This article first appeared in Wealth, The Edge Malaysia Weekly on March 24, 2025 - March 30, 2025

Areca Capital Sdn Bhd clinched two awards at the LSEG Lipper Fund Awards 2025. The Areca equityTRUST Fund once again walked away with Best Equity Malaysia awards in the five- and 10-year categories.

CEO Danny Wong says the firm’s most successful strategy last year was overweighting the construction and property sectors, whose outperformance was driven by the revival of domestic infrastructure projects and strong foreign direct investment in data centres.

Some of its top performing calls last year were YTL Corp Bhd, YTL Power International Bhd and Malaysia Airports Holdings Bhd. These investments delivered attractive returns and reinforced its strategy of identifying high-potential opportunities within key sectors.

“Additionally, our agile asset allocation played a crucial role in safeguarding gains as we strategically increased our cash holdings in July,” says Wong.

He says Areca’s asset allocation strategy is guided by the collective decisions of its investment committee. As a result, a significant rebalancing exercise took place at the end of July last year, which saw the fund’s cash position increase to 16.7% from 5.6% in June. “Such a move allowed us to lock in strong gains from the first half of 2024 while positioning the portfolio more defensively amid evolving market conditions.”

Asset allocation continues to be key this year. Wong says the firm will continue to remain agile to navigate market uncertainties.

“While this year is expected to be volatile due to uncertainties surrounding the implementation of [President Donald] Trump’s second-term policies and their potential implications, our focus remains on staying flexible and responsive to evolving market conditions. We are committed to sustaining a strong performance and managing risks effectively.

“Nevertheless, we will capitalise on market fear by selectively adding quality growth stocks that have been unjustly depressed, maintaining a long-term perspective while disregarding short-term noise,” says Wong.

Wong also attributes Areca’s win to its investment philosophy, which is based on the belief that financial asset prices are influenced by a combination of liquidity flows, risk appetite and ultimately, the intrinsic value of the underlying asset.

Moving forward, Wong expects the market to be volatile. Fund managers may not replicate the gains of 2024, but it doesn’t necessarily mean investors should adopt an extremely defensive strategy. “Instead, investors should expect a more selective, fundamental-driven approach. Returns might be more challenging, but attractive opportunities can be found. We remain cautious yet optimistic.”

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