This article first appeared in The Edge Malaysia Weekly on December 12, 2022 - December 18, 2022

Malaysian Industrial Development Finance (MIDF) Amanah Asset Management Bhd, through its MIDF Amanah ESG Mustadamah Fund, bagged two awards at The Edge Malaysia ESG Awards 2022. The fund won gold for the best “G” (governance) fund and silver for the best “S” (social) fund.

CEO Shan Kamahl Mohammad says that the environment, social and governance (ESG) and sustainability agendas are high on the firm’s list of priorities as it strives to become a value-based intermediary through its financial products, operations and culture.

“We have felt that asset owners need a reliable shariah-

compliant investment conduit to facilitate their entry and constant participation in the ESG space, and this award is a testament to that,” says Shan Kamahl.

The MIDF Amanah ESG Mustadamah Fund was launched in June 2021. Its investable universe has grown by around 260% from 24 to 87 constituents. Shan Kamahl says this shows that listed companies are gradually jumping on the ESG bandwagon.

“The fund’s demand will be pegged to the acceptability of investors in general of the ESG movement and how important they feel ESG is in their larger portfolio. On our end, we will be constantly promoting the merits of ESG investing to our growing pool of investors through awareness campaigns and promotional events,” says Shan Kamahl.

“The main drive for AUM [assets under management] growth of the fund will ultimately be its ability to ‘walk the talk’ and generate the appropriate active returns, while keeping up with its larger ESG agenda.”

One of the key factors that contributed to the fund’s performance was the team’s willingness to embrace and commit to the strategy while intending to “do good”, not only from a performance perspective but also from an ESG awareness perspective.

At the same time, the regulators and exchanges have facilitated a gradual transition of the ESG agenda from the institutional to the retail space, which has enabled products such as this to become more acceptable to retail and high-net-worth investors, he observes.

Meanwhile, the broader investment landscape in 2022 has been volatile, says Shan Kamahl.

Macro-economic headwinds, particularly pertaining to inflation, geopolitical tension and local issues, have made managing the fund extremely challenging.

“Taking these factors into consideration, we adopted a defensive stance in our larger asset allocation. At the same time, we had additional ESG filters to assess the ‘non-financial’ elements of our stock universe,” he says.

“This enabled the manager to adopt an increased defensive approach when managing the fund, particularly from a stock selection angle. Based on the tools available to the fund, it is also able to position itself appropriately to take advantage of positive price movements in the market when the time is right.”

Looking ahead, Shan Kamahl says market conditions will continue to be challenging, with uncertainty both globally and locally. However, the firm has high hopes that the fund’s ESG factors will provide an improvement on its absolute return objective over the medium-term and beyond.

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