Fundsupermart.com (FSM) held its annual Recommended Unit Trusts Awards to honour the unit trusts which have made it to the FSM Recommended Unit Trusts list for the 2018/19 period. The awards include 37 unit trusts from 14 fund houses, including RHB Asset Management Sdn Bhd, Kenanga Investors Bhd, Eastspring Investments Bhd, AmInvest, Aberdeen Islamic Asset Management Sdn Bhd, Affin Hwang Asset Management Bhd, and CIMB-Principal Asset Management Bhd (see appendix for the full list).
The unit trusts are evaluated based on Performance, Risk and Expense Ratio. “These areas are what we believe a good unit trust should excel in. Only unit trusts with exemplary track records in these areas make it to our Recommended Unit Trusts list,” said Wong Weiyi, General Manager of Fundsupermart Malaysia.
“The FSM Recommended Unit Trusts list is a good starting place for investors to begin their investment journey. There are only 37 Recommended Unit Trusts for them to screen and understand, which is more digestible than trying to understand close to 500 unit trusts on the FSM platform,” Weiyi added.
Apart from its annual Recommended Unit Trusts Awards 2018/19, FSM, which is the online investment distribution arm of iFAST Capital (iFAST) Sdn Bhd, also celebrated its 10th anniversary in the business.
Discussing the significant milestone, Dennis Tan, Managing Director of iFAST, said, “We’ve come a long way since we started in 2008, with only seven fund houses on board the iFAST platform. Today, we have 31 fund houses and seven Private Retirement Scheme (PRS) Providers, with close to 500 unit trusts and PRS funds on iFAST platform. I would like to thank the seven fund houses who have been supporting us since day one, and also to the fund houses who came on board along the way.”
As for iFAST’s assets under administration (AUA), Dennis shared, “iFAST’s AUA grew 34% YoY to RM1.75 bil as at 31 March 2018. 35% of the AUA was contributed by FSM, while the remaining 65% of the AUA was contributed by our business-to-business (B2B) platform.” The B2B platform caters to the specialised needs of financial advisory companies, banks, and financial institutions, while Fundsupermart.com, which is the company’s business-to-consumer (B2C) platform, is targeted at DIY investors.
Dennis believes that the company’s efforts over the last two years to broaden the range of products and services available on its platforms are showing results. He shared, “In July 2016, we launched insurance products and last year, we introduced bonds and a discretionary portfolio management service. These products and services have started to gain momentum and provided positive contributions to the performance of the iFAST business.”
To that end, Dennis added that iFAST now runs a more comprehensive wealth management platform that will help bring the company’s AUA and business volume to the next level in the years ahead.
With regard to the performance of the global equity markets, Weiyi mentioned that while investors may have gotten accustomed to the low-volatility environment last year and were expecting the continuity of a smooth ride in the global equity market, the MSCI World Index plunged by more than -9.0% in US dollar terms in a period of less than two weeks amid stronger-than-expected US non-farm payroll data and average hourly earnings which led to a higher FED rate hike probability.
“Subsequently, the global equity markets continued to show signs of volatility due to the spike in 10-year US Treasury yields and increasing trade war fears, especially between the two largest economies in the world, the US and China, as well as technology privacy and regulatory concerns that once dragged the performance of the technology sector,” said Weiyi.
On the local front, Weiyi highlighted that although Malaysia’s equity market as represented by the FBM KLCI index was one of the top performing markets in the first quarter of 2018 amid strong foreign fund inflow, registering more than 5% returns in ringgit terms, the unexpected election results in early May 2018 spelled numerous uncertainties as the change of new government would bring questions on policies that may no longer apply moving forward.
“As of 29 June 2018, foreign funds halted their 37-day selling spree as a finish to the quarter. Given the intense selling pressure by the foreign investors, the Malaysian equity market delivered post-election losses of about -8.0%”, he added.
Regarding FSM’s asset allocation strategy, Weiyi shared, “Although the rare synchronised global growth that we experienced in 2017 might not be sustainable amid rising trade and geopolitical tensions, we believe investors will still be well compensated with a slight overweight in equities. Therefore, we remain +5% overweight in equities vis-à-vis fixed income.”
“Among all the markets under our coverage, we maintained our preference for Asia ex-Japan relative to their developed market peers by giving a 4.5 stars “Very Attractive” rating due to its still-strong earnings outlook and attractive valuation,” said Weiyi.
As for the foreign bond market, Weiyi highlighted the risk of further interest rate hikes as the US Fed is set to raise the interest rate three to four times in 2018. Hence, he suggested investors to avoid longer-duration developed sovereign debt, which is more susceptible to rising yields, while opting for shorter duration bond funds, which are far less sensitive to interest rates.
Back to the local bond market, Weiyi advocated longer duration bonds. He shared, “Ever since the recent overnight policy rate (OPR) hike in January, we expect Bank Negara Malaysia to keep the OPR unchanged at 3.25% for the rest of 2018, hence investors can consider longer duration bonds in order to enjoy higher yields.”
For the second half of 2018, Weiyi reminded investors to be more cautious on market fluctuations. “While we are expecting the volatility of the global equity market to stay for some time due to the normalisation of monetary policy as well as the rather expensive valuation for global equity markets as compared to early 2017 levels, we would like to advocate investors not to time the market but to be more disciplined, to stay invested in the market and focus on market valuation in order to ride through increasing market volatility”, said Weiyi.
Luminaries at the award event included Acting Chief Executive Officer of the Federation of Investment Managers Malaysia (FIMM) Puan Maryati Legori Ibrahim, who gave a keynote address, and Chief Executive Officer of the Private Pension Administrator (PPA) Encik Husaini Hussin, as well as the representatives from the award-winning fund houses.