UOB Asset Management (M) Bhd again landed a winning spot at the 2022 Refinitiv Lipper Fund Awards, with two fund awards this year.
The company’s United Asean Discovery Fund won the Best Equity Asean (Malaysia) award and the United Bond & Equity Strategic Trust Fund won the Best Mixed Asset MYR Balanced — Global (Malaysia) award in the three-year category.
CEO Lim Suet Ling credits the success to the fund house’s bottom-up approach, which focuses on fundamental business analysis, which has helped it navigate volatile market conditions.
“In cases where we have uncovered insights through our research, this would translate to high active shares in portfolios. Historically, stock selection has been a major contributor to outperformance and has been a key factor in fund rewards managed,” says Lim.
She says that UOB Asset Management is style-agnostic in its investment strategies, which gives the team the flexibility to choose an optimal style to achieve its investment goals.
Both victories did not come without challenges, however. Lim says the biggest came in the form of an uneven economic recovery as the country recovered from the aftermath of the coronavirus pandemic and political upheaval. But the firm has been able to use it to its advantage.
“We have seen the uneven economic recovery and political flows as passing issues. Weak market conditions presented us with a buying opportunity. The investments paid off as businesses ultimately benefited from economic reopening and a reduced risk premium when there was greater clarity on policy,” Lim says.
Despite the turmoil, the company has not made any significant rebalancing of asset allocations. “As we are still in the early stages of the recovery cycle and supported by supportive government policies, we have been well invested over the period,” she says.
Lim hopes policymakers will continue supportive policies to allow fund managers to navigate the lingering volatility. “We believe the biggest issue for asset returns in 2022 will be government policy rather than economic growth.”
Apart from that, Lim says geopolitics could affect short-term returns, following the Russian invasion of Ukraine. Over the longer term, she expects the gradual tightening of monetary policies around the world to hurt returns.
She says: “As economies have recovered and inflation remains elevated, we expect many central banks to tighten monetary policy, which could hurt asset returns.
“Historical evidence suggests that U.S. equities have positive returns on average during tightening cycles, although lower than returns during periods of accommodative monetary policy.
“In 2020 and 2021, the global stock market posted double-digit returns supported by government stimulus measures. In 2022, we expect returns to be more modest as some of the stimuli are reduced. »
In a rising rate environment, however, UOB Asset Management expects sectors such as financials to outperform while sectors such as utilities will lag, given the past performance of these sectors.
“With regard to fixed income, we would be slightly below duration neutral. We prefer Malaysian ringgit-denominated debt to US dollar-denominated debt, given more modest rate hike expectations for the first We favor corporates over government issues for a recovery in yield and better credit metrics with macro improvement,” Lim says.