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

Hong Leong Asset Management Bhd (HLAM) maintained last year’s record, winning 15 fund awards at the Refinitiv Lipper Fund Awards 2023.

These awards are split among four of its funds, with the Hong Leong Dana Makmur Fund winning most of the awards. It won the Best Equity Malaysia (Islamic) and Best Equity Malaysia (Provident) awards in the three-, five- and 10-year categories.

The second-biggest winner is the Hong Leong Dana Maa’rof Fund, which won the Best Mixed Asset MYR Balanced Malaysia (Islamic) and Best Mixed Asset MYR Balanced Malaysia (Provident) awards in the three- and five-year categories.

HLAM’s other winning funds are the Hong Leong Asia-Pacific Dividend Fund and the Hong Leong Dividend Fund.

CEO Hoo See Kheng attributes the success to the firm’s bottom-up stock picking strategy, which he believes is the most effective for creating long-term and sustainable performance for funds.

“In periods of heightened equity market volatility, a thorough understanding of each company’s operations and long-term business outlook is crucial,” says Hoo.

“Our active and concentrated portfolio management style is critical in ensuring the funds are invested only in what we deem are the stocks with the best risk-reward profile, as opposed to underperforming stocks that could be a drag on the overall fund performance.”

The harsh macroeconomic environment in 2022 was a good test of the reliability of the fund’s investment strategy, he adds.

The fund managers had to navigate many challenges last year. There were persistent negative news flow, adverse geopolitical developments and prolonged drawdowns in the equity markets. Naturally, investors had doubts about staying invested in the equity market.

“Our investment team was very well aware of the clients’ concerns and took the initiative to maintain regular communication and offered solutions that would help manage their concerns,” says Hoo.

This communication with investors is crucial because, despite the fear, investors with a longer-term investment horizon were presented with good buying opportunities during the market dip.

“We observed that a lot of fundamentally sound stocks were also caught in the equity market sell-off and we took the opportunity to build or expand our positions in these stocks at attractive levels,” says Hoo.

The firm increased its exposure to the technology sector, which suffered the brunt of the market-selling pressure.

“As our focus is on long-term fund outperformance rather than short-term fluctuations in stock prices, the funds were well invested throughout the year despite the major market upheavals last year,” Hoo adds.

The Hong Leong Dana Makmur Fund aims to achieve consistent capital growth over the medium to long term by investing in undervalued companies.

According to its latest fund fact sheet (Feb 28, 2023), the fund invested 44.27% of its equity portfolio in the technology sector, followed by 29.43% in industrial products and services.

The Hong Leong Dana Maa’rof Fund, meanwhile, is primarily an Islamic balanced fund that seeks to achieve regular income and medium- to long-term capital growth.

Based on its latest fact sheet (Feb 28, 2023), the fund invested 41.38% in sukuk and 50.6% in shariah-compliant equities, with government sukuk (28.97%) and technology (23.87%) as the two biggest sectors.

It will continue to be challenging to manage these funds this year, as the economic outlook remains murky.

“Although it appears that the central banks have seen some success in stemming runaway inflation, we expect the battle to be prolonged and difficult. The global economic outlook is fragile while geopolitical risks remain high,” says Hoo.

The firm’s preference is to invest in high-quality companies in view of this challenging macro environment, he adds.

“We believe that companies that are able to have pricing power and are helmed by capable management who have a good track record in managing costs are likely to see their share prices outperform.”

This year, Hoo sees opportunities in the technology sector, particularly in electronic vehicles, data storage and 5G space. Funds under the firm are also fully invested as the firm does not try to time the market.

While investing in technology companies, HLAM itself has also embarked on its digitalisation journey in the past several years by being an early adopter of the online unit trust distribution system in Malaysia.

“In fact, digitalisation and automation are already ‘business as usual’ for us. We will continue to enhance our online platform HL iSmart Invest as part of our inclusiveness strategy to make investment and wealth management easy, simple and hassle-free for customers.”

The firm is also making its business operations more environmentally friendly. “In addition, as part of our sustainability journey, we aim to increase the use of e-communication with our investors to lower our carbon footprint,” he adds.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.