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RHB Mudharabah Fund Report - March 2019

IM Insights
By IM Insights
4 years ago
RHB Mudharabah Fund Report - March 2019

Shariah, Sukuk


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  1. FUND FACTSHEET – MARCH 2019 All data expressed as at 28 February 2019 unless otherwise stated RHB MUDHARABAH FUND This Fund aims to provide a balanced mix of income and potential for capital growth by investing in stocks listed on the Bursa Malaysia or on any other stock exchanges, unlisted stocks and Islamic debt securities and other non-interest bearing assets acceptable under principles of Shariah. The Fund’s activities shall be conducted strictly in accordance with the requirement of the Shariah principles and shall be monitored by the Shariah Adviser of the Fund. INVESTOR PROFILE INVESTMENT STRATEGY This Fund is suitable for Investors who want: • an investment that complies with the principles of Shariah; • a professionally managed portfolio of Shariah-compliant equities, sukuk and Islamic debt securities; • to have a balanced portfolio that provides both income and capital growth; and • to invest in shares but do not have the time to manage their own portfolio. • Up to 60% of NAV will be invested in Shariah-compliant equities; • Minimum of 40% of NAV will be invested in Islamic debt securities, sukuk, Islamic money market instruments and/or liquid assets acceptable under Shariah principles. FUND PERFORMANCE ANALYSIS FUND DETAILS Performance Chart Since Launch* Manager Trustee Fund Category Fund Type Cumulative Performance (%)* 1 Month Fund 0.84 Benchmark 0.91 Fund Benchmark 1 Year -9.05 -4.66 Calendar Year Performance (%)* 2018 Fund -10.64 Benchmark -5.16 3 Months -0.49 0.89 6 Months -4.95 -3.21 YTD 1.58 1.26 3 Years -6.08 3.12 5 Years -12.18 2.92 Since Launch 50.64 N/A 2017 10.31 6.92 2016 -7.40 -1.44 2015 7.08 2.79 Source: Lipper IM Launch Date Unit NAV Fund Size (million) Units In Circulation (million) Financial Year End MER (as at 28 Feb 2018) Min. Initial Investment Min. Additional Investment Benchmark Sales Charge Redemption Charge Annual Management Fee Annual Trustee Fee Switching Fee Redemption Period 2014 -12.27 -1.66 Distribution Policy *All fees and charges payable to Manager and the Trustee are subject to any applicable taxes and/or duties and at such rate as may be imposed by the government from time to time. For the purpose of computing the annual management fee and annual trustee fee, the NAV of the Fund is exclusive of the management fee and trustee fee for the relevant day. FUND PORTFOLIO ANALYSIS Sector Allocation* Unquoted Sukuk Industrial Products & Services Construction Energy Utilities Consumer Products & Services Telecommunications & Media Health Care Infrastructure Others Plantation Cash 44.53% 0% 10% 20% FUND STATISTICS Historical NAV (RM) 1 Month High 0.7695 Low 0.7510 9.71% 8.04% 7.29% 6.78% 6.16% 4.87% 4.61% 2.93% 2.15% 1.55% 1.38% RHB Asset Management Sdn. Bhd. CIMB Islamic Trustee Bhd Balanced fund (Shariahcompliant) Capital Growth and Income Fund 09 May 1996 RM0.7573 RM14.83 19.59 28 or 29 February 1.79% RM1,000.00 RM100.00 50%FBM Emas Shariah + 50%Maybank Islamic Bhd’s 12 months Islamic FD-i Up to 6.00% of NAV per unit* None Up to 1.50% p.a. of NAV* Up to 0.09% p.a. of NAV* RM25.00 per switch* Within 10 days after receipt the request to repurchase Incidental 12 Months 0.8327 0.7354 Since Launch 1.0388 0.4095 Source: Lipper IM 30% 40% 50% Top Holdings (%)* RHBA 4.88% (27/04/2027) SERIES 2 TENAGA NASIONAL BHD MEX II IMTN 6.400% (28/04/2034) ISSUE NO 14 SERBA DINAMIK HOLDINGS BHD SPR ENERGY SDN BHD 5.790% (15/07/2033) *As percentage of NAV, ** IMTN: Islamic Medium Term Note RHB Asset Management Sdn Bhd (174588-x) 6.83 3.89 3.77 3.73 3.58 Historical Distributions (Last 5 Years) (Net) Distribution Yield (%) (sen) Feb 2019 Feb 2018 Feb 2017 Feb 2016 Feb 2015 - Source: RHB Asset Management Sdn. Bhd. Head Office: Level 8, Tower 2 & 3, RHB Centre, 50400 Kuala Lumpur General Line: 603-9205 8000
  2. FUND FACTSHEET – MARCH 2019 All data expressed as at 28 February 2019 unless otherwise stated RHB MUDHARABAH FUND This Fund aims to provide a balanced mix of income and potential for capital growth by investing in stocks listed on the Bursa Malaysia or on any other stock exchanges, unlisted stocks and Islamic debt securities and other non-interest bearing assets acceptable under principles of Shariah. The Fund’s activities shall be conducted strictly in accordance with the requirement of the Shariah principles and shall be monitored by the Shariah Adviser of the Fund. MANAGER'S COMMENTS MARKET REVIEW EQUITY The MSCI All Country World Index registered positive return of 2.5% in February 2019 as the rally in global equities continued. Year-to-date, the index rose almost 10% which is commendable given the current concerns over United States (US)-China trades and geo-political uncertainties. Among the developed markets, the US (+3.1%) and Europe (+3.1%) rallied the most. During the month, Asia Pacific ex-Japan (+2.1%) and Emerging Markets (+0.1%) equities rallied less than the global markets in average, while Japan (-0.1%) equities have underperformed. Over in Malaysia, markets cheered on a Chinese New Year rally, with the FTSE Bursa Malaysia KLCI Index (KLCI) hitting a 3-month high of 1,730 points before giving up gains. Meanwhile, the FTSE Bursa Malaysia Shariah Index (FBMS) closed at a 4-month high of 11,732 points. A combination of overbought indicators, profit taking, and the start of what was the final quarter of corporate reporting for many companies led the Malaysian indices lower. For the month, KLCI closing up at 1.44% month-on-month (MoM) whilst the FBMS Index rose by 1.68%. Additionally, our Malaysian Ringgit (MYR) strengthened further vs. United States Dollar (USD) to 4.0658 (-0.72% MoM) helped by higher Brent Crude Oil, which traded up +6.7% MoM to USD66.82 per barrel on supply constraints. The higher oil prices also helped boost sentiment in oil & gas stocks pushing the Bursa Energy Index up +12.21% MoM making it the biggest sectoral winner last month, led higher by the likes of Dialog and Yinson. The weakness in the Malaysian gloves sector continued to persist, with the glove companies continuing to be the largest drags on the index for the second month running. On the corporate side, the government has begun talks with Gamuda Berhad to negotiate the acquisition of four highway toll concessions namely Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik Kuala Lumpur Barat (SPRINT), Lebuhraya Shah Alam (KESAS) and the Stormwater Management and Road Tunnel (SMART). Upon the successful takeover, the government intends to abolish the existing toll mechanism. According to its election manifesto, the government aims to acquire highway concessions and abolish tolls in stages, in accordance with the terms of the concession agreement. This is to alleviate the high cost of living for highway users. Meanwhile, Yinson Holdings has secured a contract for the charter, operations and maintenance of a Floating Production Storage and Offloading (FPSO) vessel in Nigeria. The contract is worth US$901.79 million (RM3.67 billion). Business confidence in Malaysia retreated for the first time in two years in the first quarter of 2019, with the confidence indicator of the statistics department’s business tendency survey recording a fall into negative territory. Malaysia's wholesale and retail trade grew 8.1% year-on-year (YoY) to 173.8 points for the fourth quarter of 2018, mainly due to expansion in retail trade. FIXED INCOME The month of February 2019 saw investors weighing the US-Chinese trade talk progress where we saw US President Donald Trump extending the 1 March 2019 deadline to raise tariff on Chinese products. US Fed Jerome Powell’s testimony before congress also saw he mentioned that the Fed is in no rush to make a judgment about further changes in interest rates as he spelled out the central bank’s approach to an economy that is likely slowing. Powell’s comments solidified a Fed policy shift last month in which it indicated it would pause a three-year cycle of raising hikes, which has been projected to run well into 2020. The International Monetary Fund (IMF) also warned governments to gear up for a possible economic storm as growth undershoots expectations as they are seeing an economy that is growing more slowly than what they had anticipated. IMF has lowered its global economic growth forecast for 2019 from 3.7% to 3.5%. We saw the US Treasury (UST) yields closing higher at February 2019 month end where the benchmark 2-, 5-, 10- and 30-year UST were last traded at 2.51% (January 2019: 2.46% +5 basis points), 2.51% (2.44%; +7 basis points), 2.72% (2.63%; +9 basis points) and 3.08% (3.00%; +8 basis points) respectively. On the local rates, both of Malaysia’s sovereign papers ie; Malaysia Government Securities (MGS) and Government Investment Issues (GII) were well supported despite heavy issuance this month on sovereigns as well as Government Guaranteed sukuk. Overall, the curve has bull-flattened and trades were skewed towards GII. The curves closed the month lower with 10, 15 and 20-year GII recorded the best performance as yields fell by an average of 16 to 20 basis points lower. Investors have been extending duration on slower growth outlook and modest inflation expectation. At month-end closed, MGS yields 3-, 5-, 7-, 10-, 15-, 20- and 30-year MGS were reported at 3.57% (January 2019: 3.58%), 3.72% (3.76%), 3.87% (3.95%), 3.89% (4.06%), 4.29% (4.39%), 4.49% (4.56%) and 4.70% (4.77%) respectively. The GII closed the month as follows; the 3-, 5-, 7-, 10-, 15-, 20- and 30-year GII were reported at 3.64% (January 2019: 3.67%), 3.82% (3.86%), 3.97% (4.02%), 4.03% (4.09%), 4.37% (4.46%), 4.60% (4.69%) and 4.84% (4.88%) respectively. Malaysia announced that its 4Q18 Gross Domestic Product (GDP) grew at faster rate of 4.7% YoY which beat market concensus forecast of 4.5% YoY. Resilient household spending was one of the main deviation with private consumption growing 8.5% YoY in 4Q18, driven by strong performance in retail spending and dining out at restaurants. The better than expected GDP growth is positive for the market. Consumer Price Index (CPI) print came in at 0.7% YoY in January 2019 weaker than the market expected level of -0.4% and December 2018 print of 0.2%. Despite the lower reading, softer inflation is expected to bolster consumer spending moving forward. We opine the subdued inflation outlook remains positive for MYR bond/sukuk from a real yield perspective. Finance Minister Lim Guan Eng expects the country’s inflation rate to average between 1.6% and 2.0% this year due to global uncertainties caused by the trade war between the US and China. In 2018, Malaysia recorded an inflation rate of only 1%, the lowest in nine years compared with an inflation rate of 3.7% posted in 2017. We also saw Fitch reaffirmed Malaysia’s long tern foreign currency issuer default rating (IDR) at A- with stable outlook reflecting higher growth rates than the peer median and a net external creditor position which is supported by steady current account surpluses and large external assets. On the Malaysian corporate bond/sukuk space, trading were active particularly from asset managers and financial institutions with average daily volume in the circa of RM600-700 million changing hands. Interests were seen skewed towards Government Guaranteed, AAA rated and AA rated space as market remain searching for yields. MARKET OUTLOOK AND STRATEGY EQUITY Emerging markets seems to be in a ‘sweet spot’ for few reasons i.e. benign inflation expectations, a dovish Federal Reserve (Fed) and reasonable optimism about both Chinese stimulus and a US-China trade deal. China’s downturn is at the heart of global disinflationary pressures, and the market's optimism about Chinese stimulus is thus at odds with the idea that this can persist. In addition, China's downturn has helped to justify the Fed's dovishness. On the local front, investors will be watching out for new developments from the upcoming Parliament sitting which will take place from 11 March to 11 April 2019, the release of the Felda White Paper as well as Bank Negara Malaysia (BNM) Annual report. On the external front, investors will continue to follow closely the latest developments on the ongoing US-China trade talks, ongoing developments of Brexit and US Fed meeting on 19 to 20 March 2019. In terms of stock picking, the key investment criteria we look out for are exposure to a pick-up in domestic consumption and investments as well as limited exposure to regulatory risks. We also believe that this year the undervalued/oversold will outperform. FIXED INCOME In 2018, growth divergence amongst emerging economies was uneven due to rising oil prices and escalating trade tensions, along with domestic political and policy uncertainty. The widening growth differential between the US and the rest of the world has drove the USD higher, which increased fund flows into the US. The USD also benefited from the decoupling of interest rates between the US and the rest of the world as interest rate differentials widened. In 2019, we expect a convergence to happen as growth differential narrows. For Malaysia, BNM kept Overnight Policy Rate (OPR) rate unchanged at 3.25% in the January 2019 Monetary Policy Committee (MPC) meeting, as widely expected. The statement however, in our observation has turned more dovish on growth and inflation expectation as the MPC acknowledged to some extent on the material impact of trade tensions on global trade and investments in addition to heightened volatility in financial markets. In view of a more slow GDP growth number for Malaysia, we are of the view that OPR will be unchanged for the whole of 2019 so as to ensure stability of MYR. We remain comfortable in tactically nimble around duration or buying on dips to the portfolio. We also remain overweight corporate bond/sukuk on healthy credit spreads and yield premium. DISCLAIMER: Based on the fund’s portfolio returns as at 10 February 2019, the Volatility Factor (VF) for this fund is 7.6 and is classified as “Moderate”. (source: Lipper) “Moderate” includes funds with VF that are above 6.6 but not more than 8.8 (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 VC referred to was dated 31 December 2018 which is calculated once every six months and is valid until its next calculation date, i.e. 30 June 2019. 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 July 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 distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from cum-distribution NAV to exdistribution NAV. 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 1-800-88-3175 for a copy of the PHS and the Master Prospectus or collect one from any of our branches or authorised distributors. The Manager wishes to highlight the specific risks of the Fund are stock market risk, individual stock risk, liquidity risk, issuer risk, interest rate risk, credit / default risk and shariah specific risk. These risks and other general risks are elaborated in the Master Prospectus. This factsheet is prepared for information purposes only. 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 to future performance. Returns may vary from year to year. RHB Asset Management Sdn Bhd (174588-x) Head Office: Level 8, Tower 2 & 3, RHB Centre, 50400 Kuala Lumpur General Line: 603-9205 8000