Kenanga Shariah Balanced Fund Report - August 2017

Transcription

1. August 2017 Market Review and Outlook Mixed Assets Market Review The International Monetary Fund (IMF) remained confident that the global economic recovery is on a firmer footing this year on expectations of accelerating growth in the Euro-zone, Japan and China. In the July 2017 update of its World Economic Outlook (WEO), the IMF kept its global GDP forecast at 3.5% for 2017 and 3.6% for 2018 – unchanged from its April 2017 outlook. The latest Global Manufacturing PMI index edged up to 52.7 during the month, a tad higher than 52.6 in June 2017. Although the rate of output expansion eased slightly, stronger inflows of new business and rising workforce numbers suggest that the current pace of increase should be broadly sustained going forward. Elsewhere, The Group of Twenty (G20) nations met in Hamburg for its 12th summit. Free trade, financial market regulation, and inclusive growth were the broad agenda. Representatives from China and US met in Washington in July for an inaugural US-China Comprehensive Economic Dialogue to address trade issues such as US trade deficit with China. Nonetheless, the session failed to produce agreement on bilateral trade and economic issues, resulting in an impasse. On the local front, Malaysian economy remained on an improving path following the better-than expected growth of 5.6% YoY in the first quarter this year. In mid-July 2017, the IMF upgraded the Malaysian GDP forecast by 0.3 percentage points from its April 2017’s forecast to 4.8%, which was in line with BNM’s projection of 4.5% to 4.8% range. The stronger outlook for this year is based on rebounding exports and private investment, together with resilient domestic demand. In the same vein, the Asian Development Bank (ADB) also upgraded Malaysia’s growth outlook to 4.7% from 4.4% on stronger GDP growth in the first quarter of the year, driven by rising exports and continued growth in the manufacturing sector. July ended with KLCI, FBMS and FBMSC closed marginally lower (MoM) by -0.2%, -0.8% and -1.0% respectively, whilst YTD, the KLCI, FBMS and FBMSC were up by 7.2%, 5.9% and 17.4% respectively. Foreign investors continued to be net buyers of Malaysia equities in July, but at a tapered pace of MYR 0.4b. Malaysia equities continue to receive the most of foreign net buy in the region in 2017 with YTD total foreign net buy of MYR 11.2b. Commodities posted a strong performance in July with WTI and Brent crude up 9.0% and 7.5% to finish at USD 50.17 and USD 52.17, respectively. On the fixed income front, US Treasury yields were up across the curve in July despite Fed’s cautiousness over the subdued inflation. The Fed kept rates steady at 1.00% - 1.25% but reiterated concerns about the low inflation which had dampened expectations of another rate hike this year. As expected, the Fed had confirmed it would start shrinking its balance sheet “relatively soon”. Yields were pushed up by strong durable goods data which had increased growth and inflation expectations. At month-end, yields were weighed down by 2Q2017 GDP which rose in line with expectations to 2.6% q-o-q from 1.2% q-o-q in 1Q2017. In the GDP report, PCE index eased to 0.3% q-o-q from 2.2% q-o-q in 1Q2017 while the employment cost index had also moderated to 0.5% q-o-q from 0.8% q-o-q. At month-end, the 2- and 10year UST closed at 1.35% (-3 bps) and 2.29% (-1 bp) respectively. The Ringgit (MYR) strengthened by 0.27% against the US Dollar (USD) over the month prompted by the Fed’s decision to keep interest rates low longer. Producer prices in Malaysia rose 8% y-o-y in May, compared to 7.5% in April as costs rose for most sectors, mainly agriculture, forestry & fishing, water supply and manufacturing. Malaysia’s Coincident Index increased by 1.1 index points to 129.90 in May, while its Leading Economic Index advanced 1.2% m-o-m in May following a decrease of 1.3% in the previous month. Local government bonds yield curve rose towards the end of the month driven by the rise in US Treasury yields and higher oil prices. At month-end, the 3-, 5-, 7- and 10-year benchmark MGS yields settled at 3.30% (-9 bps), 3.70% (+8 bps), 3.91% (+1 bp) and 3.99% (+8 bps) respectively. Trading activities decreased this month compared to the previous month where local government bonds registered a trading volume of RM41.9 billion compared to the previous month’s value of RM49.9 billion. Meanwhile, the secondary corporate bonds market recorded lighter trading activities compared to last month. During the month, total trading volume was lower at RM9.8 billion compared to last month’s RM15.9 billion. Kenanga Investors Berhad (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. August 2017 Market Review and Outlook Mixed Assets Market Outlook Although the outlook for market remains positive , there are rising risks of a short-term pullback given the strong YTD performance. These include threats from the US Federal Reserve’s monetary tightening, protectionist measures from the United States and other geopolitical tensions. Hence we advocate minor tilt towards defensive stocks with stable earnings, laggards, as well as quality high yielders. Historically, the summer period is also a lull period for the emerging markets, and thus we also look to progressively trim stocks that have rallied without commensurate earnings and fundamental improvement. On the fixed income front, the surge in the 2-year UST yield to above 1.4% in July, its highest since 2008, is no surprise given the two US Fed rate hikes thus far, as well as expectations of further hikes. We expect the Fed to stay on course, likely hiking rates again in 2H2017. We expect foreign holdings of local government bonds to continue rising, albeit at a moderate pace. In Malaysia, the benchmark Overnight Policy Rate (OPR) is expected to remain status quo at 3.00% for the rest of 2017. In the secondary market for Malaysian Government Securities (MGS) and corporate bonds, we anticipate bond yields to trend higher in 2017, albeit at a moderate pace. Mixed Assets Fund Strategy The Fund will continue to invest in a diversified portfolio consisting principally of fixed income securities and other permissible investments. Stock picking remains key for outperformance. We continue to favour companies driven by selective themes such as beneficiaries of rising foreign direct investment, GLC reform/restructuring plays, infrastructure, and tourism. Kenanga Investors Berhad (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 Shariah Balanced Fund 3-year Fund Volatility (A fund under Kenanga OneAnswer™ Investment Funds) 6Low .1 August 2017 Lipper Analytics 15 Jul 2017 FUND OBJECTIVE Aims to achieve long-term capital growth through diversified investments in equities, fixed income and money market instruments which are Shariah-compliant. FUND PERFORMANCE (%) % Cumulative Return, Launch to 31/07/2017 100 80 60 Fund Category/Type 40 Islamic Balanced / Income & Growth 20 0 Launch Date 23 April 2004 Jul 17 Jun 16 Dec 16 Jun 15 Dec 15 Jun 14 Dec 14 Jun 13 Dec 13 Jun 12 Dec 12 Jun 11 Dec 11 Jun 10 Dec 10 Jun 09 Dec 09 Jun 08 Dec 08 Jun 07 Dec 07 Jun 06 Dec 06 Jun 05 Dec 05 Apr 04 Trustee CIMB Commerce Trustee Berhad Dec 04 -20 Kenan g a Sh ariah Balan ced : 11.46 FTSE Bursa Malaysia Emas Shariah In dex (50%) & All Malaysian Go vernment Investment Issue (50%) : 84.20 Benchmark FTSE Bursa Malaysia Emas Shariah Index (50%) & All Malaysian Government Investment Issue (50%) External Investment Manager / Designated Fund Manager Arieff Wahid Sales Charge Max 6.5% Source: Novagni Analytics and Advisory Sdn Bhd CUMULATIVE FUND PERFORMANCE (%) # Benchmark Period Fund 1 month -0.23 -1.58 6 months 3.14 -5.95 3.09 1 year -11.96 -32.46 3.95 3 years 16.47 5 years -26.63 84.20 Since Launch 11.46 CALENDAR YEAR FUND PERFORMANCE (%) # Period Fund Benchmark 2016 -10.15 -1.14 2015 -9.42 3.40 2014 -12.14 0.05 2013 8.79 7.07 7.94 2012 5.09 # Source: Novagni Analytics and Advisory Sdn Bhd ; Lipper, 31 July 2017 Annual Management Fee 1.55% p.a. DISTRIBUTION HISTORY Not Applicable Annual Trustee Fee 0.07% of NAV, subject to a minimum of RM9,000 p.a. HISTORICAL FUND PRICE * Date Since RM 0.7887 19-Nov-13 Highest 24-Aug-04 RM 0.4610 Lowest Redemption Charge FUND SIZE * RM0.14 million Nil NAV PER UNIT * RM0.5233 Initial Offer Price RM 0.50 Per Unit All fees and charges payable to the Manager and the Trustee are subject to GST as may be imposed by the government or other authorities from time to time. ASSET ALLOCATION (% NAV) * July June May 1 2 3 4 5 42.20% -0.40% 58.20% 41.60% 0.60% 57.80% 41.00% 1.60% CP / Sukuk / Others SECTOR ALLOCATION (% NAV) * Corporate Sukuk (Unsecured) Trading and Services Properties Technology Islamic REITS Finance Infrastructure Warrants Short Term Islamic Deposits and Cash 57.40% Liquidity TOP EQUITY HOLDINGS (% NAV) * PARAMOUNT CORP BHD NOTION VTEC BHD TENAGA NASIONAL BHD PESTECH INTERNATIONAL BERHAD AXIS REIT Equity 9.44% 9.38% 8.52% 8.17% 6.62% 1 2 3 4 5 42.2% 16.7% 14.3% 9.4% 6.6% 6.1% 5.0% 0.1% -0.4% TOP FIXED INCOME HOLDINGS (% NAV) * MALAKOFF POWER BHD 5.4520231215 WESTPORTS MALAYSIA 4.950 20210503 MMC CORP BHD 5.2020201112 MUMTALAKAT IMTN 5.35% 30.04.2018 UNITED GROWTH BHD 4.7320220621 7.25% 7.17% 7.07% 7.06% 7.05% * Source: Kenanga Investors Berhad, 31 July 2017 Based on the fund’s portfolio returns as at 15 July 2017, the Volatility Factor (VF) for this fund is 6.12 and is classified as “Low”. (Source: Lipper). “Low” includes funds with VF that are above 1.870 and less than or equal to 6.225 (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 30 June 2017 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. 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 interest rate risk, credit and default risk, reinvestment risk, counterparty risk, stock specific risk, derivatives/structured products risk and reclassification of Shariah status risk.