Head of Research, Wealth Management, OCBC Bank Malaysia
Member of OCBC Wealth Panel
Our preference for a carry strategy continues amid the positive outlook for credit assets, although gains surpassing that of the last one and half years will be difficult to achieve. The default outlook for higher-yielding papers remains benign, but investors are better advised to move up in terms of credit quality.
Our moderately defensive investment stance favours high yield bonds for potentially higher returns. On bonds, we remain positive on Emerging Market and Developed Market high yields. We are however, negative on Emerging Market Investment Grades (from Neutral previously).
We are still negative on Japan and Asia ex-Japan equities, but neutral on the U.S. and Europe equities markets.
Top Investment Ideas
Unit Trust: RHB Asian High Yield Fund – RM (Risk rating: High)
Eligibility: High Net Worth Investors Only
This fund invests in a target fund, the Fidelity Funds – Asian High Yield Fund and is suitable for investors seeking capital growth and income and long term capital growth. The fund invests primarily in high yielding bond issuers which have principal business activities in the Asian region. Asian high yield bonds feature higher yield and better potential upside with lower default rate and duration compared to other high yield markets. This high yield feature also entails a higher spread which should provide a buffer against spread compression in a rising interest rate environment.
Unit Trust: Affin Hwang Select Income Fund (Risk rating: Moderate)
Eligibility: Retail and High Net Worth Investors
Suitable for investors seeking to invest in an income-driven, absolute return focused fund. This fund also targets to provide a high level of cash flow as well as growth by investing at least 70% of its NAV into fixed income instruments and a maximum of 30% NAV into equities globally with an Asian focus.
Unit Trust: RHB Asian Income Fund (Risk rating: Moderate)
Eligibility: Retail and High Net Worth Investors
This fund invests in one target fund, the Schroder Asian Income fund and is suitable for investors seeking income and capital growth over the medium- to long-term via an active allocation strategy. Exposure in Asia is opportunistic as we view Asia being in a relatively strong position with a high level of foreign reserves, limited external debt, undervalued exchange rates and plenty of policy flexibility.
Unit Trust: Affin Hwang Global Balanced Fund (Risk rating: Moderate)
Eligibility: Retail and High Net Worth Investors
Investors seeking capital growth opportunities through a portfolio of collective investment schemes with access into equities listed in global markets, fixed income instruments such as debt securities, money market instruments and fixed deposits, issued globally may consider this fund.
|Top Investment Ideas are an expression of the investment outlook in this publication. They are not recommendations made in accordance with your investment objective and risk profile. As such, we recommend that you complete a suitability assessment before purchasing your selected investment product.|
Any opinions or views expressed in this material are those of the author and third parties identified, and not those of OCBC Bank (Malaysia) Berhad (“OCBC Bank”, which expression shall include OCBC Bank’s related companies or affiliates).
We recommend that you read and understand the contents of the Information Memorandum for the RHB Asian High Yield Fund – RM dated 8 June 2015, by RHB Asset Management Sdn Bhd. Investments in the Fund are exposed to management risk, lower rated/unrated securities, qualified foreign institutional investors, emerging and frontier market risk, currency risk, distribution out of capital risk, securitized of structured debt instruments, derivatives related risk, risks relating to specific derivative instruments and others as disclosed in the Information Memorandum. This fund is eligible to be purchased by High Net Worth Individuals only, the criteria of High Net Worth Individuals as per stated in Schedules 6 and 7 of Capital Market and Services Act (CMSA) 2007
We recommend that you read and understand the Master Prospectus for the Affin Hwang Select Income Fund dated 18 July 2017 and expires on 17 July 2018 by Affin Hwang Asset Management Bhd (formerly known as Hwang Investment Management Berhad). Investments in the Fund are exposed to specific risks including equity investment risk, equity-linked securities investment risk, credit/default risk, interest rate/price risk, structured products risk, country risk, currency risk, regulatory risk and others as disclosed in the prospectus.
We recommend that you read and understand the contents of the Master Prospectus for the RHB Asian Income Fund dated 6 October 2016 and expire on 5 October 2017, by RHB Asset Management Sdn Bhd. Investments in the Fund are exposed to management risk, liquidity risk, foreign investment risks such as currency risk and country risk and others as disclosed in the prospectus.
We recommend that you read and understand the contents of the Prospectus for the Affin Hwang Global Balanced Fund dated 1 September 2016 and expire on 31 August 2017, by Affin Hwang Asset Management Berhad. Investments in the Fund are exposed to collective investment schemes risk, credit and default risk, interest rate risk, currency risk, liquidity risk, related parties transaction risk, country risk and others as disclosed in the prospectus.
Product Risk Rating and Suitability Determination Matrix: a)Moderate: Product carries the risk that an investor may possibly suffer partial loss of full principal investment amount but total loss is unlikely ('Partial loss' means the loss suffered by the investor can be up to 15% of the original investment principal) and customers with 'Balanced', 'Growth' and 'Aggressive' risk profiles may invest in a Moderate risk-rated product; b)High: Product carries the risk that an investor may suffer substantial or 100% loss of principal investment amount ('Substantial loss' means the loss suffered by the investor can be more than 15% of the investment principal) and customers with 'Growth' and 'Aggressive' risk profiles may invest in a High risk-rated product.
Unit Trust investments are not bank deposits and are not obligations of or guaranteed or insured by OCBC Bank (Malaysia) Berhad. Unit Trust investments are not guaranteed and are subject to investment risk unless otherwise specified. The investment risk includes general risks as described in the Information Memorandum/Prospectuses for Unit Trust investment funds (“Information Memorandum/Prospectuses”) and specific risks which may be different for each Unit Trust investment. Description of specific risks and general risks are published in the Information Memorandum/Prospectuses. With respect to Unit Trust investment, past performance is not indicative of future results; the net asset value can go up or down. Investors should also note that the net asset value per unit and distributions payable, if any, may go down as well as up.
Where unit trust loan financing is available, investors are advised to read and understand the contents of the unit trust loan financing risk disclosure statement before deciding to borrow to purchase units. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV; and where a unit split is declared, investors should be highlighted of the fact that the value of their investment in Malaysian ringgit will remain unchanged after the distribution of the additional units.
The Information Memorandum/Prospectuses have been registered with the Securities Commission Malaysia, which takes no responsibility for its content. A copy of the Information Memorandum/Prospectuses can be obtained at OCBC Bank’s branches. Units will only be issued upon the receipt of application form referred in, and accompanying the Information Memorandum/Prospectuses. Investors are advised to read and understand the contents of the Information Memorandum/Prospectuses, and if necessary consult their adviser(s), as well as consider the fees and charges involved before investing in the Unit Trust.
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