Morningstar recently announced the winners for the 2023 Morningstar Fund Awards – Malaysia. Of the five awards, AmanahRaya Investment Management Sdn Bhd won two.
|Morningstar Category Awards||Winner|
|Best Malaysia Bond Fund||AmanahRaya Unit Trust Fund (ARUTF)|
|Best Malaysia Bond (Shariah) Fund||AmanahRaya Syariah Trust Fund (ARSTF)|
Congratulations to AmanahRaya Investment for winning the Best Malaysia Bond Fund award with the AmanahRaya Unit Trust Fund (ARUTF), and Best Malaysia Bond (Shariah) Fund with the AmanahRaya Syariah Trust Fund (ARSTF).
Smart Investor had the opportunity to interview Mohamad Shafik Bin Badaruddin, Managing Director / Chief Executive Officer, AmanahRaya 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?
Mohamad Shafik: Thank you. Our accomplishment is due to a combination of factors. Our recipe is founded on a disciplined approach to managing investments, stringent credit checks, strict risk management, and a focus on giving our investors strong and consistent returns. In addition, we prioritise establishing long-term relationships with our clients by providing them with clear, as well as timely communication.
Our team of seasoned investment professionals works closely to identify opportunities in the market and manage risk in a controlled manner. As we navigate the market, we constantly learn and adapt to the changes in the market and the economy, which we believe will enable us to stay ahead of the ‘game’.
SI: What are the strategies that you used in 2022? How was the fund positioned to mitigate risks and optimise opportunities?
MS: Our strategies for 2022 involved a focus on high-quality investments and a cautious approach to risk management. We positioned the fund defensively, with a bias towards shorter duration and higher credit quality bonds. However, we remain invested for most parts of the year and tried to play with allocation and diversification strategies as opposed to timing the market.
We were highly focused on building resilient portfolios that could withstand volatility and unexpected events, by diversifying across ratings, issuers and sectors. Overall, our approach was designed to balance risk and return, and to deliver consistent performance over the long term.
SI: 2022 was a bad year for most investments; how has this affected your investment strategies for both the short- and long-term?
MS: The macro landscape in 2022 was not very supportive of fixed-income investing, especially when central banks began to turn hawkish and tighten liquidity condition. The challenging landscape had reinforced the importance of having a strong investment discipline. While we did some adjustments to our investment strategies in response to changing market dynamics and conditions, our overall approach remained consistent with what we have been practising all these years.
In short, the prevailing market condition did not affect or change the way we do things at ARIM. The key is to have a plan upfront. Something along the line of – if the market does this, we do this, if otherwise, then we do this. After refining our strategies and listing down all the actionable ideas and probable outcomes, before executing, we always ask ourselves the question “what could go wrong”, just so to be aware of the risks to our strategies.
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?
MS: We are monitoring the market and economic condition very closely. Having said this, we are in an ever ready state to change direction of our strategy if need be. If a recession happens – now that is a big ‘IF’, general we would expect bond prices to fall during a recession. Also, shorter tenure bonds would look more attractive compared with longer tenured ones.
In our view, the market is already discounting a mild recession in the U.S., Europe, as well as the UK, for 2023. As of now, it looks like central banks appear to be in control to engineer a soft landing with inflation slowing meaningfully by the end of 2023.
Given the scenario, we would maintain our current portfolio duration for the first half and revisit them with the view to possibly extend the duration slightly in the second half.
SI: With high inflation and interest rates, what’s your message for retail investors?
MS: Our message to retail investors is to keep invested, during good or bad times, and avoid market timing. While we are not against timing the market, doing it consistently is something that is very difficult to achieve based on industry experience in general.
It is also important for investors to work with financial advisors or unit trust agents who are able to advise them on how to asset allocate their monies into a diversified portfolio. Building a well-diversified portfolio across multiple asset classes is key to building wealth in the long run.