PMB Investment Berhad is an Islamic Fund Management Company. It offers unit trust and fund management services. It is a wholly-owned subsidiary of Pelaburan MARA Berhad, one of the pioneers in the unit industry in Malaysia with more than five decades of experience.
PMB Investment can be traced back to 24 June 1967 when the then Amanah Saham MARA, now Pelaburan MARA, was established and subsequently launched its first unit trust fund in the following year on 6 April, now known as PMB Dana Al-Aiman.
Isnami Ahmad Mohtar shared with Smart Investor their journey in the industry.
Smart Investor: Congratulations! Can you tell us more about your winning fund in the FSMOne Recommended Unit Trusts Awards 2022/2023?
Isnami Ahmad Mohtar: PMB Shariah Premier Fund (PMB SPF) was launched on 14 August 1972 as Kumpulan Modal Bumiputera Pelaboran Perwira for Bumiputera investors only. It was opened for public and re-launched as ASM Premier Fund on 12 June 1995. It was made an Islamic fund and re-launched as ASM Shariah Premier Fund on 15 January 2013 targeting investors who were seeking to invest in a fund investing in large market capitalisation companies.
The fund assumed its current name on 28 April 2014. The objective of the fund is to provide opportunities for investors to achieve capital growth over the medium- to long-term period through investment in the 50 largest Shariah-compliant stocks by market capitalisation listed on the Bursa Malaysia. Strategy-wise, under normal circumstances, allocation to Shariah-compliant equities and Shariah-compliant equity related securities ranges between 70% and 99.5% of the net asset value of the fund.
In terms of performance, for the last five years from 2017 to 2021, on a yearly basis the fund had performed better than its benchmark and its peers, except for 2019. For a 5-year period which ended on 31 December 2021, the fund recorded a total return of 62.46% against its benchmark’s return of 2.07% and its peers’ return of 25.9%.
SI: What are the challenges you have faced in the past 12 months?
IAM: The biggest challenge in the past 12 months was dealing with the volatile stock market which became driven by the news. It was too difficult to pick the right stocks and sectors when the market was highly volatile. Besides, it was difficult to determine the right asset allocation, either to go defensive or fully invested under these market conditions. Then, and even now, the stock market is more in trading mode as market direction changed quite fast due to the flow of the news.
Other issues that affected our stock market was, the economic impact of the Omicron strain, lockdowns, rising inflationary pressures, interest rate hikes, geopolitical tension, supply chain disruptions, the Russian-Ukraine war and high commodities prices had led the World Bank, International Monetary Fund and Bank Negara to revise Malaysia’s economic prediction lower.
The other main issues include a mountain of external worries such as the US Federal Reserve (Fed) tapering plan, rising US Treasury yields, the contagion effect from the fallout of China’s Evergrande Group as well as the sanctions against Russia.
SI: What are the market trends that an investor should look out for in the near future?
IAM: The markets were already pricing in worries about hot inflation and recession fears. The latest US CPI rose 8.6% year over year (40-year high), well above the 8.3% expected by economists surveyed by Dow Jones. Interest rates tend to jump up much more in an inflationary environment. This means that equity multiples come down more when inflation is higher.
Besides, investors also worry about the Fed taking a more aggressive rate-hike path to fight inflation. If this happens, we expect analysts will cut forward earnings estimates and stock valuations will be affected. We also opine that the Fed’s aggressive tightening cycles will negatively affect the stock market.
The stock market is also facing other significant headwinds such as global recession fears, the prolonged supply chain disruption, rising business costs, the prolonged Russian and Ukraine war and China’s economic slowdown. However, as Malaysia has transitioned to endemic status, it will have a positive impact on the economy and stock market.
Considering the uncertainty of external factors, prospects for the local stock market in the third quarter 2022 do not look very promising yet, and we continue to be cautious.
Isnami Ahmad Mohtar, chief investment officer, PMB Investment Bhd