This article first appeared in Wealth, The Edge Malaysia Weekly on March 25, 2024 - March 31, 2024

Kenanga Investors Bhd (KIB) has bagged two individual awards at the LSEG Lipper Fund Awards 2024.

Maintaining its impressive track record, the Kenanga Malaysian Inc Fund won the Best Equity Malaysia Diversified Fund award and the Kenanga OneAnswer Investment Funds — Kenanga Diversified Fund took the Best Mixed Asset MYR Flexible Fund award on March 6. Both funds won in the 10-year category of the Malaysia Provident Funds universe.

KIB executive director and CEO Datuk Ismitz Matthew De Alwis attributes the wins to the firm’s comprehensive research process that allows them to understand industry dynamics, companies’ business models and factors that influence returns on equity.

“Our deep understanding of fundamentals allowed us to size positions effectively across portfolios. Investments in the construction, utility and regional technology sectors were particularly successful, playing a crucial role in our achievement,” he says.

Chief investment officer Lee Sook Yee says the best decision the firm made in 2023 was to buy YTL Power International Bhd shares early in the year. “Based on its [YTL’s] power division’s anticipated turnaround, it was among our best calls. Another notable investment was in Alchip Technologies, a key player in ASIC (application specific integrated circuits) chips for AI (artificial intelligence) servers, which also contributed to portfolio returns.”

Taipei-headquartered semiconductor giant Alchip provides system-on-chip (SoC) design solutions for products such as consumer electronics, optical networking and medical imaging equipment.

Last year, the fund house’s asset allocation strategy was characterised by its balanced approach, considering both the potential for a positive earnings recovery and key risks such as China’s slowdown, rising US interest rates and domestic political uncertainties, says Lee.

The firm opted for a relatively neutral stance, avoiding excessive trading or frequent rebalancing activities. Instead, it focused on bottom-up stock picking with a long-term perspective, aiming to capitalise on promising opportunities while managing risks effectively.

In the light of the current economic outlook this year, the firm’s fund managers are adopting a strategic approach to managing funds. They favour equities and pick stocks selectively based on their tried-and-tested research methods.

“We are adopting a tactical overweight position in equities, driven by a positive outlook on the asset class. However, we remain ready to adjust allocations and take profit as market conditions evolve. Nonetheless, our overall strategy remains consistent by focusing on bottom-up stock picking for the longer term,” De Alwis asserts.

Looking ahead, KIB is eyeing promising opportunities in various sectors. The semiconductor industry currently stands out, fuelled by the growing demand for AI technology.

“AI adoption is in its early stages globally, with enterprises and governments looking to ramp up deployments this year. Domestically, we see improving momentum on policy execution,” he says.

Policy execution by the Malaysian government is another reason the fund house is positive on sectors like construction, property development and renewable energy, says De Alwis.

“We are also more positive on the local tech and manufacturing sector, given the anticipated recovery of global smartphone and PC (personal computer) sales after two years of downturn. Overall, within a regional context, we are overweight on Malaysia this year,” he adds.

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