Eastspring Investments takes home four awards

This article first appeared in Wealth, The Edge Malaysia Weekly on March 27, 2023 - April 2, 2023

Eastspring Investments (EI) Bhd bagged four Refinifiv Lipper Fund 2023 awards for their equity and fixed income funds.The Eastspring Investments Asia Select Income Fund won Best Mixed Asset MYR Balanced - Global (Malaysia) in the 10-year category; the Eastspring Investments Balanced Fund won Best Mixed Asset MYR Balanced - Malaysia (Malaysia) in the three- and 10-year categories; and the Eastspring Investments Islamic Equity Income Fund won Best Equity Malaysia Income (Islamic) in the three-year category.

Its head of investments Doreen Choo says the firm’s disciplined, valuation-and-research-driven investment style generated attractive returns for their clients over the long run.

“We derive intrinsic values based on valuation, growth and cash flow analysis, and we have a quality bias for companies with strong balance sheets, good earnings visibility and sound management,” Choo says.

“Security mispricing driven by investors’ ‘greed and fear’ is an enduring phenomenon that can be successfully exploited through our long-term investment approach. Value opportunities are also created by cyclical extremities in interest rate and credit markets or shifts in investor risk perception, which result in the mispricing of assets relative to fundamentals.”

We were more positive on corporate bonds versus government bonds on a risk-adjusted basis and tactically adjusted our portfolios’ interest rate risk exposures in an increasing interest rate environment.” > Choo

For equities, 2022 was a volatile year, with many markets in the red, and the Malaysian market was no exception. Choo says some of EI’s holdings, which have good fundamentals, also suffered heavy selling because of poor market sentiment.

“Yet, we continue to focus on our investment philosophy. Good stock selections have helped our overall fund performance. In fact, most of our equity funds did relatively well against peers and showed resilience in a down market.”

Meanwhile, for fixed income, the significant increase in global bond yields driven by high and sticky inflation forced a major repricing across almost all financial markets. Choo says against a backdrop of sharply higher global yields, the Malaysian bond market exhibited a certain amount of resilience, given the ample liquidity of domestic bond market participants and lower domestic inflation, owing to significant government intervention in prices.

“We were more positive on corporate bonds versus government bonds on a risk-adjusted basis and tactically adjusted our portfolios’ interest rate risk exposures in an increasing interest rate environment.”

The EI Balanced Fund and EI Islamic Equity Income Fund were correctly positioned in the glove sector rally and subsequent sharp correction, says Choo. The former took a defensive stance by reducing exposure to high-growth sectors on the back of higher geopolitical tensions and the US Federal Reserve’s aggressive monetary policy tightening stance, whereas the latter benefited from economic reopening plays.

The EI Asia Select Income Fund’s fixed income investments in corporate bonds benefited from the complete reopening of the economy, which contributed to its performance. Choo says against a backdrop of higher global inflation and interest rates, the fund also tactically managed interest rate risks.

For the fund’s equity investments, the best call it made was to overweight China. “This was a contrarian bet that hurt performance for the first nine months of the year but our patience, underpinned by our value focus, paid off eventually,” she says.

Choo is cautiously optimistic about 2023. “China’s reopening should partially cushion the slowdown in global growth. Nevertheless, we are mindful of the potential escalation of geopolitical risks in Ukraine and the Sino-US spats, which may destabilise global trade flows and financial markets. Thus, the fund seeks a defensive investment approach, as we expect value and growth rotational themes to remain in play this year,” she says.

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