Pacific Dana Aman Fund Report - March 2020

Transcription

1. Data Ended 31 March 2020 Pacific Dana Aman Investment objective 3-year Fund Volatility 10 .7 The Fund aims to provide the unitholders with consistently above average returns in both income□ and capital growth over a medium to long-term period by investing in a wide portfolio of authorised securities and investments which comply with Shariah principles. high Lipper Analytics 10 Mar 20 Performance Fund* 1 Mth 6 Mths 1 Yr 3 Yrs 5 Yrs Since Launch▲ -19.68% -24.97% -23.79% -34.52% -35.21% 262.39% -8.65% -13.36% -12.72% -19.68% -21.17% 145.53% Benchmark# * Source: Lipper for Investment Management, 31 March 2020. Fund sector: Equity Malaysia # Composite benchmark: 95% FTSE Bursa Malaysia EMAS Shariah Index (FBMS) & 5% 3-Month Islamic Interbank Money Market (IIMM) Rate, source: Bloomberg & Bank Negara Malaysia www.bnm.gov.my, 31 March 2020 ▲ Since start investing date: 7 May 1998 Fund details 600 Total return % 500 400 Characteristic Fairly aggressive Fund category/type Equity (Islamic) / Growth and income Launch date 16 April 1998 Financial year end 31 March Fund size RM42.2 million NAV per unit RM0.2870 Highest/Lowest NAV per unit (for current financial year) Highest 27 Jan 2020 Lowest 19 Mar 2020 Income distribution Once a year, if any. Sales charge Up to 5.50% of the Fund’s NAV per unit Annual management fee Up to 1.50% p.a. of the NAV of the Fund Fund manager Jolynn Kek Sales office BOS Wealth Management Malaysia Berhad (formerly known as Pacific Mutual Fund Bhd) 199501006861 (336059-U) customercare@boswm.com 300 200 100 0 Pacific Dana Aman Benchmark # Asset allocation Equities 76.33% CIS 11.91% Cash 11.76% Country allocation Malaysia 100.00% Mar-20 May-18 May-16 May-14 May-12 May-10 May-08 May-06 May-04 May-02 May-00 May-98 -100 RM0.4098 RM0.2597 □ Income is in reference to the Fund’s distribution, which could be in the form of cash or units. + Volatility Factor (VF) as at 29 February 2020: 10.7. Volatility Class (VC) as at 31 December 2019: High (above 8.8 and below/same as 11.1). VF means there is a possibility for the Fund in generating an upside return or downside return around this VF. VC is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision and VC is 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. Source: Lipper. 1
2. Data Ended 31 March 2020 Equities – Sector exposure and Top 10 holdings CAPITAL GOODS 13.97% TENAGA NASIONAL BERHAD 5.99% ENERGY 12.13% AXIATA GROUP BERHAD 5.16% HEALTH CARE EQ. & SERVICES 8.80% DIALOG GROUP BERHAD 4.63% TELECOMMUNICATION SERVICES 8.77% AEON COMPANY (M) BERHAD 4.01% RETAILING 8.01% DIGI.COM BERHAD 3.61% UTILITIES 6.52% SUPERMAX CORPORATION BERHAD 2.89% REAL ESTATE 4.45% BIMB HOLDINGS BERHAD 2.85% BANKS 2.85% YINSON HOLDING BERHAD 2.71% DIVERSIFIED FINANCIALS 2.39% TOP GLOVE CORPORATION BERHAD 2.49% FOOD & BEVERAGE 2.00% BURSA MALAYSIA BHD 2.39% Income distribution (past 10 years) Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Gross distribution (sen) 2.50 3.00 3.00 3.50 4.00 4.00 3.50 2.50 - - Distribution yield (%) 4.17 5.17 5.22 5.45 6.84 7.53 7.01 5.53 - - 2
3. Data Ended 31 March 2020 Fund Commentary • Equity allocation was cut from 88% to 76%. • The Fund cut equity exposure across the board, particularly in commodity exposures. • The Fund is expected to employ a trading strategy amid high volatility, with equity allocation around this level. • The Fund has seen opportunities on strength to manage legacy holdings down and will look to invest in more defensive businesses with good dividend yield for income sustainability. • The Fund underperformed its benchmark in March due to its Energy exposures which were affected by a breakdown in OPEC+ cooperation which caused oil prices to tank. Its Industrial exposures also disadvantaged the Fund as the Malaysian lockdown would delay the rollout of key projects. However, relative positives were the Fund's underweight position in Banks and Materials. Equity The Covid-19 outbreak continued to rattle global markets as it ravaged many more countries in March 2020. The outbreak was finally categorised as a pandemic by WHO, reflective of the concern felt by market participants. A few other countries began recording their first fatalities this month such as the US and Australia, while Europe finally surpassed China in the number of confirmed Covid-19 infections. Meanwhile the US raised their travel alert to the highest level for the entire world. To make matters worse, OPEC+ talks fell through and now an oil price war between Saudi Arabia and Russia is ongoing. Market moves: US (-13.7%), Hong Kong (-9.7%), Shanghai (-4.5%), Japan (-10.5%), Korea (-11.7%), Taiwan (-14.0%), Eurozone (-16.3%), UK (-13.8%), Singapore (-17.6%), Thailand (-16.0%), Indonesia (-16.8%), and Australia (-21.2%). In the US, the first week began with a surprise move by the Federal Reserve (Fed) cutting their benchmark rates by 50 basis points (bps) outside of a scheduled meeting. A dip in the ISM manufacturing index in February to 50.1% (from 50.9%) was enough to convince the market of the drag caused by the Covid-19 outbreak as supply constraints were noted to be felt by producers. Flash services PMI in March also fell to 39.1 (market expectation: 42.0) though manufacturing PMI was better than expected. While US employment started the month strongly with unemployment reaching a 50-year low of 3.5%, the momentum quickly reversed course – first with a 2-year high of 282,000 weekly initial jobless claims and then with the all-time high of 3.28 million weekly initial jobless claims, indicating the extent of the effect that the outbreak has on the underlying economy. However, positive market reactions to the jobless claims seemed to postulate expectations that stimulus measures unveiled may be enough to manage the fallout experienced in the economy, especially the USD2 trillion stimulus package passed towards end-March, which in itself is the biggest stimulus package ever passed in US history. The package was also more than welcome by the Fed, which had been calling for fiscal policy to support their monetary measures. Even early on in the month, the Fed had been the more proactive side in the response to the outbreak. On top of delivering a combination of 150bps of rate cuts, they also increased asset purchases and expanded repo operations. With all these measures in place, the Fed views that a rebound in economic activity would occur sometime in the second half of the year. Meanwhile, development in US politics this month also pointed to a narrower policy outcome as former Vice President Joe Biden, touted a champion of market-friendly policies, became a much more likely frontrunner to become the Democratic Party’s presidential candidate. Over in Europe, major lockdown measures were initiated or extended across its countries. As a gauge on the severity of the situation, the death toll from Covid-19 in Italy alone had surpassed that of China. Economic sentiment, as a consequence, took a beating as was seen in the ZEW Eurozone economic sentiment reading in March that plummeted to -49.5 from +10.4 in February. Response to contain the economic effects from the outbreak was not as straightforward as had been hoped. The ECB was not as lenient to the European governments as the Fed was to the US government in providing monetary stimulus. The ECB’s decision not to cut their benchmark rates went against market expectations, but it was grounded on the ECB’s stance that fiscal policy support should be “first and foremost” in responding to the outbreak. However, monetary stimulus did come through actions such as relaxing certain capital rules to encourage lending and expanding the quantitative easing programme. These measures came as per the ECB guidance that each month of lockdown imposed by the EU governments could cause the EU economy to shrink by 2.1%. Composite PMI for the Eurozone this month indicated strong confirmation to this forecast as a flash reading of 31.4 was recorded, from 51.6 in February – the lowest reading the index had ever seen. The UK, on the other hand, had taken a quite coordinated action in both fiscal and monetary measures with the UK government handing out a GBP30 billion stimulus package and the Bank of England cutting their benchmark rate by a combined 65bps. 3
4. Data Ended 31 March 2020 The situation in China at least gave a slight relief to global concerns as their containment measures , in place since much earlier on, and strict enforcement managed to plateau off new cases. Data on the economic front in the early weeks of the month were not encouraging as the February factory PMI and non-manufacturing PMI both plunged to record lows. China exports also plunged more severely than expected in February, fuelling worries to a global economic contraction. Despite this, the People’s Bank of China (PBOC) expressed optimism for the economy, with expectations that China’s economy will not take a long time to recover to its potential growth rate and “significant improvement” is coming in the next three months. The pledge by the PBOC to keep monetary conditions accommodative would certainly be expected to help achieve the outcome. Even the March reading of manufacturing PMI indicated some truth to the forecast as it rebounded from 35.7 in February to 52.0, beating market expectations. Hope remains that the CNY72.5 trillion worth of stimulus provided to combat the outbreak, mainly in fiscal stimulus, can be successful. The Malaysian market was not spared from the contraction felt by the rest of the world. The FBMKLCI’s heavy exposure to businesses operating in the commodity, travel and leisure spaces proved to be damaging to the index although its performance was not as bad as its regional peers. Corporates have even started to give guidance of poor earnings in the first quarter at the very least, with a majority of corporates still not confident of giving specific guidance, though almost all of them agreed on poor numbers this quarter. As the government imposed a nationwide Movement Control Order (MCO) (subsequently extended to one month from two weeks initially), sentiment is negative on the ground even amidst the stimulus packages to be delivered to households and businesses alike. Even after the MCO ends, there is still uncertainty as to how businesses would be allowed to operate to prevent any further wave of infection, which would definitely stall any pick-up in economic activity. On the commodities front, events took a turn for the worse as crude oil repeated a market collapse reminiscent of the collapse experienced during 2014-2015. WTI and Brent crudes fell from the USD45-50/barrel range to USD20-26 as the OPEC+ talks ended with a complete reversal from the original Saudi Arabia-led proposal for a further supply cut to stabilise oil prices, which was met with a disagreement by Russia. As the talks broke down, Saudi Arabia then responded with a pledge to flood the market with its crude supply in an attempt to thwart the Russian economy. The oil price collapse also dragged other commodities with it as well. Gold prices were a surprise decliner as the broad selloff across asset classes pointed to a primal flight to cash. Outlook in the near future remains bleak though investors are still hopeful of a recovery albeit the growth trajectory being less pronounced than before. As the OECD warned that global growth is expected to dive to unchartered levels, governments around the world are juggling public health measures to contain the outbreak and business activity to prevent a more severe economic contraction. The all-important crude oil has not proven a convincing bottom in prices, what with Saudi Arabia and Russia still confident of their respective nation’s coffers to withstand the low-price environment and therefore refusing to re-enter negotiations. We have now turned bearish on local equities as it is still uncertain how the broad-based stimulus packages can support an economic recovery while political risk still looms large. We also maintain our neutral stance on foreign equities as the fiscal and monetary support worldwide are expected to be enough to contain negative development surrounding the outbreak so far, though outlook remains challenged. 4
5. Data Ended 31 March 2020 Fixed Income The month started off with the 10Y US Treasury (UST) breaking down below 1% for the first time following the half percentage Fed Funds Target Rate (FFTR) cut in an emergency move by the Federal Reserve (Fed) to ease the economic fallout from the fast-spreading Covid-19 pandemic. Thereafter in an attempt to assuage the ensuing panic, FOMC moved again by bringing the FFTR to 0-0.25% in another off-cycle meeting mid-March. The US central bank has also launched an onslaught of measures, including commitments to buy both government and private sector bonds in unlimited amounts as needed to support companies’ short-term funding needs, and a slew of other facilities in order to relieve stresses in money markets. Consequently, the yield curve steepened sharply lower with shorter T-bills drifted to negative territories. That said, despite the Fed going into overdrive to boost liquidity, bid/ask spread for UST and USD corporate bonds continued to widen, reflecting the perception of enhanced solvency risks for sovereigns and corporates alike. Meanwhile, cracks emanating from the pandemic has started to show in the labour market as initial jobless claims came in at a startling 3.28 million, quadruple the previous record. The 2Y and 10Y yields closed the month 67bps and 48bps lower at 0.24% and 0.67% respectively. Albeit its status as government bond, local govvies yields had risen in March on the back of greater risk aversion in the global markets and a strong USD, exacerbated by depressed oil prices due to production dissent between Saudi Arabia and Russia. Latest foreign holdings data had broken 3 months of consecutive inflows, with net foreign sell-off amounting to a staggering RM8.1 billion. Yields were volatile as investors continued to assess the potential economic impact of the pandemic. Sentiment remained guarded despite another 25bps OPR cut by BNM and unprecedented stimulus package amounting to about 17% of GDP as number of daily cases continued to rise. Primary govvies auctions meanwhile, continued to garner healthy bids of more than 2x across the board despite a weaker Ringgit, reflecting ample liquidity in the local bond market. The 3Y and 10Y MGS ended the month 14bps and 51bps higher at 2.75% and 3.34% respectively. Disclaimer This leaflet provides general information and does not have regard to any specific investment objective, financial situation or particular personal need. The fund performance is calculated on an NAV-NAV basis including any capital gains and reinvested income distributions. Replacement master prospectus dated 1 April 2019 with its supplementary replacement master prospectus dated 22 July 2019 and Product Highlights Sheet (“PHS”) are obtainable at our offices and you have the right to request for a copy. They have been registered and lodged with the Securities Commission Malaysia (where applicable), who takes no responsibility for their contents. Units will only be issued when we receive the official account application form and investment form. You should study the replacement master prospectus and PHS, and consider the fees and charges involved before investing. You should also note that distributions and net asset value per unit do go up and down. Past performance is not an indication of future performance. The specific risk of Pacific Dana Aman is company specific risk. Description of the specific risk can be obtained from the replacement master prospectus dated 1 April 2019. Where a distribution is declared, you are advised that following the distribution, the NAV per unit will be reduced from cum-distribution NAV to ex-distribution NAV. 5