Top Investment Ideas (August 2017)
Finding Sensible Carry







Michael Lai
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 TrustAffin 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.
 
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