense it solidifies our approach that focuses on our core competency. It taught us there is no ‘one size fits all’ hence the need to discard biases and remain adept in facing every circumstance that is different.
We will need to evaluate every situation by its merit and formulate suitable approaches and strategies in our investment decision making process.
SI: The recession is expected to hit us this year. What are your plans and strategies for 2023? Is there anything you plan to do differently?
CKY: Investment is a perennial process and hence 2023 is really a continuous window for making the most appropriate decision for maximizing returns while minimizing risks. In this sense, recession is just a blip in the investment journey requiring more focus on managing risk. We are fortunate that 2023 has started well for us with our funds posting relatively strong gains thus far.
Therefore, this gives us better flexibility in our strategies, allowing us to be more selective in our stock picks on higher conviction calls rather than constantly trying to catch up in performance by moving down the riskiness scale. We will dig deep into our core competency, as always, and focus on our competitive advantage in managing our esteemed clients’ money.
SI: With high inflation and interest rates, what’s your advice for retail investors?
CKY: The current episode of high inflationary pressure has laid bare a key shortfall in retirement planning and driven home the key message in pension weakness. Prior to this, each productive working individual is already facing inadequate pension due to longer life expectancy.
Compounding the effect is high inflation that erodes the real value of retirement funds with each Ringgit having lower purchasing power ability. In order to counter these effects, each working person would need to either work longer by retiring later or save more. Unfortunately, not everyone has the choice of the former with the statutory retirement age of 60 in Malaysia while not everyone has the luxury to save more.
As such, we advise all investors to make their retirement fund sweat for better returns that at the minimum compensates for inflation. Hence choose a fund base on knowledge of the Portfolio Manager who is managing it and stay invested all the time!
