KAF Dana al-Iddhikhar Fund Report - September 2022

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1. 0 .20 Very Low 10 Sep 2022 KAF DANA AL-IDDHIKHAR (KDAI) SEPTEMBER 2022 The fund aims to seek to provide a regular stream of income by investing primarily in Islamic money market instruments and other fixed income securities, which comply with Shariah requirements. THE FUND IS SUITABLE FOR INVESTORS WHO:     Conservative in nature in terms of Shariah-compliant investment; Prefer a consistent, reasonable and stable level of return on Shariah-compliant investment; Prefer a lower level of investment risk; and Have a short-term investment horizon. SECTOR ALLOCATION* AS AT 31 AUGUST 2022 MANAGER’S COMMENTS Malaysia’s exports surged 38.0% year-on-year (YoY) to Ringgit Malaysia (RM) 134.1 billion (bn) in July 2022 (July) driven by higher demand for electrical and electronics (E&E) products, petroleum products as well as liquefied natural gas (LNG) while imports surged 41.9% YoY to RM118.6bn. The trade surplus was RM15.5bn, up 14.3% YoY. Malaysia’s Consumer Price Index (CPI) rose by 4.4% YoY in July. Malaysian foreign reserves rose by United States Dollar (USD) 1.7bn in August 2022 (August) to USD110.9bn. Meanwhile, Malaysia’s Purchasing Managers’ Index (PMI) increased to 50.3 in August from 50.6 from the previous month. US Treasury yields appreciated in June 2022 (June) following the treasury yields descend. Treasury 2-year, 5-year, and 10-year benchmark yields rose to 3.493%, 3.351% and 3.193% respectively in August from 2.8844%, 2.676%, and 2.6487% from the previous month. On the other hand, the Malaysian Government Securities (MGS) 3-year, 5-year, and 10-year benchmark yields have rose to 3.363%, 3.739% and 3.969% respectively in August from 3.498%, 3.71%, and 3.881% from the previous month. Investor hopes for a slower rate hike pace by the US Federal Reserve (“Fed”) and global Central Banks in light of recession concerns were doused with cold water during the Jackson Hole meeting this month. Fed Chairman Jerome Powell stated the overarching focus to move ahead with rapid rate hikes to rein in high inflation back down to 2% and that it will cause businesses and households some pain but if inflation is not brought under control, it will result in even more pain. Powell’s comments galvanised the market sentiment for higher bond yields despite recent US Gross Domestic Product (GDP) data showing a contraction in the economy as business spending declined and consumer spending dropped to a 2 year low. Furthermore, the Fed has reversed from Quantitative Easing to Quantitative Tightening by selling off US Treasury bonds to shrink its balance sheet. At present, the market consensus is that the Fed Funds rate will reach 4% by the first quarter 2023. In Malaysia, strong economic growth, rising inflation and a weakening Ringgit have prompted market participants to expect Bank Negara Malaysia (“BNM”) to continue its gradual Overnight Policy Rate (OPR) hikes to 3.00% by first quarter 2023. The local economy grew by 8.9% YoY in Q2 2022 but the high figure was due to the low base effect of the MCO in 2021 while inflation continued to rise to 4.4% YoY in June. GDP growth is also expected to slow to 1.9% YoY by 4Q 2022 as the low base effect wears out and external conditions weaken. Nonetheless, foreign investors were seen returning to Asian markets in August with a net combined USD2.36bn entering Malaysian, Thai, Indonesian, Korean and Indian bond markets marking the first net inflow since February 2022. The 3 bond auctions for August also saw decent demand from investors with the 5-year MGS 11/2027, 20-year Government Investment Issue (GII) 09/2041 and 15-year MGS 04/2037 minted Bid-To-Cover (BTC) ratios of 2.044x, 4.435x and 2.244x respectively. The fixed income market remains challenging in the current rate hike environment but we will continue to navigate carefully through the rough landscape in search of opportunities to generate investment returns. Hence, we maintain our defensive stance with medium portfolio duration and an emphasis on high credit quality. *As percentage Net Asset Value of the fund. Asset exposure is subject to change on a daily basis. Source: KAF Investment Funds Berhad. Distribution History Month (2022) January February March April May June Distribution (sen) NIL NIL NIL NIL NIL NIL FUND PERFORMANCE ANALYSIS AS AT 31 AUGUST 2022 Net Asset Value prices. Cumulative return over the period (% since inception) INVESTMENT STRATEGY The fund seeks to achieve its objective by investing primarily in Islamic money market instruments and other Sukuk. The Manager will decide which instrument or security to buy based primarily on their yield, relative to their credit quality and the period to maturity. The fund will at all times place/invest its cash in Islamic money market deposits/instruments and Sukuk (listed or unlisted), which are rated by RAM, MARC or other approved rating agencies. FUND DETAILS AS AT 31 AUGUST 2022 Manager Trustee Fund Category Fund Type Launch Date Unit net asset value (NAV) Fund size Units in Circulation Financial Year End Min. Initial Investment Min. Additional Investment Benchmark Sales Charge Repurchase Charge Annual management fee Annual trustee fee Redemption payment period Distribution policy KAF Investment Funds Bhd. CIMB Islamic Trustee Bhd. Islamic Money Market Fund. Income Fund. 6 October 2005. RM0.5049 RM12.198mil 24.162mil 30 September. RM1,000.00 RM1,000.00 Malayan Banking Berhad (“Maybank”) one (1) month General Investment Account (“GIA”) rate. None. None. 0.375% per annum of NAV. 0.025% of NAV per annum subject to a minimum trustee fee of RM 12,000. Within 10 days after receipt of the request to repurchase. Income, if any, will be distributed on a monthly basis. All such distribution will be reinvested into the fund. % 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years KDAI 0.12 0.40 0.66 1.57 6.47 14.27 Benchmark 0.12 0.34 0.60 1.10 3.98 9.75 Source: ExNovo Fund Analytics Portal by Novagni Analytics & Advisory Sdn Bhd LARGEST HOLDINGS* AS AT 31 AUGUST 2022 Cash & other assets 100.00% *as percentage of Net Asset Value. Disclaimer: Based on the Malaysian Fund Volatility Report issued by Refinitiv Lipper dated 10 September 2022, the Volatility Factor (VF) for this fund is 0.20 and is classified as “Very Low”. “Very Low” includes funds with VF that are between 0 to 4.44. 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. A Product Highlights Sheet (“PHS”) highlighting the key features and risks of the fund is available and investors have the right to request for a PHS. Investors are advised to obtain, read and understand the PHS and the contents of the Master Prospectus dated 15 January 2017 and its supplementary(ies) (if any) (“the Master Prospectus”) before investing. The Master Prospectus has been registered with the Securities Commission Malaysia who takes no responsibility for its contents. Amongst others, investors should consider the fees and charges involved. Investors should also note that the price of units and distributions payable, if any, 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; and where a unit split is declared, investors should be highlighted of the fact that the value of their investment in Malaysian Ringgit will remain unchanged after the distribution of the additional units. Any issue of units to which the Master Prospectus relates will only be made on receipt of a form of application referred to in the Master Prospectus. For more details, please call 03-2171 0559 for a copy of the PHS and the Master Prospectus or collect one from any of our authorised distributors. The Manager wishes to highlight the specific risks of the fund are interest rate risk and credit/default risk. These risks and other general risks are elaborated in the Master Prospectus. This factsheet is prepared for information purposes only and has not been reviewed by Securities Commission Malaysia. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Past performance is not necessarily a guide for future performance. Returns may vary from year to year. Head Office: Level 11, Chulan Tower, No. 3, Jalan Conlay, 50450 Kuala Lumpur General Line: (603)-2171 0559 Fax: (603)-2171 0583 Website: www.kaf.com.my