CONSIDER this scenario: A professional in her mid-30s with two children is considering to invest with the aim of achieving stable dividends and accumulate funds for the children’s education.
But due to lacklustre market conditions and a wide array of investment options out there, sometimes it can be overwhelming or challenging to decide on the best suited investment choice with minimal risk.
In this situation, there are two ways that Maybank Asset Management (MAM) can construct a product to cater to this individual’s investment needs – a mixed asset fund or a portfolio of existing funds.
A mixed asset fund can consist of equities, fixed income, money markets and alternative funds.
Unit trust funds have withstood the test of time, providing exposure to equity markets and a diversified portfolio, with smaller sums of investment.
MAM is ramping up its foray into the retail segment, as it recognises the need to cater to the growing demand for financial advisory and investment for education and retirement planning in Malaysia.
This is backed by the growing middle class and improvement in standards of living with higher disposable income.
Maybank Asset Management Sdn Bhd CEO Ahmad Najib Nazlan (pic) speaks to BizWealth about addressing the needs of retail investors, plans for the year ahead, and outlook on the market.
Q: In theory, how would MAM construct its products to cater to an individual who is looking for stable dividends and savings for his or her child’s education?
A: A mixed asset fund made up of equities and fixed income would be appropriate for an investor looking for a stable income and also wishes to accumulate his fund for a specific goal.
For example, the fund could invest in investment grade bonds where it provides a consistent dividend payout and have minimal default risks, allowing the fund to provide a stable income to the investor.
The fund could also invest in high dividend yielding blue chip equities which yields a consistent dividend payout as well as potential capital appreciation.
This allows the investor to reach their investment goals faster compared to investing only in fixed income which offers more conservative returns.
On the other hand, MAM could also design a portfolio consisting of its existing funds to meet clients’ needs and goals.
For example, a portfolio consisting of three funds that we have now – the MAMG Global Shariah Income Fund provides income distribution on an annual basis, while the Maybank Dividend Trust Fund offers clients a consistent dividend as well as potential capital appreciation through investing in high dividend yielding equities.
Another portion of the portfolio invested in the Maybank AsiaPac Ex-Japan Equity-I Fund could boost the investor’s capital appreciation by investing in syariah-compliant equities in Asia Pacific excluding Japan.
What sets MAM’s unit trust products apart from other funds?
Our value proposition is that MAM has established strategic partnerships with reputable global asset managers which allows us to tap on their expertise and provide clients products with global exposure.
This year alone, we have partnered with BNY Mellon Investment Management and Schroders, which have assets under management (AUM) of US$1.77 trillion and US$593bil.
Our other global partners include Hong Kong’s Value Partners Group Ltd and Italy’s Azimut Group.
Thus, we get access to more than 300 investment strategies that are in line with MAM’s vision and investment process, which covers both conventional and syariah perspectives.
When we seek out a partner, we like to see that they have a unique investment strategy and have a presence in markets that we are not in.
Generally, what kind of returns can clients expect to get through MAM’s unit trust products? What are your signature or best selling products?
It all depends on our clients’ risk profiles.
The general rule is that if you chase higher returns, then the degree of risk follows suit.
The returns for equities range from 8% to 12% per annum, fixed income at 4% to 5.5% per annum, and money market at 2.7% per annum.
MAM also has products exposed to the alternative investment space, to the likes of private equity, direct lending and real estate.
Returns from this segment are usually higher as it is generally considered as a riskier asset class.
Some of MAM’s most popular offerings include the Maybank Constant Income Fund, a three-year close-ended bond fund, and the Maybank Dividend Trust Fund, which targets both capital appreciation and regular income stream by investing in high yielding equities.
What new retail funds does MAM have in the pipeline?
We expect to launch at least three to five retail funds in 2019, depending on market conditions.
Some of the funds would be internally developed while others would be developed with our strategic partners where we aim to provide the Malaysian investors innovative solutions, mainly in the alternative and global segments; these are not offerings that are easily found in the Malaysian market right now.
Can you elaborate on some of MAM’s investment strategies? Which sectors have the greatest appeal?
Our core strategy is to invest in companies with very strong fundamentals, solid business models with good earnings visibility, strong cash flow generation and have the ability to provide certainty in paying out dividends.
Considering the heightened volatility and lower growth environment, our strategies will be skewed towards these core stocks and less concentration on growth or cyclical stocks.
Certain sectors that we think can weather the current volatility better than the rest of the market are Banking, Consumer and Utilities.
The expansionary Budget 2019, which also include the RM37bil tax refund may also provide a boost to these sectors as people may have higher liquidity and with this money, provide a good multiplier impact to the economy.
What is your view on capital markets and how do you foresee it to be next year?
Equity markets will continue to be very volatile in 2019 during the adjustment period due to the risk premium on the government’s ability to balance between fiscal position and clarity of policies.
The strong headwinds coming from global events are not helping in calming Malaysian markets either.
The fixed income market will be well supported, especially during this volatile period since investors may opt for quality and certainty of income from this asset class, at least to reduce volatility of their portfolio.
With a total of 42 funds currently available, of which 30 are conventional funds and 12 are syariah-compliant, MAM strives to be an asset manager that not only provides relevant and transparent solutions, but also doing it in a cost effective way.
In fact, MAM does not have to rely on agents to sell unit trust products which keeps costs as low as possible.
Prospective investors can simply go to any Maybank branch to inquire about the products and purchase them.
The solutions offered are always designed with the investors’ needs in mind, Ahmad Najib says.
“There is a demand for price efficiency and investors today are tech-savvy – some of them want to do their own research.
“Hence, a combination of direct, branch and online services is the way forward as it would cater to the different needs of investors,” he says.
Over the next few years, MAM aims to achieve a 20% to 25% compound annual growth rate in AUM, through the expansion into retail markets, strategic partnerships, building up its digital capabilities, as well as strengthening its position as Asean’s leading Islamic asset manager.
As at Sept 30, 2018, MAM’s AUM stands at RM33.7bil.