Smart Investor Malaysia

Interview with Affin Hwang Asset Management Bhd, Winner Of The FSMOne Recommended Unit Trusts Awards 2022/2023

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Affin Hwang Asset Management Bhd is an independently-managed, bank-backed asset management firm which started in 2001. The company won nine awards, making it the biggest winner in FSMOne Recommended Unit Trusts Awards 2022/2023!

Chan Ai Mei, chief marketing and distribution officer, shared their investment philosophy and strategies with us.

Smart Investor: Congratulations on bagging nine awards at the recent FSMOne Recommended Unit Trusts Awards 2022/2023! Tell us about your fund house’s investment philosophy and strategy which contributed to your win.

Chan Ai Mei: Our investment philosophy is underpinned by an absolute return mindset by focusing on quality growth at reasonable prices. This is then overlaid with a macro awareness to determine our risk tolerance. This approach has served us well over the years by knowing when to take some money off the table when the risk- reward considerations justify doing so, as well as deploying more when the risk-reward outcome is in our favour.

We are benchmark-aware investors, but are not constrained by it in our investment process. This has allowed us to raise cash during periods of volatility and focus on capital preservation when the macro environment becomes challenging. Importantly, we also subscribe to the simple belief of managing our client’s money as if it were our own.

We don’t take unnecessary risk with investors’ capital as we are very much invested together with them. The total staff investments within our funds stood in excess of over RM150 million YTD which sums up the belief that we have in our own products.

SI: Affin Hwang AM was a big winner in the Core Equity Category this year. Tell us a little bit about the Select Asia Pacific (ex-Japan) Dividend Fund which won the best Core Equity – Asia ex-Japan fund award. Also, why should investors consider a dividend-focused strategy for their portfolio?

CAM: Select Asia Pacific (ex-Japan) Dividend Fund is an actively-managed equity fund that seeks to provide regular income and capital growth through investments in dividend yielding equities and ‘future dividend leaders’ in Asia.

Through a disciplined investment approach, the Fund adopts a barbell strategy in its stock selection process. The first basket comprises very stable and high dividend-yielding equities that will ensure the consistency of dividend payouts. On the other end, the Fund will invest in companies with strong earnings growth and rising cash flows that have the potential to be future dividend leaders.

One of the important benefits of having a dividend strategy is the measure of stability it adds to one’s portfolio by creating a regular income stream. Through a dividend strategy, investors essentially get ‘paid-to-wait’ as dividends provide a predictable income stream, whilst investors wait for long-term capital appreciation or volatility to subside.

This would help induce investors to stay invested in their portfolios and avoid any drastic shifts in their asset allocation which can be detrimental to their long-term goals.

SI: 2022 has been a volatile year for markets. What advice would you give investors in navigating through this cycle?

CAM: It’s time for investors to go back-to-basics. Markets are going to stay volatile and the past year has shown that timing market conditions isn’t going to work all the time. Instead, practice dollar-cost averaging by continuously investing in fixed sums through regular intervals. This helps lower the purchase price of your investments over time by taking advantage of market dips as well as reducing the risk of bad timing or investing according to one’s emotions.

Investors should also strive to achieve diversification in their portfolios across different asset-classes, strategies, sectors and geographical exposure. Over the long-term, it’s been shown that diversification still remains an investor’s best defence in lowering volatility and achieving better risk-adjusted returns overall.

Against a constant 24-hour news cycle, it pays to also tune-out and avoid monitoring your portfolio constantly. It is counter-productive and usually leads to emotional knee-jerk reactions that puts you in a worse position than before. Instead, set half-year portfolio reviews with your wealth manager or when there is a significant change in your risk capacity, time horizon or objectives. This may warrant a change in your asset allocation because you may be taking too much risk.

A great yardstick is to ask yourself if you can sleep at night comfortably without thinking about your portfolio. If you can’t, then chances are you taking more risk than you can stomach financially. So it’s important to make periodic reviews at least biannually and ensure that your portfolio is geared towards its stated purpose with an asset allocation that matches your risk tolerance.

Chan Ai Mei, chief marketing & distribution officer, Affin Hwang Asset Management.
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