HLG Unit Trust Bhd, in the wake of the current weak and volatile equity market, is somewhat adopting a strategy different from most of its other competitors: investing in companies which it knows best rather than being concerned over the short term volatility of a company's stocks per se.
HLG Asset Management Sdn Bhd executive director and chief investment officer Ivan Tham said most of the investors were subscribing to a particular theory that said risk was measured by volatility.
“According to the theory, the more volatile a particular stock is, the more risky it is. We like to take a different view. If a particular stock drops quite steeply, it does not mean that it is a risky stock; on the contrary, it may open up an opportunity for us to buy since it is cheaper now.
“We essentially do not buy companies which we know nothing about. As a fund manager of HLG Unit Trust, the company will take into account certain factors before investing. These include a good understanding of the company and the industry as a whole, its suppliers and competitors as well as its customers,” he said in an interview with StarBiz.
Tham said that due to the current uncertainty fuelled by the US-led coalition war on Iraq, there had been a steady demand from investors for bonds and fixed income funds.
To this end, he added, the company's strategy was to invest into short and medium-term bonds (five years or below) rather than long-term papers which tended to be more susceptible to volatility.
According to him, investing into good quality papers or bonds is important as it would provide investors with good returns. On the equity side, it is looking into investing in companies with good cash flows, sustainable businesses and good business models.
The company is also looking into investing in companies which are undergoing restructuring or involved in some form of consolidation. HLG Unit Trust's exposure is currently on the average about 70% to 75% in equity funds and the balance in liquid assets. The company plans to take advantage of this uncertain volatile market condition to pick up good stocks.
Some of the sectors which the company is looking into investing are trading and services, gaming and selected construction counters.
HLG Unit Trust, which recently bagged an award for its HLG Penny Stock Fund under the equity Malaysia sector (three-year period) at The Star/Standard & Poors Investment Funds Award Malaysia 2003, to date has 13 funds with a total fund size of RM1bil (as at April 2).
The company recently launched its two new Islamic funds, namely the HLG Dana Maa'rof and HLG Dana Munir. The former is an Islamic balanced fund and the latter is an Islamic fixed income fund.
The Dana Maa'rof, which is generally a conservative fund, can invest up to 60% of its portfolio in equities and the balance in fixed income securities. The Dana Munir can invest up to 95% of its portfolio in fixed income securities and the remaining in liquid assets.
Asked on the response to these funds, HLG Unit Trust chief executive officer and general manager Tye Su Leng said the response had been encouraging although the funds were launched at the time of the outbreak of the US-Iraq war.
She added that the new funds would add diversity to its Islamic investment options for its investors and complement its earlier HLG Dana Makmur Fund (an Islamic equity fund).
According to her, investors are also given the option to invest via the company's investment packages that are tailored to suit the needs of the more aggressive investors as well as investors who prefer a more cautious approach to investing.
Investors who invest via the HLG Aggressive Investment Package during the fund's initial offer period (from March 25 until April 14) would receive an additional 4% in the form of bonus units in their Dana Munir investments while the HLG Conservative Package offers an additional 1% in the form of bonus units in the HLG Dana Munir.