Kenanga Islamic Balanced Fund Report - April 2019

Transcription

1. April 2019 Market Review and Outlook Mixed Assets Market Review US markets continued its positive streak with the Dow Jones Industrial Average Index , S&P 500 Index, and Nasdaq Composite Index rising 0.1%, 1.8%, and 2.6% respectively. However, the Fed Yield Curve inverted, spooking investors as such inversion normally precedes a recession. Over to the European Union, the central bank decided to keep rates at 0% and announced a new series of long-term lending operation to increase liquidity and counter the slow growing economy while the U.K. parliament rejected the European Union withdrawal agreement for the third time, setting the motion for a no deal Brexit on April 12. MSCI Asia ex-Japan Index was up 1.58% in March with best performers being India (+7.8%), Shanghai (+5.1%), and Philippines (+2.8%) while worst performers were Malaysia (-3.75%), followed by Korea (2.5%), and Thailand (-0.9%). Asian equities enjoyed a broad-based rally on a better than expected dovish Fed, positive trade talk sentiments and China’s stimulus measures. China will cut taxes and fees for all companies by nearly CNY2 trillion in 2019 and VAT for manufacturing sector will be cut to 13% from 16% as part of measures to support the slowing economy. Locally, the FBM Small Cap remained resilient with a +1.3% month-on-month (M-o-M) gain, outperforming the main market. February Consumer Price Index (CPI) was up 0.2% M-o-M, underpinned by rise in pump prices as Bank Negara Malaysia (BNM) kept Overnight Policy Rate (OPR) unchanged at 3.25%, and RM7.9 billion Goods and Services Tax (GST) and income tax has been refunded as at end-February. The government has paid CCCC RM200 million in interests for the RM55 million loan taken for the East Coast Rail Link Project (ECRL). Foreigners remain net sellers in March with RM1.6 billion outflows, bringing yearto-date (YTD) outflow to RM1.3 billion. Materials outperformed on potential slowdown in aluminium supply growth while telcos outperformed on potential asset sales. Industrial benefitted on the potential ECRL revival as consumer discretionary, financial and utilities underperformed. On the commodities front, Brent Crude Oil rose 3.6% M-o-M to USD68.39/bbl from OPEC over-delivery, Iran and Venezuela sanctions tightening. Meanwhile, CPO price declined slightly by 0.7% to RM2,106 per metric ton. MYR weakened by 0.4% against USD to 4.082. 10-yr MGS was 13 basis points (bps) lower M-o-M post Moody’s reaffirmation of Malaysia’s credit rating at A3. During the month of March, US Treasuries (UST) saw the yield curve bullish flattened following the Federal Reserve’s (Fed) Federal Open Market Committee (FOMC) statement on March 20, indicating a change in projection from two hikes to a median projection of its dot plot signalling no hike at all for 2019, and just one for 2020. During the FOMC meeting, the Federal Funds Rate (FFR) was maintained at 2.50%; policymakers are adopting a patient stance as US economy has cooled so far this year, with ‘slight-tomoderate’ growth across most of its district. The dovish Fed statement and consensus expectation of a slower 2019 Gross Domestic Product (GDP) forecast to 2.4% from 2.5% estimated earlier as a result of the unresolved US-China trade conflicts, sent the 2Y and 10Y UST yields to fall by 26 and 31 bps to 2.26% and 2.41% respectively month-end as investors are expecting a rate cut to follow suit. Moving on to Malaysia, BNM also maintained the OPR at 3.25% during the Monetary Policy Committee (MPC) meeting on 5 March. In the MPC statement, BNM stated that it now expects inflation to stay low in the immediate term and be “broadly stable” in 2019 as compared to last year, after previously saying that it would trend higher. As a result of the more cautious tone, some economists started to expect BNM to cut its OPR which sparked strong buying momentum in Malaysian Government Securities (MGS) across all tenures. With investors pricing in the 25 bps rate cut as early as next meeting in May, the 3Y, 5Y, 7Y and 10Y yields tumbled 19, 17, 15, and 12 bps respectively to close at 3.38%, 3.53%, 3.72% and 3.77% monthend. 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. April 2019 Market Review and Outlook In the recent release of BNM ’s 2018 Annual Report, it was projected the 2019 GDP growth to range between 4.3% and 4.8%, driven by domestic demand, amid the challenging global environment. Meanwhile, Malaysia remained in the deflationary patch for two straight months as CPI fell 0.4% year-onyear in February (January: -0.7%). Mixed Assets Market Outlook Better than expected Chinese economic data, coupled with the more dovish tone from the US Fed suggests that macro conditions are improving. We are cautiously optimistic on the market but will closely monitor the on-going US-China trade talks for signs of progress. The two sides will meet again soon, which could imply a deal as early as late April. On the Brexit front, all eyes will be on 12 April as the curtain of a nearly 3 year journey come to a close. Due to concerns that economic growth is slowing, lower energy prices are weighing on inflation and risks from abroad are dimming the outlook, the Fed signalled that it will keep interest rates on hold for the full year of 2019. On local front, the recent release of Bank Negara’s 2018 Annual Report with revision on 2019 GDP forecast to 4.3% - 4.8% (from 4.9% projected earlier) and inflation to average between 0.7% - 1.7% in 2019 (from 2.5% - 3.5% projected earlier) sparked more economists to revise their expectations of stable monetary policy to a rate cut as early as the next MPC meeting in May. However, at this juncture, we do not expect BNM to cut interest rates in 2019 as there is no indication that the downside risks to growth from unresolved trade tensions, heightened uncertainties in the global and domestic environment, and prolonged weakness in the commodity-related sectors are about to materialize. MPC is expected to continue monitoring and assessing the balance of risks surrounding the outlook for domestic growth and inflation closely. Having said that, we do not rule out the possibility of an interest rate cut by BNM should the global economic growth slowdown further. Mixed Assets Fund Strategy On the local front, domestic and foreign investors will be watching out for new developments from the ongoing Parliament sitting, release of Felda White Paper, multitier levy system for foreign workers and power sector market structure reform plan. A slew of weak corporate earnings are expected in the upcoming results, hence we focus on stock picking for outperformance regardless of sector. 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. 3-year Fund Volatility Kenanga Islamic Balanced Fund Low April 2019 Lipper Analytics 10 Mar 2019 FUND PERFORMANCE (%) FUND OBJECTIVE Aims to achieve steady capital growth and income distribution (if any) over the medium to long-term period by investing in a diversified portfolio of authorised investments in accordance with Shariah requirements. % Cumulative Return, Launch to 31/03/2019 140 120 100 80 60 Fund Category/Type Balanced (Islamic) / Growth & Income 40 20 0 Launch Date 06 December 2004 Trustee CIMB Islamic Trustee Berhad Kenan g a Islamic Balanced : 113.87 Jun 18 Dec 18 Mar 19 Jun 17 Dec 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 Dec 04 -20 60% FTSE Bursa Malaysia Emas Sh ariah In dex an d 40% Mayban k 12-month GIA Rate : 74.73 Source: Novagni Analytics and Advisory CUMULATIVE FUND PERFORMANCE (%) # Benchmark 60% FTSE Bursa Malaysia Emas Shariah Index and 40% Maybank 12-month GIA Rate Period 1 month 6 months 1 year 3 years 5 years Since Launch External Investment Manager / Designated Fund Manager Syarifah Hidayatul Akmal Sales Charge Max 5.50% # Annual Management Fee 1.50% p.a. Fund 0.36 -3.42 -2.97 -0.90 2.09 113.87 Benchmark -0.13 -4.52 -6.62 -0.75 -2.02 74.73 Redemption Charge Nil Period 2018 2017 2016 2015 2014 Fund -7.74 4.29 -0.77 6.56 -1.40 Benchmark -7.92 8.20 -2.95 2.74 -1.94 Source : Lipper, 31 March 2019 DISTRIBUTION HISTORY * Gross Distribution Date RM Yield (%) Unit Split 16-May-16 2.79 sen 6.62% 26-Feb-15 4.00 sen 8.71% 26-Feb-14 3.00 sen 6.27% - Annual Trustee Fee 0.05% p.a. CALENDAR YEAR FUND PERFORMANCE (%) # HISTORICAL FUND PRICE * Since Inception Date Highest RM 0.6885 11-Jan-08 Lowest RM 0.3746 18-Dec-18 FUND SIZE * RM 14.19 million NAV PER UNIT * RM 0.3955 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 50.90% 34.40% 15.30% CP / Sukuk / Others 1 2 3 4 5 34.30% 14.80% January SECTOR ALLOCATION (% NAV) * 50.30% 18.30% 35.20% Liquidity TOP EQUITY HOLDINGS (% NAV) * GABUNGAN AQRS BHD FRONTKEN CORP BHD TENAGA NASIONAL BHD HARTALEGA HOLDINGS BHD CAHYA MATA SARAWAK BHD 46.50% Equity 2.72% 2.44% 2.36% 2.28% 2.05% Corporate Sukuk (Unsecured) Industrial Products Short Term Islamic Deposits and Cash Trading and Services Consumer Products Properties Construction Technology Quasi Government Securities Corporate Sukuk (Secured) Others 1 2 3 4 5 29.1% 18.2% 14.8% 9.7% 6.1% 5.4% 5.2% 4.6% 2.8% 2.4% 1.7% TOP FIXED INCOME HOLDINGS (% NAV) * HONG LEONG ISLAMIC BANK 4.8020240617 CAGAMAS BHD 4.5020230525 BANK MUAMALAT MALAYSIA 5.8020260615 MEX II SDN BHD 5.6020260429 IJM LAND BHD 5.73 4.29% 2.91% 2.89% 2.59% 2.49% * Source: Kenanga Investors Berhad, 31 March 2019 Based on the fund’s portfolio returns as at 10 March 2019, the Volatility Factor (VF) for this fund is 5.40 and is classified as “Low”. (Source: Lipper). “Low” includes funds with VF that are above 1.760 and less than or equal to 6.595 (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. 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. “Cooling-Off Period” or “Cooling-Off Right” is not applicable to EPF Member Investment Scheme (EPF MIS). 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 stock specific risk, currency risk, country risk, credit and default risk, interest rate risk, reclassification of Shariah status risk.