This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on March 14 - 20, 2016.

Public Mutual Bhd swept seven individual awards at The Edge-Thomson Reuters Lipper Fund Awards 2016. The PB Asean Dividend fund won the award for Best Equity Asean Fund in the five-year category, while the PB Asia Real Estate Income fund won the award for Best Mixed Asset MYR Balanced — Global, also in the five-year category.

The fund house’s PB China Pacific Equity fund won the award for Best Equity Asia Pacific in the three-year and five-year categories, while the Public China Select fund won the award for Best Equity Greater China in the three-year category. 

This year, Public Mutual’s Islamic funds also emerged winners. The Public Islamic Asia Dividend fund grabbed the award for Best Equity Asia Pacific Ex Japan in the five-year category and the Public Islamic Opportunities fund clinched the award for Best Equity Malaysia Small and Mid Caps in the three-year category.

Public Mutual CEO Yeoh Kim Hong attributes its success to its investment policy — adopting a fundamental approach to stock selection. “By adopting this approach, our funds were able to achieve consistent returns during the period in review by focusing on stocks with resilient earnings and underpinned by fundamentals. This strategy enabled our winning funds to outperform in periods of market volatility,” she says.

The winning funds were able to ride the market volatility of the last few years by focusing on quality large and mid-cap stocks and with select exposure to smaller cap stocks. These stocks met various criteria, including resilient earnings, good management track record and attractive valuations. 

“The Public Islamic Opportunities fund, which won in the three-year category for the Equity Malaysia Small and Mid Cap — Islamic award, rode the volatility in the small-cap space by focusing on select investments in services, technology, healthcare and export-based manufacturing stocks with resilient earnings growth,” says Yeoh.

The fund house’s regional investment mandate requires the PB Asia Real Estate Income fund, PB Asean Dividend fund and Public Islamic Asia Dividend fund to focus on stocks that are supported by dividend yields, which was what helped them achieve their wins. 

For the Public China Select fund and PB China Pacific Equity fund, the wins were attributed to its holdings in select telecommunications, internet and technology stocks, which registered resilient earnings despite moderating growth in China’s economy. “This helped the funds to outperform other funds in their respective categories,” says Yeoh.

At end-2015, Public Mutual’s total assets under management rose to RM64.8 billion from RM63 billion in the previous year. Yeoh says this was on the back of an increase in the net asset value of its equity funds.

On the most challenging situation the fund house faced last year, she says it was economic policies and actions of central banks that led to increased volatility in the currency markets and made it more difficult to manage the funds’ foreign investments. “The ‘new normal’ of long-term low rates of growth in developed nations has shifted the focus to fiscal and monetary policies adopted by the various major economies.

“For example, there is a great deal of uncertainty on the timing and magnitude of stimulus measures that China could embark on, while uncertainty looms on the pace of US interest rate increases as well as a possible reintroduction of quantitative easing measures by the Federal Reserve.”

In the light of the current outlook, Public Mutual will continue to focus on sectors with more resilient earnings such as services, technology, healthcare and export-based manufacturing sectors for its domestic funds. 

As for its regional funds, the fund house will continue to focus on dividend-yielding stocks and select large and mid-cap counters in the real estate investment trust, technology, telecommunications, utilities, healthcare and services sectors. Given the challenging outlook for the Chinese economy, the Public China Select fund and PB China Pacific Equity fund will accumulate stocks in sectors with resilient growth prospects on price weakness.

Yeoh believes that even if there is a broad decline across global financial markets that adversely affect the fund house’s investment strategy, it will be able to weather the storm. “Our strategy of focusing on markets and companies with strong fundamentals as well as holding a higher cash weighting on a selective basis should enable our funds to ride through such market conditions,” she says.