Public Mutual Berhad took home two awards at the Morningstar Malaysia Fund Awards 2021 for Best Malaysia Large-Cap Equity Fund and Best Malaysia Large-Cap Equity (Shariah) Fund. The award-winning funds were the Public Industry Growth Fund (PINDGF) and Public Islamic Alpha-40 Growth Fund (PIA40GF) respectively. We sit down with Lum Ming Jang, chief investment officer of Public Mutual Berhad, to discuss the performances of these funds, the growth of technology stocks and the increasing investor interest in ESG or sustainability investing.
Smart Investor: Congratulations on your win! Public Mutual has garnered a double win for the Large-Cap Malaysian Funds. What are the key factors behind these two wins?
Lum Ming Jang: Our fundamental approach of selecting stocks with resilient earnings, strong financial positions and proven management track records has enabled the funds to navigate the challenging market conditions in 2020 amid the Covid-19 pandemic.
PINDGF, which focuses its investments on growth stocks in the Malaysian market, achieved a return of +29.5% in 2020. In comparison, the FBM KLCI, which tracks the performance of the domestic stock market, gained by +2.4%.
Despite challenging market conditions, the fund was able to achieve a commendable performance as it focused on fundamentally-strong companies within the healthcare and technology sectors which benefited from the global pandemic.
Meanwhile, PIA40GF which focuses its investments in up to a maximum of 40 Shariah-compliant stocks primarily in the Malaysian market, achieved a return of +29.4% in 2020. In comparison, the FBM EMAS Shariah Index, which tracks the performance of Shariah-compliant domestic stocks, registered a +10.1% gain. The fund’s commendable performance was achieved via its holdings of technology stocks which are underpinned by the structural digitalisation trend. Its investments in the basic materials and industrial sectors also gained from the improved economic outlook in the second half of 2020 following the easing of movement restrictions and news of vaccine roll-outs.
SI: Given such a tumultuous year with the pandemic and volatile global economy, how have the funds remained resilient through the changes?
LMJ: To mitigate market volatility, the funds raised their cash levels during the market’s sell-down in the first quarter of 2020. The funds subsequently rebalanced their portfolios into stocks primarily within the technology, Internet and e-commerce sectors.
The growth outlook for technology stocks providing software, Internet and e-commerce services has been bolstered by the pandemic, as business enterprises increasingly shift to remote work policies while consumers resort to online activities – ranging from online shopping and social media to home entertainment and gaming. This trend also has the knock-on effect of increasing the demand for communications technology and data centres globally, which ultimately benefits vendors within the semiconductor and information technology (IT) hardware supply chains.
PINDGF also capitalised on healthcare stocks which were underpinned by the growing demand for healthcare services, medical equipment as well as personal protective equipment such as rubber gloves.
Meanwhile, PIA40GF diversified its investments into the electric vehicle supply chain, leveraging on the structural growth in demand for energy-efficient and more sustainable solutions.