Nomura outlines investment strategy to achieve returns
Its fund aims to outperform MSCI Index on 3-year rolling average
KUALA LUMPUR: With stocks having reached an inflection point and the era of low rates now a thing of the past, real active equity management becomes very important in order to achieve returns.
To outperform, there will be a need to make concentrated bets, and not invest simply to hug benchmarks, said Nomura Asset Management Malaysia Sdn Bhd head of investment Leslie Yap.
While 2017 will still be dominated by volatility, there are some bright spots.
“With Opec and even non-Opec countries like Russia having agreed to cut production, this should give some stability to oil prices, which is good for an oil producing country like Malaysia. Secondly, decision making and policy making in the US could in fact be clearer because the President, the House of Representatives and Senate are all controlled by Republicans,” said Yap during his presentation to launch Nomura’s new fund.
Yesterday, Nomura Asset Management Malaysia, a Malaysian fund management unit of Nomura Holdings Inc, for the first time extended its offering to individual investors in Malaysia who meet minimum net worth or income thresholds.
Globally, Nomura Asset Management has assets under management worth some US$400bil (RM1.76 trillion). In Malaysia, Nomura is managing some RM16bil in funds, mainly for institutions and the government pension funds.
Meanwhile, the Nomura Global High Conviction Fund, a locally domiciled wholesale fund that feeds into Nomura Funds Ireland – Global High Conviction Fund, is available in Malaysia from yesterday to sophisticated investors.
Among individuals, this category includes those whose total net personal assets exceed RM3mil or gross annual income exceeded RM300,000 in the preceding year.
The target fund domiciled in Ireland focuses on the best ideas of its global equities team for individual stock selection, with an emphasis on good quality stocks that are trading below their intrinsic values.
It aims to provide investors with an opportunity to earn better returns through a highly concentrated, global equity portfolio of 17 to 25 stocks and is benchmarked to the MSCI All Country World Index.
Tom Wildgoose, head of equity investment, Nomura Asset Management UK Ltd, and manager of the target fund, said the aim of the fund is to outperform the MSCI International Index by some 300 basis points on a three-year rolling average.
Hence if the MSCI Index returns 6%, investors can expect an estimated 8% return from the Nomura High Conviction Fund.
For now, the main Ireland fund which was launched last year, has so far raised some US$8.5mil (RM37.4mil).
Wildgoose said that globally, the fund is looking at some tech stocks which have been beaten down. Among some of the stocks the fund likes are Google and Mastercard.
“We see the benefits of diversification as relatively small beyond 20 to 30 stocks, so with this strategy we look to concentrate our investments for potentially higher returns,” said Wildgoose.
Yap will serve as the fund manager of the local feeder fund. The target fund is co-managed by Ilan Chaitowitz and supported by a team of 18 investment professionals.
In Malaysia, some commodity-based stocks are starting to look interesting, according to Yap.
Wildgoose said some of the valuation metrics it looks at when investing in a stock is whether the company returns cash to its shareholders, skill management, attractive return on capital invested, and how it allocates its resources.
Yap said that when investors think of risk, they shouldn’t just be thinking about volatility, but rather not being able to achieve investment returns of investors.
“What is the point of managing volatility but you end up only giving returns of 2% to 3%,” said Yap.
“We celebrate 10 years in Malaysia today and this offering to individuals marks an important step in the growth of our business here. It signifies our commitment to serving Malaysian high net worth individuals who are increasingly looking beyond our shores to build a global investment portfolio for potentially better risk-adjusted returns,” said Nomura Asset Management Malaysia managing director and country head Nor Rejina Abdul Rahim.