Absolute Return Fund III

Transcription

1 Affin Hwang Absolute Return Fund III Quarterly Report 30 September 2016 MANAGER Affin Hwang Asset Management Berhad ( T) TRUSTEE TMF Trustees Malaysia Berhad ( W)

2 AFFIN HWANG ABSOLUTE RETURN FUND III Quarterly Report and Financial Statements As at 30 September 2016 Contents Page QUARTERLY REPORT... 2 STATEMENT OF COMPREHENSIVE INCOME... 5 STATEMENT OF FINANCIAL POSITION... 5 STATEMENT OF CHANGES IN EQUITY

3 QUARTERLY REPORT MANAGER S VIEW ON PORTFOLIO & MARKET Fund Type, Category, Objective and Distribution Policy Fund Type Category Objective Distribution Policy Benchmark Growth Mixed Asset (Wholesale) The Fund seeks to provide Unit Holders with long-term capital appreciation. The Fund is not expected to make distribution. However, incidental distribution may be declared whenever is appropriate. 8% per annum Performance of the Fund (1 July September 2016) For the period under review from 1 July 2016 to 30 September 2016, the Fund registered a return of 7.33%. Compared to the Benchmark return for the same period of 1.96%, the Fund outperformed the Benchmark by 5.37%. The Net Asset Value (NAV) per Unit of the Fund as at 30 September 2016 was RM compared to the NAV per Unit of RM as at 30 June On total NAV basis, the Fund s NAV stood at RM million as at 30 September (See Table 1 for performance of the Fund and Figure 1 for movement of the Fund versus the Benchmark respectively.) Table 1: Performance as at 30 September Months (1/7/16-30/9/16) 6 Months (1/4/16-30/9/16) 1 Year (1/10/15-30/9/16) Since Commencement (9/12/14-30/9/16) Fund 7.33% 9.65% 10.49% 15.40% Benchmark 1.96% 3.93% 8.02% 14.98% Outperformance / (Underperformance) 5.37% 5.72% 2.47% 0.42% Source of Benchmark: Bloomberg Table 2: Volatility as at 30 September Year Fund N/A The data for a 3-year annualized volatility as at 30 September 2016 is not available as the Fund has yet to record 3 years of performance data. A 3-year annualized volatility is a global standard used to report on Fund volatility as shorter time period would not provide a stable representation as well as being too sensitive to additional data points. 2

4 Figure 1: Movement of the Fund versus the Benchmark Percentage Growth (%) Affin Hwang Absolute Return Fund III Benchmark -1 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 This information is prepared by Affin Hwang Asset Management Berhad for information purposes only. Past earnings or the Fund s distribution record is not a guarantee or reflection of the Fund s future earnings/future distributions. Investors are advised that Unit prices, distributions payable and investment returns may go down as well as up. Source of Benchmark is from Bloomberg. Benchmark: Absolute return of 8% per annum Strategies Employed The Manager took on a more aggressive stance for the Fund, maintaining a higher exposure into the market over the period under review. Focus had remained primarily within the ASEAN markets on the back of aggressive government initiatives on infrastructure development projects. The Manager had maintained a portfolio tilted into equities, and remained focused on bottom-up stock selection to maintain a sustainable long term investment portfolio as we brace for more volatile market conditions in the interim. Asset Allocation For a snapshot of the Fund s asset allocation during the period under review, kindly refer to Figure 2. Figure 2: Summary of Asset Allocation Asset Allocation 30 September June March 2016 Equities 85.21% 70.65% 73.84% Fixed Income 14.19% 9.19% 4.30% Deposits / Cash 0.60% 20.16% 21.86% Total % % % Market Reviews The period under review proved to be filled with surprises for the global financial markets. The shocking vote by the United Kingdom ( UK ) to exit the European Union through the Brexit referendum led global financial markets to an immediate negative reaction. Though markets were quick to recover from the sell-off, the World Bank later lowered its global growth forecast for 2016 to 2.4% in July, from the initial 2.9% it forecasted in January. The decision was said to be attributed to the sluggish growth seen in the advanced economies, persistently low commodity prices, weaker global trades, as well as diminishing capital flows. 3

5 While the US Federal Reserve had decided to keep its rates unchanged in its September meeting, talks continue to intensify that a rate hike is on the cards, and will likely take place before the year end. The US Dollar had continued its upward trend since mid-august, and had continued to influence financial markets over the period under review. The Asian region ended the quarter on higher ground, recorded a gain of 9.4% in local currency terms, outpacing the broader World index which trended 4.4% higher over the same period. The stronger performance was largely led by the improvement in China s equity markets on the back of stabilisation signals. Purchasing Manager s Index shifted back into expansion, albeit at a marginal 50.1 reading as at end-september. After suffering from a sell-off in the earlier part of the year, China s equities looked to have regain its footing. The MSCI China Index and the Hang Seng China Enterprise Index rose 13.4%, and 10.0% respectively in local currency terms over the period under review - outpacing most of its regional peers. ASEAN markets suffered a sell-down as investors locked in gains after enjoying a stellar run in the earlier part of the period under review. Nevertheless, the Indonesian equity market remained relatively resilient as investors remain optimistic that the government's continued efforts on structural changes will be beneficial for the economy over the longer term. Its recent tax amnesty bill, which is expected to rake in a revenue of more than USD300 billion for the government, was seen as a positive move on the government s part. A bulk of the targeted revenue is expected to flow into infrastructure spending, a sector which has been at the forefront of the central government plans. In the Philippines, President Duterte s administration had also taken a more aggressive stance, targeting 7% of the economy s GDP to be spent on infrastructure development. However, the lack of clarity on the President s policy stance had wavered investors confidence. Closer to home, murmurs of a possible election taking place in the near-term had provided a boost in the KLCI s performance, which had largely trudged along over the period under review after concerns surrounding the 1MDB debacle continued to cloud over the market. A surprise OPR cut by the central bank in July, while shocking to markets, was also taken in positive light by investors. Weak oil prices, and the ongoing strength of the US Dollar dampened market s sentiment, leaving the FBM KLCI slipping 0.1% lower in local currency terms in the 3-months ending September. On the fixed income front, Asian credits remained well supported over the quarter. With an estimated 30% of global government bonds trading at negative yields, Asian issuances remain comparatively attractive. US 10- year treasury yields climbed from 1.47% to 1.59% over the period under review. Investment outlook We expect the accommodative monetary policies being adopted by global central banks to continue to provide support for markets with its continued flood of liquidity into the system. As volatility is expected to remain on the back of the on-going market uncertainty, we will be maintaining a more cautious view on the market in the near term. The Manager maintains a constructive longer-term outlook on the ASEAN markets despite valuation looking unappealing at the moment. Nevertheless, we hold an optimistic view on the infrastructure sector, and will be looking for opportunities on market pullbacks. The Fund will also be looking to selectively add portfolio exposure into China on the back of stabilising growth. We also believe that there are opportunities to increase exposure into the domestic market given the resilient domestic consumption. The Fund is currently tilted into income yielding stocks, given the current backdrop of slow growth and low interest rate environment. Nevertheless, focus remains on fundamentally strong companies that will likely provide more resilience under the persistently unpredictable market condition. We are, however, lowering our expectations on growth returns from investments given the current environment, which we believe may persist in the medium term. 4

6 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2016 INVESTMENT INCOME/ (LOSS) Financial Financial period ended period ended RM RM Dividend income 117, ,713 Interest income 132,064 22,416 Net (loss)/ gain on foreign currency exchange (56,801) 1,434,214 Net loss on forward foreign currency contract at fair value through profit or loss - (35,104) Net gain/ (loss) on financial assets at fair value through profit or loss 3,520,398 (2,168,037) 3,713,485 (561,798) EXPENSES Management fee (142,334) (174,842) Trustee fee (6,723) (6,411) Auditors remuneration (1,765) (1,760) Tax agent s fee (933) (892) Transaction costs (81,481) (129,330) Other expenses (54,490) (37,810) (287,726) (351,045) NET PROFIT/ (LOSS) BEFORE TAXATION 3,425,759 (912,843) TAXATION (7,066) (2,341) NET PROFIT/ (LOSS) AFTER TAXATION AND TOTAL COMPREHENSIVE INCOME/ (LOSS) FOR THE FINANCIAL PERIOD 3,418,693 (915,184) Net profit/ (loss) after taxation is made up of the following: Realised amount 894,843 (1,101,130) Unrealised amount 2,523, ,946 3,418,693 (915,184) STATEMENT OF FINANCIAL POSITION 5

7 AS AT 30 SEPTEMBER 2016 ASSETS RM RM Financial assets at fair value through profit or loss 48,855,485 29,184,998 Cash and cash equivalents 2,397,898 10,881,738 Dividend receivables 20,645 2,700 Amount due from Manager - creation of units - 39,824 Amount due from brokers 133, ,330 TOTAL ASSETS 51,407,827 40,569,590 LIABILITIES Forward foreign currency contract at fair value through profit or loss - 35,104 Amount due to Manager - management fee 40,703 49,326 - cancellation of units 1,007,750 Amount due to Trustee 2,239 1,809 Amount due to brokers 1,211,233 - Auditors remuneration 8,765 8,760 Tax agent s fee 8,083 7,992 Other payables and accruals 9,564 5,990 TOTAL LIABLITIES 2,288, ,981 NET ASSET VALUE OF THE FUND 49,119,490 40,460,609 EQUITY Unitholders capital 44,210,103 40,303,416 Retained earnings 4,909, ,193 NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 49,119,490 40,460,609 NUMBER OF UNITS IN CIRCULATION 85,136,000 77,486,000 NET ASSET VALUE PER UNIT (RM)

8 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2016 Unitholders Retained capital earnings Total RM RM RM Balance as at 1 July ,577,154 1,490,694 47,067,848 Total comprehensive income for the financial period - 3,418,693 3,418,693 Movement in unitholders capital: Creation of units arising from applications 1,574,390-1,574,390 Cancellation of units (2,941,441) - (2,941,441) Balance as at 30 September ,210,103 4,909,387 49,119,490 Balance as at 1 July ,735,078 1,072,377 50,807,455 Total comprehensive loss for the financial period - (915,184) (915,184) Movement in unitholders capital: Creation of units arising from applications 1,891,902-1,891,902 Cancellation of units (11,323,564) - (11,323,564) Balance as at 30 September ,303, ,193 40,460,609 7

9 Affin Hwang Asset Management Berhad ( T)