Fund flows into fixed income, tech funds

Investors were quick to take the opportunity to buy the dip in March. From then on, sales volumes have picked up, says analyst


MALAYSIAN investors are flocking into fixed-income portfolios and the rally in tech stocks to seek out investment avenues that provide higher returns following the Movement Control Order (MCO) in March, said fund managers.

Affin Hwang Asset Management Bhd (Affin Hwang AM) chief marketing and distribution officer Chan Ai Mei said fixed-income and technology-centric funds have been the fund manager’s top-performing portfolios with better redemptions and returns.

“When the MCO hit, sales volumes fell to 20% of normal run rates. Subsequently, investors realised they should not miss out as there was ample liquidity being pumped into the market which had moved up asset prices.

“Investors were quick to take the opportunity to buy the dip in March. From then on, sales volumes have picked up as investors believe the Covid-19 pandemic will eventually dissipate and a vaccine will be developed soon with many already in different stages of trials,” she told The Malaysian Reserve.

Chan said following the fallout in March, the fund manager observes several portfolios that have been attracting investors despite the current market volatility, which are the fixed incomes: Local fixed income, Asian fixed income and China bond funds, as well as China growth strategy, technology funds and global health science strategy.

As of September, Affin Hwang AM’s five top-performing funds comprising fixed-income and feeder funds amounted to RM2.89 billion.

They included Affin Hwang Aiiman Income Plus (RM920 million), Affin Hwang Select Bond Fund (RM758 million), Affin Hwang Bond Fund (RM559 million), Affin Hwang World Series — China A Opportunity Fund (RM316 million) and Affin Hwang World Series — Global Healthscience Fund (RM334 million).

Its Select Asia (ex Japan) Quantum fund delivered 39.2% as of Oct 21, 2020, while its Select Asia (ex Japan) Opportunity Fund rose 20.8%. Among other portfolios that have posted good returns are the Select Asia Pacific (ex Japan) Dividend Fund which rose 21.4%, Select Balanced Fund with 22.5%, while the Select Bond Fund with 4.8%.

“The abovementioned funds continue to deliver consistent performance in its respective asset classes and outperform its peer groups and benchmark,” Chan said. For Areca Capital Sdn Bhd, its two flagships, which comprise bond and equity funds, have a combined size of RM500 million and grew about 15% and 60% respectively this year.

Year-to-date, Areca Capital’s bond fund achieved 4.9% in returns, while the equity fund achieved 31%. Its top-performing fund, Areca Dividend Income Fund, recorded a 42% return.

Its CEO Danny Wong Teck Meng said investors will price in the Covid-19 recoveries and the new positive cases globally, as well as the vaccine development to reduce the risk of capital loss.

“Seeing the spike in positive cases, sectors which are dependent on footfall traffic will no doubt suffer, but these sectors have not rallied much as the outlook remains uncertain.

“The market will likely price in the recovery if and when a vaccine is found.

“For us, we would rather focus on sectors that have better certainty and visibility in earnings,” he said.

Wong added that judging from the average daily trading value on Bursa Malaysia which has grown about 200%, the level of enthusiasm among the retail investors to invest has increased.

“That is definitely good for the market and it has been a while since we have witnessed this.

“We believe the low deposit rates and more sophisticated investors nowadays could attract more investors into equities than before,” he said.

For Affin Hwang AM, it has been observing an uptrend in retail participation since May, driven by the need to diversify as fixed deposit rates hit fresh lows.

“This led investors to take the opportunity to invest in long-term structural themes including global technology and health science funds that are the main beneficiary from this pandemic, which has accelerated the adoption of technology platforms across the globe,” she said.