This article first appeared in Wealth, The Edge Malaysia Weekly on March 27, 2023 - April 2, 2023

Despite the challenging and volatile market conditions in 2022, Public Mutual Bhd bagged 19 fund awards at the Refinitiv Lipper Fund Awards 2023.

The firm’s 11 award-winning equity funds are Public ASEAN Growth, Public e-Islamic Sustainable Millennial, Public Emerging Opportunities, Public Far-East 

Alpha-30, Public Greater China, Public Islamic ASEAN Growth, Public Islamic Dividend, Public Islamic Global Equity, Public Islamic Opportunities, PB China Australia Equity and PB Global Technology & Healthcare.

Meanwhile, its four award-winning mixed-asset funds are Public e-Flexi Allocation, Public Ehsan Mixed Assets Conservative, Public Growth Balanced and PB Mixed Assets Conservative.

CEO Chiang Kang Pey says that despite market adversity last year, Public Mutual adhered to its investment philosophy of adopting a fundamental approach to investing by selecting the stocks of companies with resilient earnings, a strong financial position and a proven management track record. “This strategy enabled our winning funds to ride through periods of elevated market volatility and deliver consistent returns over the long term.”

The most challenging situation the firm faced last year was the elevated market volatility amid the rise in interest rates globally, persistent inflationary pressures and geopolitical risks arising from the ongoing US-China tensions and the escalation of the Russia-Ukraine conflict.

“To overcome these challenges, our funds adopted a diversified portfolio comprising growth and value stocks, while focusing our investments on companies with strong balance sheets that are capable of weathering the volatile economic conditions,” says Chiang.

While many unit trust funds may not have performed well last year, the firm’s winning funds delivered commendable returns for the three-, five- and 10-year periods, he says. It was achieved by maintaining diversified portfolios across various sectors and markets. The firm also actively rebalanced its portfolios to capitalise on market opportunities arising from changing trends in the domestic and foreign markets.

“In 1H2022, our funds generally trimmed their exposure to the technology and internet sectors, which were impacted by the rise in global interest rates. They increased their holdings of selected energy and plantation stocks, which were poised to benefit from the rally in the commodity market, as well as stocks in the tourism and consumer discretionary sectors to capitalise on the reopening of borders,” says Chiang.

“As inflationary pressures remained elevated, our funds increased their exposure to the banking sector to capitalise on the high interest rate environment, as well as on defensive sectors such as consumer staples and telecommunications, which offer more resilient earnings growth. Subsequently, when the pace of US interest rate hikes eased in 4Q2022, our funds capitalised on the lower valuations of selected growth stocks in the technology, internet and e-commerce sectors.

“In view of the evolving trends in the respective markets, sectors and industries that our funds were invested in, we rebalanced our portfolios accordingly to navigate the market conditions. Our funds generally raised their cash levels during the year to cushion against market volatility but redeployed their cash holdings towards year’s end amid signs of a softening of inflation and expectations of smaller interest rate hikes in 2023.”

In the light of the continued market volatility amid a slowing global economic environment this year, Chiang says the firm’s equity funds will continue to focus on quality stocks that are underpinned by resilient earnings and dividend yields. Companies that are beneficiaries of secular growth trends, such as the rapid adoption of digital technology and artificial intelligence, are also favoured.

“Meanwhile, given the prospects of slower global economic growth, moderating inflation and peaking global interest rates, the bond portfolios of our balanced and mixed-asset funds will continue to capitalise on selected higher-yielding bonds that are attractively priced to generate potentially better returns,” he says.

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