Quarterly Market Outlook
Source: Lipper Investment Management as of Q4 2023
To kick off 2024, we see fixed income having a slight edge over equity. Fixed income’s yield is at a multi-year high and is also the most direct beneficiary asset from interest rate cut. Notably, the NASDAQ exhibited a substantial increase of 45% throughout 2023, and this positive momentum in the US equity market, particularly in the technology and AI sector may potentially continue into the beginning of 2024.
Source: TA Global Technology Fund Fact Sheet as of 31 October 2023
For investors with a more global view, you might want to consider the RHB Global Shariah Equity Index Fund. This type of fund is designed to track components of financial market indices, such as the Dow Jones Islamic Market Titans 100.
Index funds offer broad market exposure, low operating costs, and minimal portfolio turnover. This index fund focuses on the top 50 U.S. stocks, the top 25 European stocks, and the top 25 Asian stocks. The tech sector comprises a significant portion of the index's holdings while also diversifying into other sectors including health care and consumer discretionary. These global blue-chip companies are financially robust and capable of weathering challenging business environments.
Source: HSBC Global Asset Management, 31 October 2023. Exposure in HSBC Islamic Funds - HSBC Islamic Global Equity Index Fund - 97.18%
Let’s not forget real estate. As an actively managed fund, the fund manager strategically allocates resources into REITs that are anticipated to perform strongly within their respective categories. This REIT fund has over 50% exposure in industrial and telecom tower REITs.
REITs present the potential for both capital appreciation and income generation. To qualify for favourable tax treatment, REITs are required to distribute a significant portion of their income to shareholders. In addition to this structure, REITs have historically enjoyed a resurgence in total return performance following the end of monetary policy tightening cycles.
Despite encountering some negative attention, particularly concerning shopping mall and office REITs, they are still a good bet as the market is mature enough to include a diverse range of types, so you aren’t putting all your eggs in one basket.
Source: Manulife Shariah Global REIT Fund Fact Sheet as of December 2023
In the final months of 2023, this fund rebounded by more than 20%. Don’t worry about missing out on lower prices, though, as the fund is still close to its starting price in 2019, just before the pandemic.
Source: Lipper Investment Management as of Q4 2023
This fund has a diversified portfolio of more than 1,000 holdings, with most of its exposure in U.S. treasuries. At the same time, the fund manager aims to create excess returns from sources like high-yield bonds and emerging market hard currency bonds. At the feeder fund level, currency hedging is implemented to mitigate foreign currency risks. This fund offers a yield of 7.55% with a duration of 5.91 years.
Source: AllianceBernstein (Luxembourg) S.a.r.l., 31 October 2023. Exposure in AB FCP I - American Income Portfolio - 95.89%
With the prospect of rate cuts becoming a reality, this fund holds great potential as bonds are expected to benefit directly from lower rates.
What about Asia? The Principal Islamic Asia Pacific Dynamic Equity Fund is a bottom-up fund offering good diversification options within the continent in India, Taiwan, and South Korea.
There are plenty of little pockets of opportunity in various Asian countries and sectors and this fund strategically positions the investors to make the most of them. This fund has consistently outperformed its benchmark in the past and may also invest up to 20% of its NAV in global companies with businesses/operations within the Asia Pacific ex-Japan region.
Get in touch with RHB Premier today.
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