Dear unit holders,
As we are aware, there were interesting events influencing the market over the past few days including Malaysian political scene and Covid-19. As a respond to this uncertainties, domestic market fell significantly, with KLCI losing as much as 40 points (-2.6%) within one day and closed at 1490 level. This level had breached the previous technical support of 1517 points and 1500 points, implying further downside risk is imminent. FBM Shariah index on the other hand fell by -2.9% within one day. As our active equity funds are domestic-centric, our funds too had fallen together with market, losing between -1.7% to -2.6% during the day alone. As a respond to the negative market movement, we had undertaken steps to limit further downside in the NAV by trimming our equity positions especially in index-related counters.
Malaysia KLCI Index 24/2/2020 – 26/2/2020 (2pm) Source: Bloomberg
Globally, equity markets around the world were taken aback by the latest development regarding the novel coronavirus, Covid-19 and how it will affect global growth. Granted, China did a rather a good job in containing the virus from spreading to other China cities. However cases outside of China shot up, with countries like South Korea already declaring highest alert as infections surge while in the US, President Trump requested for USD2.5bn emergency fund to combat the spreading of the virus. Due to the risk-off sentiment, the US Dow Jones Industrial Index (DJIA) had dropped by as much as 1000 points or -3.6% on Monday, while MSCI All Country World Index fell by -0.75%.
^ as reported by TheEDGE Weekly on 24 February 2020
^^ as reported by BIMB Investment Finance Department as
at 24 February 2020
Our global equity shariah fund, the BIMB-Arabesque i Global Dividend Fund 1 (BiGDF1) recorded returns Year-to-Date (YTD) of between 2.16% to 6.35%^^ for the various currency classes reflecting its resilience despite market volatility due to its robust investment process. Since inception, BiGDF1 has performed and behaved as expected. Its momentum-driven strategy that rebalances its asset allocation by rotating its sector, country and market exposure DAILY according to the market sentiment, protects investors’ capital and deliver risk-adjusted outperformance over a full market cycle.
Our Global ESG-Sukuk fund, the BIMB ESG Sukuk Fund (BSF) recorded YTD returns up to 2.42%* across its various currency classes. Global Sukuk market has developed and matured, it has exhibited smaller drawdowns during market stress. This is one of the main expected beneficiary in times of heightened uncertainty due to its safer characteristics.
The BIMB-ARABESQUE Malaysia Shariah-ESG Equity fund (BMSEF) on the other hand, being a quantitative fund, will continue to be re-balanced monthly using its quantitative rules-based approach. This discipline would hopefully deliver consistent performance. BMSEF which had approximately 30% exposure in global equities fared better than the domestic-only funds with -0.36% to -0.8% NAV** change across the various currency classes.
Moving forward, our active domestic funds intend to be actively on the lookout for oversold counters with good prospects for NAV growth, while shying away from index-linked counters until there is more certainty regarding the political situation in the country. Over a longer time frame, the funds intend to diversify into international markets to benefit from a larger investable universe and reduced concentration risk.
During this uncertain times, we advise our unit holders to expect some volatility, invest smart by diversifying one’s investment, and look beyond the short term to achieve greater rewards in the long run, in shaa Allah. Our aim has always been to generate wealth for our unit holders. May Allah ease our journey.
* as reported by BIMB Investment Finance Department as of 24 February 2020 on BIMB ESG Sukuk Class C
** source: BIMB Investment Finance Department as of 24 February 2020
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Investors are advised to read and understand the contents of the Master Prospectus of
1.BIMB-ARABESQUE i Global Dividend Fund 1, dated 17 October 2019
2.BIMB-ARABESQUE Malaysia Shariah-ESG Equity Fund, dated 9 March 2017
3.BIMB ESG Sukuk Fund, dated 1 August 2018
and any Supplemental Prospectuses issued thereafter, which have been registered or deposited with the Securities Commission who take no responsibility for their contents, before investing. A copy of the Master Prospectus (including any supplemental prospectuses) can be obtained from the Head Office of BIMB Investment Management Berhad, authorized consultants or from our authorized distributors. You are also advised to read and understand the contents of the Unit Trust Financing Risk Disclosure Statement before deciding to borrow to purchase units. Past performance of the Funds are not an indicative of their future performance. The price of units and distributions payable, if any, may go down as well as up. Investors should also consider the fees, charges and investment risks involved before investing. Units are issued upon receipt of a duly completed application form referred to in and accompanying the Master Prospectus (including any supplemental prospectuses). Product Highlights Sheet (PHS) of the Fund is available and investors have the right to request for it. The PHS should be read and understood before making any investment decision. Investors should rely on their own evaluation to assess the merits and risks of the investment. If investors are unable to make their own evaluation, they are advised to consult professional advisers.
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