Kenanga Research - On Our Portfolio - New Portfolios In 2015
We are introducing three new sets of model portfolios for 2015 under the “On Our Portfolio” series after recording two consecutive fruitful years since 2013. The themes of these portfolios remain as THEMATIC, DIVIDEND YIELD and GROWTH with the same investment criteria as for the previous portfolios. For a start, we have the portfolios with funds 50%-54% invested, and they will be reviewed on the usual weekly basis. Our invested stocks partly mirrored our 2015 Strategy Outlook which was released last Monday where we believe the market to remain choppy and volatile. “Be Selective” and more trading oriented investment strategy will likely to be the name of the game in 1Q15/2015.
Be Selective. We had released our 2015 Investment Strategy last Monday with a year end-2015 FBMKLCI target of 1,905 implying 17.7x FY16 PER on the back of 1.3%/4.7%/7.4% earnings growth for 2014/15/16. The local equity market is expected to remain choppy and volatile as a result of the unfavourable macro factors (i.e. lower crude oil prices and weak Ringgit against USD). Thus, ‘Be Selective’ and more trading-oriented are likley to be the name of the game in 1Q15/2015 investment strategy. Investors should focus on those names that fall under the following thems such as (i) bottom-fishing, (ii) GST beneficiaries or sectors/stocks that are less sensitive to GST, (iii) back to basic/strong earnings fundamentals and (iv) alpha stock selections.
The year starts with profit taking activities. The continued weaken in RM (against the USD) coupled with soften oil prices dampened the local trading sentiment in the late 4Q14. Followed by a strong dip of 146.95 points in the 1H of December, the FBMKLCI managed to recoup some losing grounds (or +87.3 points since 16th of December) in the last two trading weeks, albeit accompanied by lacklustre volume, and closed the year at 1,764.44 (or -5.67% lower in contrast to a year ago), thanks to year-end window dressing. The mild positive sentiment, however, did not continue in the first trading day of 2015, where the local benchmarked index has losing -11.67 pts or -0.66% WoW to end at 1752.77 last Friday. The main index-linked underperformers were KLCC (-3.63% WoW), SIME (-2.58%) and YTL (-1.84%). On Wall Street, both Dow Jones and S&P 500 index were ended red in the last trading day of 2014 but still finished recording another solid year with 7.5% and 11.4% gain, respectively, for the year.
New year new portfolios. To recap, we had closed all the three model portfolios on 19th of Dec-14 with handsome gains of 14%-21% compared to the total returns of -3.5% for FBMKLCI for the same duration. Today, we are launching three new sets of model portfolios with the same themes and criteria of the old model portfolios. The THEMATIC Portfolio is designed for aggressive investors who are looking for at least a 10% total return a year while the DIVIDEND YIELD Portfolio is suitable for conservative investors who focus on income stocks with minimum 4% annual yield. On the other hand, The GROWTH Portfolio provides a balance between the aggressive and conservative risk classes with less than 1.0x PEG (PER over Growth) ratio. We are investing 50%-54% of the RM100,000 allocation to each portfolio for a start and they will be reviewed on a weekly basis to adjust for prevailing market conditions.
A good mix of big and mid-caps. We have four stocks each in these three portfolios where TENAGA (solid and resilient earnings) and SAPURAKECANA (alpha play and potential benefited from oil price's rebound, if any) were included in all the portfolios. For the aggressive portfolio, we have another two mid-caps, namely HARTALEGA and PESTECH in THEMATIC Portfolio. Similarly, BJTOTO and PHARMANIAGA are the other two mid-caps names in the conservative DIVIDEND YIELD Portfolio. The balance fund - GROWTH Portfolio, meanwhile, has two mid-caps stocks, namely PHARMANIAGA & PETECH, on top of the blue-chips' selection. We believe these well-balanced stock selections between big and mid-caps in our portfolios should help us weather volatile market conditions to maximise returns.
Source: Kenanga