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 The
Task |
The
Investment Process
Implementation
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Managing your investments is no simple task. Your timely response to investment opportunities in Malaysia or within the economically vibrant Asian region must be swift and decisive.
But more often than not, there is little time for thorough analysis
of market developments and forces, which can shape and impact your
investment decisions.
In today's dynamic and global environment, the necessity to stay in close touch with these market influences is a task, both tedious and time consuming, and worrisome. Often than not, the reality is that information on individual assets is costly to obtain and difficult to analyse. At best, it can be delegated to professionals specialised in managing corporate and private funds, to prudently chart the investment course.
Through SJAM's services, we can work with you to plan and
execute an investment process which is tailored and structured to
suit your investment objectives.
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Conceptual Framework for the Investment Process
Developing the plan that meets your investment goals is the beginning of our efforts to formulate the investment strategy and portfolio.
Entrusted with this role, our approach is as follows:
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- Setting Normal Asset Allocation Policy
Whether an individual or institutional investor,
the first step is to identify and specify the investment objectives
and constraints. The purpose is to determine the asset classes
appropriate for a specific investment portfolio, and the proportion
of assets that would normally comprise the portfolio.
The following are the typical questions raised:
• What is the purpose of the fund?
• What is the minimum rate of return required by the investor?
• What is the acceptable level of risk?
• What is the investment horizon?
It is equally important to assess if certain economic conditions
or specific industries would affect you most, and how these effects
and performance outlook would affect your investment.
The objective is to appraise accurately one's present and future
strengths and vulnerabilities in order to form a realistic strategy
around this profile.
For the selection of stocks and other instruments in the asset
mix, are there pre-determined quality requirements to abide by?
Limitations might include only large capitalisation company stocks
versus medium or small-sized ones, minimum quality standards by
rating agencies, restrictions to growth stocks in favour of contrary
opinion securities, and so on.
Determining a customised set of policies for the different asset
class weights essentially involves the simultaneous consideration
of investor objectives, investor risk preferences and long-term
capital market expectations.
- Conducting Active Asset Allocation and
Securities Selection
Our approach to each engagement provides each
client with the assurance that the investment course is tailored
to the client's needs. We adopt an active asset allocation strategy
and security selection based on fundamental valuation so as to
provide our clients with added value through periodic adjustments
of the portfolio to exploit any capital market disequilibrium
opportunities that may arise.
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Major steps in performing this engagement
include:
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- Macroeconomic analysis of national economic trends and
capital markets within Asian countries such as Malaysia, Singapore, Japan, Hong
Kong, Thailand, Philippines, Indonesia, Taiwan and Korea. Indicators such as Gross
National Product, inflation, fiscal and monetary policies are important factors
to determine the proportion of funds and asset types to be invested in each of
the mentioned countries.
- On a micro level, a sectoral analysis of the various industries
in each marketplace would assess their growth prospects and potential. Which industry
yields the highest returns, or provides a stable income stream? In terms of comparative
advantage, some industries might be better positioned than others.
- Within each sector, companies are selected for investment
using a combination of fundamental and technical support decision tools.
Fundamental measures in assessing these targeted companies include their price
earnings (P/E) ratio, dividend yield (D/Y), performance track record in terms
of growth in earnings per share (EPS Growth), net asset value (NAV) and the quality
of the management.
Naturally, counters selected are fairly well traded to ensure
there is no lock-in of valuable funds.
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Judicious
portfolio diversification and a highly disciplined approach are the cornerstones
of our investment strategy.
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