Stock picking strategy at its best
This year marks a year of home runs for Kenanga Investors Group, as the Kuala Lumpur-based asset manager won five awards during Asia Asset Management’s 2023 Best of the Best Awards.
One of the five awards was Best Equity Manager (Malaysia). Kenanga Investors Group Executive Director and Chief Executive Officer Ismitz Matthew De Alwis says the award reflects the investment team’s “effective stock picking strategy”.
“Given our growth focus, we have invested in many small and mid-cap companies that delivered strong earnings growth over the years. On the ground research of these companies and sectors have enabled us to hold positions for the long term in the sector,” De Alwis says.
2022 was a challenging year for many investors, partly driven by high inflation and rising interest rates globally. Despite the challenging landscape, Kenanga Investors managed to grow its assets under management from 18.78 billion ringgit (US$4.26 billion) in 2021 to 21.26 billion ringgit in 2022.
De Alwis attributes the growth to its investment philosophy – which is founded on the conviction that fundamental research coupled with a relative value approach can generate consistent superior risk-adjusted returns.
“Our methodology is supported by a thorough research process that encompasses an understanding of industry dynamics, as well as the individual company’s business model and drivers of return on equity.
“When formulating a company’s investment thesis, we typically conduct channel checks on its competitive advantages and attempt to model out its growth drivers. Key areas of focus for us include management quality, sustainable business models, industry dynamics, and balance sheet strength.
“Our adherence to this strategy has led to consistently outperforming returns for our funds over the last three, five and ten years,” says De Alwis.
As one of the pioneers in the area of alternative funds in Malaysia, De Alwis is pleased to see the company win the Best House for Alternatives (Malaysia) award. He says the company’s alternative investment journey began in 2017 with the launch of the Kenanga Global Multi Asset Fund.
The fund leverages breakthroughs in artificial intelligence (AI) to identify profit opportunities from short-term predictive relationships in pricing and volume data.
“It then constructs portfolios with a focus on capital preservation based on forecasts of instruments’ movements. Investments may appreciate or decline with a much greater velocity due to various sentiments. However, in an AI model, these sentiments are put aside, and investment decisions are based solely on its unique algorithm which spots opportunities in asset mispricings. The AI system learns and improves over time to achieve investors’ objectives,” he says.
Since then, the company has launched various alternative funds, including the Kenanga Global Unicorn Series (KGU) and the Kenanga Sustainability Series: Frontier Fund (KSSFF).
“We have also expanded our offerings to include alternative investments such as equity wrappers and private debts. These new investment options offer the potential for higher returns while diversifying investors’ portfolios,” he says.
“In 2023, we plan to continue expanding our suite of alternative investments with a focus on providing sustainable and socially responsible investment opportunities for our clients.”
Commenting on the company’s award for Best Impact investing Manager (Malaysia), De Alwis says that impact investing has made significant strides, especially during the Covid-19 pandemic.
“Although impact investing is a relatively new concept to many Malaysians, investors are beginning to recognise the potential in generating positive social and environmental impact while receiving favourable financial returns,” he says.
He adds that the company remains committed to diversification and sustainability and plan to further expand its Kenanga Sustainability Series.
“Depending on the prevailing conditions such as market conditions, product sustainability, headwinds, constraints, and resources, we plan to launch a new impact investing fund. The fund, among others, will focus on waste and water, the two most pressing issues affecting the world today,” he says.
This year, Kenanga Investors also won the Most Improved Fund House, while De Alwis won the title of CEO of the Year (Malaysia).
De Alwis says the company’s success is driven by “a relentless pursuit of excellence in everything we do. We constantly strive to innovate and improve our products and services, while maintaining a focus on delivering exceptional value to our investors”.
“We have built a culture of collaboration, creativity, and accountability, which empowers every member of our team to contribute their unique talents and ideas towards achieving our shared goals. We truly believe that diversity is strength, our differences and diversity make us stronger as a company,” he concludes.