Maybank Asset Management Sdn Bhd’s (Maybank AM) Maybank Global Sustainable Technology Fund has won silver in the new best ESG performance and returns category at The Edge Malaysia ESG Awards 2024.

The Maybank Global Sustainable Technology Fund invests in technology companies worldwide, either directly or indirectly. The fund uses the MSCI AC World Custom Technology Index as its performance benchmark and employs a bottom-up approach for security selection, emphasising ESG integration in its research process.

Syhiful Zamri, chief investment officer of Maybank AM, explains that the main challenge this year was managing the excitement around investments in generative artificial intelligence (AI) while dealing with the limited returns achieved so far.

“The exuberance around this space has led to a concentration of performance in those companies seen as the most direct beneficiaries of AI, namely some of the leading tech mega caps and GPU providers,” says Syhiful.

“Narrow market environments can prove challenging for strategies driven by fundamental stock selection such as our fund.”

Syhiful adds that capex cycles in the tech sector are often highly volatile. Still, the team is focused on seizing opportunities, pointing out that the fund has significant exposure to companies expected to benefit from ongoing AI equipment and services investments.

The team uses Wellington’s ESG research to assess risks and opportunities in Gen AI, including ethical and social implications, energy consumption, climate impacts of AI data centres, and supply chain resilience in semiconductor companies affected by geopolitics, weather and labour issues.

The domestic ESG and socially responsible investing (SRI) landscape requires collaboration among regulators, corporations and fund managers to become more integrated, according to Syhiful.

He emphasises the need to strengthen regulatory clarity, balance transparency with practicality, enhance tax incentives and raise awareness to support the growth of ESG-focused funds.

Meanwhile, expanding ESG fund options is crucial for fund managers to meet growing investor demand, attract more investors and drive innovation in sustainable investment offerings.

“By working together to create a supportive environment, encouraging corporate responsibility and expanding the range of investment options, we can make significant strides towards a more sustainable future. This collaborative effort can help transform ESG and SRI investing from a niche interest into a mainstream practice that benefits everyone involved,” he says.

Outlook-wise, Syhiful says the team maintains cautious optimism for the Maybank Global Sustainable Technology Fund.

Technology equities remain attractively valued relative to the broad market, he says, noting opportunities across many tech subsectors, while falling interest rates could be a tailwind for higher growth areas of the market, such as software.

“The cloud hyperscalers have all doubled down on this trend, announcing billions in AI-related capex increases during the quarter. Outside of AI, we are seeing signs of demand bottoming or improving across several key semiconductor end markets, including memory, PCs, handsets, general servers and autos,” he says.

Meanwhile, key risks Maybank AM is monitoring include questions around the consumer’s health, continued weakness in enterprise demand, impacts of the US election, including heightening geopolitical tensions, and durability of AI investments.