Kenanga Bond Fund Report - April 2021

Transcription

1. April 2021 Market Review and Outlook Bond Market Review In March , the US Treasuries (UST) yield curve continued to steepen on a brighter outlook for US growth and higher inflation. Demand for UST was also dampened by the increased debt supply expectations with the approval of the USD1.9 trillion coronavirus stimulus package. Risk-on sentiment was further driven by favourable economic data, including the increase in US ISM Manufacturing index which remained in expansion territory for the 9th consecutive month. Similarly, the US economy also added more jobs than expected in February, lowering the unemployment rate to 6.2% (January: 6.3%; expected: 6.3%). Despite the upbeat manufacturing data, other economic releases mid-month fell short of market expectation, thus giving mixed signals over the strength of the recovery. For example, initial jobless claims number was above estimates, while retail sales fell by more than expected. On 17th March, the US Fed kept interest rates unchanged at 0.00%-0.25%, while maintaining the pace of its bond purchase programme at a minimum of USD120 billion per month, to support the flow of credit to US households and businesses. Month-on-month (M-o-m), the UST yield curve steepened as 2Y and 10Y UST yields ended the month at 0.16% and 1.74% respectively (end-February: 0.13% and 1.40%). Locally, Malaysian Government Securities (MGS) yields largely tracked global bond yield movements, amid the improving outlook for the global economy. As widely expected, Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 1.75% at its monetary policy meeting on 4th March. On 17th March, the Malaysian government announced a RM20 billion stimulus package (PEMERKASA), of which RM11 billion will come from direct fiscal injection to be funded by domestic borrowings. Post-announcement, the official 2021 fiscal deficit forecast was revised to 6.0% of GDP from earlier forecast of 5.4%. Meanwhile, primary MGS issuances remained well subscribed during the month, for e.g. the RM2.0 billion 20.5Y Government Investment Issue (GII) and RM2.0 billion 30Y MGS auctions were oversubscribed by 2.6 times and 2.0 times respectively. Overall, in tandem with rise in UST yields, as well as the expected increase in domestic sovereign bond supply, MGS yields climbed higher before the buying interest emerged towards month-end, following FTSE Russell’s decision to retain Malaysia in the World Government Bond Index (WGBI). M-o-m, the MGS yield curve flattened as 3Y and 10Y MGS yields ended the month at 2.16% and 3.26% respectively (endFebruary: 1.94% and 3.10%). Bond Market Outlook The ongoing health crisis is beginning to improve and vaccine rollouts have raised expectations of a return to somewhat normal conditions later this year. Nonetheless, the Fed is expected to keep interest rates low for a prolonged period of time to support the economic recovery. In March, the US Fed released its updated economic projections for the US economy, reflecting a stronger recovery than earlier projected. In 2021, the central bank expects the US economy to expand by 6.5% (December forecast: 4.2%) with headline inflation of 2.4%, while US unemployment rate is expected to fall to 4.5%. Locally, BNM released its 2020 Annual Report on 31st March and updated its key official macro forecasts for 2021 i.e. real GDP growth to 6.0%-7.5% in 2021 from 6.5%-7.5% earlier (2020: -5.6%); inflation rate to 2.5%-4.0% (2020: -1.2%) and unemployment rate to 4%-5% (end-2020: 4.8%). Nonetheless, risks remain tilted to the downside, arising from uncertainties surrounding the pandemic e.g. escalation of cases leading to further containment measures, reduced effectiveness or delays in vaccine deployments. Kenanga Investors Berhad Company No: 199501024358 (353563-P) Level 14, Kenanga Tower 237, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 1 Strictly for Clients of Kenanga Investors Berhad
2. April 2021 Market Review and Outlook Meanwhile , domestic headline inflation recorded its first positive print since February 2020, at 0.1% year-on-year (y-o-y) in February (January: -0.2%), as the decline in transport prices continued to narrow due to improving global crude oil prices. Headline inflation is likely to trend higher going forward, with a temporary spike in 2Q2021 due to the low base effect, before moderating thereafter. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy. Given the continued uncertainties surrounding the pandemic, BNM will remain data-dependent with focus on overall outlook for inflation and domestic growth. We expect BNM to remain accommodative in its monetary policy stance as the central bank is committed to utilize its policy levers as appropriate to enable a sustainable economic recovery. Bond Fund Strategy The Fund will continue to invest in a diversified portfolio consisting principally of fixed income securities and other permissible investments. Kenanga Investors Berhad Company No: 199501024358 (353563-P) Level 14, Kenanga Tower 237, Jalan Tun Razak 50400 Kuala Lumpur Tel: 03-2172 3000 Toll Free: 1800-88-3737 www.kenangainvestors.com.my 2 Strictly for Clients of Kenanga Investors Berhad
3. Kenanga Bond Fund 3-year Fund Volatility 2 .3 April 2021 Very Low Lipper Analytics 10 Mar 2021 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to provide investors with a steady income stream over the medium to long-term period through investments primarily in fixed income instruments. % Cumulative Return, Launch to 31/03/2021 120 100 80 Fund Category/Type Fixed Income / Income 60 40 20 Launch Date 15 August 2002 0 Trustee Universal Trustee (Malaysia) Berhad Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Mar 21 Aug 02 Dec 03 Jun 03 Dec 03 Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Jun 05 -20 Kenanga Bond : 97.36 Benchmark Maybank 12-months Fixed Deposit Rate Maybank 12-month Fixed Deposit Rate : 81.52 Source: Novagni Analytics and Advisory CUMULATIVE FUND PERFORMANCE (%)# Designated Fund Manager Lee Sook Yee Period 1 month 6 months 1 year 3 years 5 years Since Launch Sales Charge Nil Annual Management Fee 1.00% p.a. # Annual Trustee Fee 0.08% p.a. Fund -3.71 -3.93 0.89 7.81 15.72 97.36 Benchmark 0.16 0.92 1.97 8.62 15.57 81.52 CALENDAR YEAR FUND PERFORMANCE (%) # Period 2020 2019 2018 2017 2016 Fund 3.81 4.58 3.76 3.76 3.81 Benchmark 2.21 3.19 3.33 3.09 3.21 Source : Lipper, 31 March 2021 FUND SIZE * RM 14.08 million NAV PER UNIT * RM 0.7823 Redemption Charge Nil HISTORICAL FUND PRICE * Since Inception Date 22-Oct-20 Highest RM 0.8158 Lowest RM 0.4994 7-Mar-03 All fees and charges payable to the Manager and the Trustee are subject to the goods and services tax /sales and services tax/other taxes of similar nature as may be imposed by the government or other authorities from time to time. ASSET ALLOCATION (% NAV) * March February January 93.2% 6.8% Corporate Bonds (Unsecured) 93.2% 99.2% 0.8% 90.9% 9.1% CP / Bonds / Others 1 2 3 4 5 SECTOR ALLOCATION (% NAV) * Short Term Deposit and Cash 6.8% Liquidity TOP FIXED INCOME HOLDINGS (% NAV) * MMC CORP BHD 5.70 20280324 JEP IMTN 5.59 20270604 TANJUNG BP IMTN 5.28 20270816 ANIH IMTN 6.15 20291129 JATI CAKERAWALA S/B 5.16 20230731 13.69% 11.79% 11.58% 8.26% 8.24% Date 16-May-16 30-Dec-14 30-Dec-13 DISTRIBUTION HISTORY * Gross Distribution RM Yield (%) 3.56 sen 4.97% 2.50 sen 3.51% 2.50 sen 3.48% Unit Split - * Source: Kenanga Investors Berhad, 31 March 2021 Based on the fund’s portfolio returns as at 10 March 2021, the Volatility Factor (VF) for this fund is 2.33 and is classified as “Very Low”. (Source: Lipper). “Very Low” includes funds with VF that are 0.000 and less than or equal to 3.645 (source: Lipper). The VF means there is a possibility for the fund in generating an upside return or downside return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC will be revised every six months. The fund’s portfolio may have changed since this date and there is no guarantee that the fund will continue to have the same VF or VC in the future. Presently, only funds launched in the market for at least 36 months will display the VF and its VC. The Master Prospectus dated 29 March 2019 and the Supplemental Prospectus (if any), its Product Highlights Sheets (“PHS”) or Supplemental Disclosure Document (“SDD”) (if any) have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. The fund fact sheet has not been reviewed by the SC. A copy of the Master Prospectus, Supplemental Prospectus (if any), SDD (if any) and the PHS are obtainable at our offices. Application for Units can only be made on receipt of application form referred to in and accompanying the Master Prospectus and/or Supplemental Prospectus (if any), SDD (if any) and PHS. Investors are advised to read and understand the Master Prospectus, its PHS and any other relevant product disclosure documents involved before investing. Investors are also advised to consider the fees and charges before investing. Unit prices and distributions may go down as well as up. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should note that the value of their investment in Malaysian Ringgit will remain unchanged after the distribution of the additional units. A Fund’s track record does not guarantee its future performance. Investors are advised to read and understand the contents of the unit trust loan financing risk disclosure statement before deciding to borrow to purchase units. Kenanga Investors Berhad is committed to preventing Conflict of Interest between its various businesses and activities and between its clients / directors / shareholders and employees by having in place procedures and measures for identifying and properly managing any apparent, potential and perceived Conflict of Interest by making disclosures to Clients, where appropriate. The Manager wishes to highlight the specific risks of the Fund are credit and default risk and interest rate risk.