Positive and sustainable growth
The uncertain climate that clouded the financial sector in the three-year Covid-19 pandemic has also ushered in a period of fund inflows for Malaysian asset manager AmFunds Management Berhad and AmIslamic Funds Management Sdn. Bhd. (“AmInvest”), the funds management business of one of the country’s biggest financial groups AMMB Holdings Berhad. The firm was named multiple bests in Malaysia in Asia Asset Management’s (AAM) Best of the Best 2023 Awards, namely Best Bond Manager; Best Pension Fund Manager; Best Sukuk Manager; Best Environmental, Social and Governance (“ESG”) Engagement Initiative; Best Institutional House; Islamic Institutional House; Best Performance Award: Asian Real Estate Investment Trusts (“REITS”).
In fact, inflows into AmInvest products reached a record high in 2020, as investors invested in funds, AmInvest chief executive officer Goh Wee Peng told AAM, in part as a result of the Malaysian government’s moratorium on loan repayments to help businesses and individuals bridge the adverse impacts of the pandemic.
“Compared to the rest of the world, [local] asset management houses did well during Covid,” Goh says.
“Not only did we see the Malaysian equity market rally, but the bond markets as well. We also saw record inflows. Initially, I think all asset managers were worried at the beginning of the pandemic, because of the many issues facing us, but I would say the entire [asset management] industry coped well.”
Goh says the pandemic also accelerated the sector’s digital transformation. “We had all talked about digital transformation but somehow it took until Covid to kick in.”
This also boosted AmInvest’s pace of digital sales and onboarding numbers by a “few hundred percent” over the last two years, Goh says, adding that the firm’s profit after tax doubled in the past four years.
However, she warns that the recent banking crisis that began with the collapse of the Silicon Valley Bank (“SVB”) and Credit Suisse being taken over by UBS has rattled Malaysian investor sentiment somewhat. Investors are showing signs of a “holding their breath” attitude, according to Goh.
Like many industry players, AmInvest had anticipated that with the Federal Reserve and other central banks easing on interest rate hikes, “the end of the tunnel of [global] recovery would start to kick in in the second half of this year, including the equity market”. Goh believes it will now take a while for overall global investor confidence to recover.
That said, she points out that Malaysian investors are generally less affected as they are mainly focused on local Malaysian ringgit products and the domestic markets.
Nonetheless, AmInvest remains mindful and is closely tracking the impact of the global climate to fine tune and respond to local market needs. For instance, for the time being, it is shelving a global equity sustainable and responsible investment (“SRI”) qualified fund, which was scheduled to launch earlier this year.
Fortunately for AmInvest, the bulk of its assets under management are in local ringgit while non-ringgit assets constitute a small percentage. “We are staying in a very cautious mode. We are even seeing some of our investors pulling out money from domestic bond funds,” Goh says, attributing this to general negative sentiments as a result of SVB’s collapse and the UBS-Credit Suisse merger.
However, she expects positive growth to sustain over the next two years, driven by demand from investors who perceive AmInvest products as the go-to funds for delivering consistent results with a positive track record. It helps that the firm is also the biggest bond fund house in the country.
“Of course, we have the same team of senior management and fund managers dealing with investors’ money, so confidence levels remain strong”, she adds.
Anticipating a challenging market in the next two years, the firm is set to “make tweaks” to existing funds so that they remain in line with market trends and will continue to appeal to investors, such as the preference of dividend yields in volatile markets over the past two years.
To cater to the needs of a younger generation of investors who may place more emphasis on responsible investing, AmInvest has accelerated its ESG journey to build its methodology and framework. So far, it has launched seven SRI qualified funds.
“We are also in the midst of converting a lot of our existing funds to become SRI qualified as well. We are working to ensure that the overall transformation, from the business strategy through to the execution of our funds are managed responsibly and sustainably over the longer future. This will be our key driver looking forward.”