Inovatif

Category: News & Events

  • Interview with AIA Pension And Asset Management, Winner Of The FSMOne Recommended Unit Trusts Awards 2022/2023

    Interview with AIA Pension And Asset Management, Winner Of The FSMOne Recommended Unit Trusts Awards 2022/2023

    Be on the lookout for geopolitical uncertainty, rising rates, slowing growth and election uncertainty

    Smart Investor: Congratulations! Can you tell us more about your winning fund in the FSMOne Recommended Unit Trusts Awards 2022/2023?

    Nor Daliya Mohd Daud: We are honoured to receive this recognition for our AIA PAM Growth Fund. This Fund, which was launched on 16 May 2013, invests in equities with a bias towards equities with potential for growth. The Fund will invest in local and foreign markets as it seeks to provide long-term risk-adjusted returns to its members by integrating rigorous fundamental research with disciplined risk management.

    We incorporate Environmental, Social and Governance (ESG) considerations into the investment decision-making process as we believe ESG principles underpin proactive risk management.

    Since its inception, the AIA PAM-Growth Fund has recorded a cumulative return of 57.2% as at end March 2022.

    SI: What are the challenges you have faced in the past 12 months?

    ND: In addition to COVID-related lockdowns within Malaysia and in other major markets which restricted movements and impacted market sentiments over the past year or so, other more recent challenges include Russia’s invasion of Ukraine, soaring commodity prices and supply chain disruptions.

    Underperformance in Chinese stocks had also caused equities to decline and bond yields to rise while accelerated monetary policy and quantitative tightening by the US Federal Reserve and Bank Negara Malaysia (BNM) is now a major concern. Notwithstanding the evolving market conditions, we
    will remain vigilant and adjust our investment strategies accordingly when the need arises.

    Asset allocation decision remains the key driver when determining the range of portfolio outcomes amid volatile markets. We may adopt a temporary defensive strategy during adverse market conditions by increasing exposure to lower risk assets.

    SI: What are the market trends that an investor should look out for in the near future?

    ND: Geopolitical uncertainty. Market volatility is likely to persist in the near term given no signs of the war ending in the Russia – Ukraine conflict. The longer the war drags on, the longer sanctions will be in place with negative implications on commodity supplies and further increased inflation risks.

    Rising rates. Bond yields are rising as the market has been repricing due to the number of rate hikes by the US Federal Reserve that should occur in the foreseeable future. The US Federal Reserve and other central banks are moving to normalize monetary policy to tackle inflation. Domestically, Bank Negara Malaysia’s policy measures should remain accommodative in the near term and the supply of sovereign bonds should be well-absorbed by the market. Overall, the domestic financial system liquidity remains ample, which shall remain supportive of the bond market.

    Slowing growth. After a strong economic rebound in 2021, a slowdown in the global economy is expected this year amid less favourable market conditions with rising inflation, China COVID-19 lockdowns and geopolitical concerns.

    Election uncertainty. There are news that the 15th Malaysian General Election will be held this year. The uncertainty in the general election outcome could trigger volatility in the market. Investors would want to see decisive policy decisions to combat inflation and a slowing economy.

    Nor Daliya Mohd Daud, Director, AIA Pension and Asset Management Sdn Bhd
  • FSMOne Malaysia Is Positive That Investment Opportunities Are Abound In The Current Market

    FSMOne Malaysia Is Positive That Investment Opportunities Are Abound In The Current Market

    FSMOne Malaysia, a multi-asset investment platform today assured Malaysian investors that unit trusts are still relevant and viable option that can help them achieve medium to long term financial goals. This assurance was reiterated at the FSMOne’s Recommended Unit Trusts Awards 2022/2023 at Pavilion Hotel, Kuala Lumpur earlier today.

    The Awards, which are distinguished acknowledgements of outstanding fund managers that have produced best-in-category fund performances, saw 44 Recommended Unit Trusts from 17 fund houses, including Affin Hwang Asset Management Berhad, Manulife Investment Management (M) Berhad, Principal Asset Management Berhad, RHB Asset Management Sdn Bhd, Kenanga Investors Berhad, Eastspring Investments Berhad, and AmFunds Management Berhad, to name a few, make it to the list (see appendix for the full list).

    Mr Koh Soo Cheng, General Manager of FSMOne Malaysia during his presentation emphasised that unit trusts continue to be an essential investment vehicle for all investors as they allow investors to build highly personalised and appropriately diversified portfolios to achieve their financial goals.

    “From our analysis, we observed that throughout various market cycles over the years, the performances of our Recommended Unit Trusts have consistently been up to the mark against peers within the same category,” said Mr Koh Soo Cheng.

    “The huge following of our Recommended Unit Trusts is a testament to the trust that our investors have on our selection methodology,” added Mr Koh Soo Cheng.

    The Recommended Unit Trusts were assessed on both quantitative and qualitative parameters. The quantitative parameters included Returns, Risk, and Expense Ratio while the qualitative parameters considered were the consistency of fund managers in their investment approach, stability of the management team, and the departure of key personnel, among others.

    “With an increase in our client base for the past 2 years, I believe that financial literacy among our investors is now more evident than ever. Besides FSMOne Recommended Unit Trusts lists which serves as a good point of departure for new investors, they can also get investment ideas from iFAST TV. It is an investment-focused channel committed to creating relevant, informative and engaging video content which was launched last year.”

    “We are committed to provide the best of wealth management all under one platform.  To that end, FSMOne Malaysia has launched stocks and ETFs trading capabilities supporting Malaysia, US, Hong Kong and Singapore exchanges last year, and will be supporting the China A-Shares exchange on 8 July 2022,” added Mr Koh Soo Cheng.

    On the global economic outlook, Mr Jason Wong, Research Manager of FSMOne Malaysia highlighted that he expects global growth to slow in the second half of 2022 amid persistently elevated inflation and monetary policy tightening by major central banks around the world.

    In terms of the market outlook, he expects volatility to persist as lingering risks such as slowing growth, recession fears, high inflation, aggressive rate hikes and geopolitical tensions to possibly drag on towards the end of 2022.

    “That being said, the market retracement this year has dragged down global equities to much more palatable levels, which could present opportunities for long term investors to take advantage of. With a lot of the negativity priced into markets, we would not rule out a gradual rebound amidst the volatility should things turn out better than expected. Some of the potential catalysts for a swift turnaround include inflation abating, China’s reopening and the end of the Russia-Ukraine war,” Jason Wong added.

    Yet, on the other hand, despite the obvious risks, he thinks that the deep sell-off in Chinese stocks could finally be on the cusp of a turnaround. He expects China to roll out more policy measures to help support the economy. In fact, the government has already been rolling out economic support measures and fighting back against plummeting confidence in recent months. Adding to his optimism is the fact that China is emerging from its worst Covid-19 outbreak in more than two years, with daily Covid-19 cases trending down nationwide in recent weeks.

    “Amidst the changes in the macroeconomic environment, fund managers have adjusted their portfolios accordingly towards investments that can better weather rising inflation and interest rates. Hence, we advise everyone not to overlook this opportunity for returns that would contribute to better long term wealth accumulation,” Jason Wong elaborated further.

    This is the 14th year FSMOne Malaysia hosted its FSMOne Recommended Unit Trusts Awards. FSMOne Malaysia has been established in Malaysia since 2008.

    For more information about FSMOne Malaysia and their recommended unit trusts, please visit www.fsmone.com.my.

    About FSMOne Malaysia and iFAST Capital Sdn. Bhd.

    FSMOne Malaysia (previously known as Fundsupermart.com Malaysia) is a Multi-Asset Investment Platform under iFAST Capital Sdn. Bhd. (“iFAST Capital”), established in Malaysia since 2008.

    iFAST Capital is a holder of a Capital Markets Services Licence (CMSL) and is licensed by the Securities Commission to deal in securities (includes Stocks & ETFs, unit trusts and OTC bonds), dealing in private retirement scheme, offer investment advisory services, financial planning services and fund management services in relation to portfolio management.

    iFAST Capital is a Federation of Investment Managers Malaysia (FiMM) registered Institutional Unit Trust Adviser (IUTA) and Institutional Private Retirement Scheme Adviser (IPRA). It is also an approved Financial Adviser licensed by the Central Bank of Malaysia to conduct financial advisory business and also a Participating Organisation of Bursa Malaysia Securities Berhad.

    iFAST Capital is a subsidiary of iFAST Malaysia Sdn. Bhd. which is wholly owned by iFAST Corporation Ltd. (“iFAST Corporation”). iFAST Corporation is headquartered in Singapore and the iFAST group of companies are also present in Hong Kong, Malaysia and China. The company was incorporated in Singapore on 10 January 2000.

    iFAST Corporation was listed on the Singapore Exchange Mainboard in December 2014.

  • Malaysia’s Employer-Sponsored Medical Benefit Costs Expected To Increase 12% In 2022

    Malaysia’s Employer-Sponsored Medical Benefit Costs Expected To Increase 12% In 2022

    Insurers in Asia are experiencing above inflation rises in the cost of employer-sponsored medical benefits programs over pre-pandemic levels, according to a report by Mercer Marsh Benefits (MMB). According to findings in MMB Health Trends, costs in Malaysia decreased by 3% in 2020, but increased by 8% in 2021. Insurers are expecting medical costs to further rise by 12% in 2022 – six times the predicted general inflation rate for Malaysia, the third highest increase in Asia, the report noted.

    The MMB Health Trends report surveys 210 insurers globally, including 74 in Asia, and identifies key trends influencing the future of employer-provided medical benefits. The results show that five countries in Asia experienced higher medical trend rates than the regional average (8.8%) in 2021, namely India with the highest medical inflation rate of 14%, followed by China (12%), Indonesia (10%), Vietnam (10%), and the Philippines (9%). Overall, 81% of insurers in Asia indicated an upward trend in medical claims activity in 2021, even though 53% of insurers reported lower medical claims than pre-pandemic levels.

    Malaysia’s Ministry of Health has estimated that non-communicable diseases (NCDs) cost the Malaysian economy RM 12.88 billion in terms of productivity losses arising from absenteeism, presenteeism or premature death in persons of working age per year.[i]. 

    The MMB Health Trend report reveals that cancer (55%), diseases of the circulatory system (43%), and COVID-19 (36%) were the top cost drivers of medical claims in Asia in 2021, while respiratory diseases (47%), gastrointestinal diseases (36%) and COVID-19 (34%) are healthcare conditions that experienced the most frequent claims.

    Joan Collar, Asia Regional Leader, Mercer Marsh Benefits, commented: “Costs have soared despite lower levels of medical treatment than before the pandemic, a trend exacerbated by deferred healthcare treatments that for many have resulted in more adverse outcomes, leading to higher costs. Reducing NCDs remains a key priority for employers for the health of their employees and their business. More than ever, employer-sponsored medical benefits should be viewed as an investment in employees’ well-being. Employees who feel their employer cares about their health and well-being are more motivated, productive, committed, and loyal.”

    Gaps remain in mental health coverage though inclusive benefits increase

    Of all global regions, the report identified Asia as having the most inadequate coverage in relation to mental health, with only 34% of insurers providing coverage for outpatient treatments in mental health, and just 21% providing coverage for preventive mental health measures. Moreover, 32% do not offer any coverage for mental health services, reflecting a huge protection gap between access to benefits against the burden of mental health risks.

    However, the study shows that 33% of insurers are making changes to facilitate more inclusive medical plan designs by allowing coverage for the non-permanent or full-time workforce with 54% either adding or considering extending eligible expenses that are more inclusive for women.

    “Employers need to develop a mental health strategy to enhance the overall well-being of their employees and refine their benefits strategy accordingly to align it to their diversity, equity, and inclusion goals and the different needs of their employees. With a sharp rise in the number of employees experiencing burnout and fatigue, this has become a workplace imperative. Employers need to deploy investments and resources to ensure they maintain a mentally resilient workforce,” Ms. Collar added.

    The Mercer Marsh Benefits (MMB) is the service value proposition that Marsh brings to its clients. MMB is not an insurance product. In India, an insurance product can be provided only by a registered insurance company. Insurance is a subject matter of solicitation.

    About Marsh

    Marsh is the world’s leading insurance broker and risk advisor. With over 45,000 colleagues operating in 130 countries, Marsh serves commercial and individual clients with data-driven risk solutions and advisory services. Marsh is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people. With annual revenue nearly $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. For more information, visit mmc.com, follow us on LinkedIn and Twitter or subscribe to BRINK.

    [1] The Impact of Noncommunicable Diseases and Their Risk Factors on Malaysia’s Gross Domestic Product (2020). Putrajaya, Malaysia: Ministry of Health Malaysia.

  • Bank Negara Malaysia Increase Overnight Policy Rate (OPR) By 25 Basis Points To 2 Percent

    Bank Negara Malaysia Increase Overnight Policy Rate (OPR) By 25 Basis Points To 2 Percent

    At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to increase the Overnight Policy Rate (OPR) by 25 basis points to 2.00 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 2.25 percent and 1.75 percent, respectively.

    The sustained reopening of the global economy and the improvement in labour market conditions continue to support the recovery of economic activity. These have partly cushioned the impact of the military conflict in Ukraine and the strict containment measures in China. Inflationary pressures have increased sharply due to a rise in commodity prices, strained supply chains and strong demand conditions, particularly in the US. Consequently, several central banks are expected to adjust their monetary policy settings at a faster pace to reduce inflationary pressures. The global growth outlook will continue to be affected by the developments surrounding the conflict in Ukraine, COVID-19, global supply chain conditions, commodity price shocks, and financial market volatility.

    For the Malaysian economy, latest indicators show that growth is on a firmer footing, driven by strengthening domestic demand amid sustained export growth. The labour market is further lifted by a lower unemployment rate, higher labour participation and better income prospects. The transition to endemicity on 1 April 2022 would strengthen economic activity, in line with further easing of restrictions and the reopening of international borders. Investment activity and prospects have also improved, underpinned by the realisation of multi-year projects and positive growth outlook. However, risks to growth remain, which include a weaker-than-expected global growth, further escalation of geopolitical conflicts, worsening supply chain disruptions, and adverse developments surrounding COVID-19.

    Headline inflation is projected to average between 2.2% – 3.2% in 2022. Given the improvement in economic activity amid lingering cost pressures, underlying inflation, as measured by core inflation, is expected to trend higher to average between 2.0% – 3.0% in 2022. Nevertheless, upward pressure on prices would be partly contained by existing price controls and the continued spare capacity in the economy. The inflation outlook continues to be subject to global commodity price developments, arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions, as well as domestic policy measures on administered prices.

    Over the course of the COVID-19 crisis, the OPR was reduced by a cumulative 125 basis points to a historic low of 1.75% to provide support to the economy. The unprecedented conditions that necessitated such actions have since abated. With the domestic growth on a firmer footing, the MPC decided to begin reducing the degree of monetary accommodation. This will be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support a sustainable economic growth in an environment of price stability.

    Source: Bank Negara Malaysia

  • Here’s The Reason Why Kenanga Investors Won This Coveted Morningstar Award

    Here’s The Reason Why Kenanga Investors Won This Coveted Morningstar Award

    Congratulations to Kenanga Investors Berhad for winning the Best Malaysia Large-Cap Equity Fund. In a tough market last year, Kenanga manages to put in a stellar performance and outperform all others.

    We spoke to Lee Sook Yee, Chief Investment Officer of Kenanga Investors Berhad to share more about their secret for success.

    Key Factors Behind The Success Of This Fund?

    We are honoured to have received this award from Morningstar. This award reflects our team’s dedication and perseverance to continuously go above and beyond for our clients.

    As a bottom up stock picker, our investment is underpinned by comprehensive fundamental research combined with a relative value approach to create superior risk adjusted returns.

    In formulating a company’s investment thesis, we usually run channel checks on the company’s competitive advantages and also attempt to model out the growth drivers. Some of the key areas we look at include management quality, sustainable business model, industry dynamics and balance sheet strength.

    By consistently applying this strategy, our funds have achieved continuously outperforming returns throughout the last 3,5 and 10 years.

    Strategies To Maximise The Chance Of Success For The Fund

    Half recovering from the pandemic-stricken crisis, 2021 presented both challenges and opportunities. One of the biggest challenges was having to grapple with the lingering impact of the pandemic, as persistent waves of Covid resurgence triggered intermittent lockdowns and containment measures, which when happened pulled the markets down with them.

    Although such corrections became less intense as vaccination gathered pace, new sources of fear took shape in the form of worries over rising inflationary pressure attributed to severe supply chain disruption, talent and component shortage, power rationing which impacted our investments in varying degree.

    We navigated through these speed bumps by constantly reviewing our investment theses to make sure they stayed relevant, identified the “relative winners” from sectors which were deemed resilient, consistently-growing and reasonably priced. Tech sector was one key sector which ticked most boxes and contributed immensely to our outperformance last year.

    Can We Expect New Investment Products By Kenanga Investors?

    We look forward to expanding our Kenanga Sustainability Series, a suite of multi-asset class products rooted in sustainability considerations to advance long-term financial growth for investors and to generate social and financial value for surrounding communities, in 2022. We introduced the first fund under this series in 2021 which was the Kenanga Sustainability Series: Frontier Fund. It provides investors with a range of opportunities in boosting not only the future development curve through the reduction of carbon emissions, new medical discoveries that may propel patient empowerment, and greater societal benefits while driving sustainable returns.

  • PB Asia Equity Fund (PBAEF) and Public Islamic Alpha-40 Growth Fund (PIA40GF) Wins It Again For Public Mutual

    PB Asia Equity Fund (PBAEF) and Public Islamic Alpha-40 Growth Fund (PIA40GF) Wins It Again For Public Mutual

    Congratulations to Public Mutual for another double win for the second successive year. It is no easy feat to achieve, considering the tough market in 2021.

    On hand to share more insights on their success, we spoke to Chiang Kang Pey, Deputy Chief Executive Officer of Public Mutual.

    Key Factors Behind These Two Wins?

    Our key strategy behind both wins is our adherence to a fundamental investment approach of focusing on companies with sustained earnings, strong financial positions and proven track records. Despite the elevated levels of market volatility in 2021, the portfolios of our winning funds – PB Asia Equity Fund (PBAEF) and Public Islamic Alpha-40 Growth Fund (PIA40GF) – were rebalanced accordingly in line with the changing trends in the respective markets, sectors and industries that the funds were invested in.

    Steps Taken For Best Chance Of Continued Growth?

    In 2021, PBAEF, which focuses its investments in the Asian markets, locked in profits from selected growth stocks and positioned in semiconductor-related stocks within the Asian region which benefitted from the shortage of chips amid supply chain disruptions and China’s localisation trend. In addition, the fund’s performance was lifted by its holdings of North Asian technology and electric vehicle-related stocks which ride on the structural trends of digitalisation and the increased focus on cleaner energy solutions.

    Meanwhile, PIA40GF, which focuses its investments in the domestic market, continued to capitalise on technology and basic materials stocks which stood to benefit from the long-term digitalisation trend as well as the strength in commodity prices. The fund also locked in gains from selected technology stocks at the end of 2021 amid concerns over the potential rise in global interest rates.

    To ensure the long-term growth of our funds, we constantly assess and monitor the long-term prospects of our investee companies’ business models and strategies – including their pricing power, market dominance, growth potential as well as the competitive landscape. These strategies have proven to work well for the performance of our funds.

    Strategies That Have Shifted In Line With Market Forces?

    Despite the decline in the severity of symptoms for the newer Covid-19 Omicron variant, the evolving nature of this virus could mean that potentially new and unpredictable variants may emerge. Nevertheless, barring unforeseen circumstances, the global economy is anticipated to continue on its path towards recovery amid the easing of movement restrictions and the re-opening of international borders as governments increasingly transition towards policies to ‘live with Covid’.

    Tightening monetary policies by global central banks, global supply chain disruptions as well as sanctions triggered by the current geopolitical conflict between Russia and Ukraine have also led to elevated levels of volatility in global financial markets this year.

    That said, the domestic and Asian markets – which PIA40GF and PBAEF focus their investments on – are less exposed to the geopolitical risks in Europe. As such, both funds will continue to invest in selected recovery plays within the local and regional markets such as the financial, energy and commodities sectors, as well as selected consumer discretionary and leisure stocks.

    The funds will also continue to position for the long-term growth potential of the technology sector which will benefit from the increasing adoption of digital products and services as well as the rise of automation, online shopping and hybrid/ remote working arrangements.

    Upcoming Trends For Investors?

    Global markets may continue to experience volatility and uncertainties in the short term amid the normalisation of monetary policies by major central banks in response to elevated inflation levels, as well as the current Russia-Ukraine conflict which has exacerbated global supply chain disruptions and inflationary pressures. Meanwhile, the performance of the China stock market will depend on whether the Chinese government will continue to implement policies on sectors such as technology and real estate which may impact their profitability or earnings visibility.

    In addition to the recovery plays which will benefit from the re-opening of international borders and the lifting of social-distancing restrictions, investors are expected to focus on sectors that are more defensive such as utilities and consumer staples amidst the uncertainty surrounding the global economic outlook. Sectors that will benefit from the impact of high inflation such as the commodity, basic materials and energy sectors which have staged a strong performance compared to the broader markets thus far this year may also continue to outperform if inflationary pressures remain elevated.

    Over the longer term, sectors that possess structural growth prospects such as those driven by the trends of digitalisation and the push towards greener energy solutions are also expected to do well. The rising adoption of cloud computing, artificial intelligence, cybersecurity, e-commerce, electric vehicles and lower-carbon solutions is expected to drive sustainable earnings growth for companies in these segments in the years ahead. The valuations of such growth-oriented stocks have also fallen on profit-taking activities amid higher bond yields; thus providing buying opportunities for investors who have a longer-term investment horizon.

    Plans And Strategies For 2022?

    We will remain committed to our fundamental-based approach and long-term investment strategies which have served us well in delivering consistent returns to our unitholders over the long term. Given the volatile markets amid uncertainties surrounding the Russia-Ukraine conflict and its impact on global growth and inflation, we have adopted a portfolio comprising growth and value stocks.

    We will continue to monitor developments in the global markets so as to re-deploy our funds’
    cash holdings when opportunities arise.

     

  • Morningstar Announces Winners for 2022 Morningstar Fund Awards Malaysia

    Morningstar Announces Winners for 2022 Morningstar Fund Awards Malaysia

    KUALA LUMPUR, 7 April 2022 — Morningstar Asia Limited, a subsidiary of Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, has announced the winning funds for its 2022 Morningstar Fund Awards Malaysia.

    The annual Morningstar Malaysia Fund Awards recognise retail funds that have added the most value for investors within the context of their relevant peer group in 2021 and over longer time periods. Morningstar selects the winners using a quantitative methodology, along with a qualitative overlay. Weightings to one-, three-, and five-year risk-adjusted performance are factored into the methodology.

    Wing Chan, Morningstar’s Head of Manager Research, Europe and Asia Pacific, remarked: “Our 2022 winners have proven themselves to be excellent stewards of investors’ capital. They have demonstrated their abilities to navigate through market volatility and deliver excellent returns over the longer term. We applaud all winners for their outstanding achievements.”

    The 2022 Morningstar Awards winners in Malaysia are:

    Methodology

    The Morningstar fund category awards are based on Morningstar fund data as of 31 December 2021. The awards methodology emphasises the one-year period, but funds must also have delivered strong three- and five-year returns after adjusting for risk within the awards peer groups in order to obtain an award. In selecting winners, fund returns are adjusted for risk using the Morningstar Risk, a measure which imposes a higher penalty for downside variation in a fund’s return than it does for
    upside volatility. For the full methodology, please click here. The full methodology for the awards is available here.

    Morningstar Asia Limited is a subsidiary of Morningstar, Inc., a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately US$265 billion in assets under advisement and management as of Dec, 31. 2021. The Company has operations in 29 markets.

    For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

    ©2022 Morningstar, Inc. All Rights Reserved.

  • Personal Tax Relief for 2022

    Personal Tax Relief for 2022

    Remember to take full advantage of the tax reliefs available in filing your personal tax returns in 2022.

    It is that time of the year where you need to fulfil your duty as a Malaysian individual if you are earning income.

    E-filing with the Inland Revenue Board of Malaysia (IRBM) will only be available from March 1, 2021 and you must ensure that you submit your filing by April 30, 2022.

    For individuals filing their tax returns, you have some personal reliefs that you can claim, such as personal tax relief, medical and insurance premiums paid during 2021.

    Additional relief is available to further reduce your tax burden for caring for your parents, spouse and children.

    Some changes were made to reduce some of the taxpayer’s financial burden and adjusting to life during the pandemic.

    LHDN-Tax-Relief-For-Resident-Individual
    Image from https://twitter.com/LHDNMofficial/status/1473529533391196160

     

    Tax reliefs for taking care of your parents

    Tax-Reliefs-for-Taking-Care-of-your-Parents.

     

    With a growing ageing population, many of us are required to care for our ageing parents.

    It can be a privilege to spend time with an older parent. However, it is also a huge responsibility and takes a lot of time, energy and money.

    If you are caring for an elderly or sick parent, you can get a tax break to help relieve some of your financial challenges.

    Effective from the Year of Assessment (YA) 2021, the deduction on the expenses incurred by an individual for the medical treatment, special needs and carer for his parents is increased to RM8,000, an increase of RM3,000 from the previous YA.

    The amount includes parents’ medical treatment, limited dental treatment such as tooth extraction, filling and scaling services as well as care services.

    Expenses for caregiving include nursing home or home caregivers, including cost of foreign hired caregivers with valid visas or special work permits.

    However, it shall not include tax payers and taxpayer’s spouse or children. Note that parents who are physically and mentally healthy who may receive such care do not qualify for this deduction.

    Note-on-claims

     

    Tax reliefs if you have children

    Tax-Reliefs-If-You-Have-Children.

     

    Having children is costly, and to reduce the financial burden will encourage better childcare.

    For each child below 18 years old, taxpayers can claim relief of RM2,000.

    For children above 18, the taxpayer can claim up to RM8,000, with the condition that the child is studying or serving under tutelage in a professional trade.

    In addition, if you have children up to age six who attend registered child care centres or kindergartens, you can claim relief of up to RM3,000 for the expenses incurred.

    Since YA 2017, to support mothers in breastfeeding their young children, breastfeeding mothers can claim relief for the purchase of breastfeeding equipment (such as breast pump kit, milk collection and storage and cooler bag) with proof of receipt.

    The relief is up to RM1,000 allowed in total and only claimable once every two years.

    One special tax relief that parents should consider is savings for their children in the Skim Simpanan Pendidikan 1Malaysia (SSPN) account.

    While the child reliefs mentioned earlier can only be claimed by one parent, the relief of up to RM8,000 for savings in SSPN can be claimed by both parents for their respective contributions.

    This is provided that each parent has contributed a net deposit of the claimed amount, even for the same child. This relief has been extended a few times, and the latest extension is to YA 2022.

    Fun-fact-SSPN

     

    Reliefs available for self

    Regardless if you have any such dependents or expenses, you are entitled to RM9,000 relief where evidence of expenses incurred is not required.

    However, for the rest of the reliefs, you are required to provide supporting records.

    Tax-Reliefs-Available-For-Self

     

    Disabilities

    To provide further support for those with disabilities, the government has granted added reliefs for the taxpayers.

    Tax-reliefs-disabilities

     

    Except for the purchase of equipment for disabled use, the rest of the reliefs given do not require proof of expenses incurred.

    ******************

    That summarises the reliefs you can claim in filing for your individual tax return this year based on the latest personal tax filing information updated by the IRBM on January 20, 2022.

    Remember to keep all receipts and supporting records where applicable for seven years, which you will need to produce in the event that the IRBM wants to do a tax audit on you.

  • 2021 Morningstar Fund Awards Malaysia Winners

    2021 Morningstar Fund Awards Malaysia Winners

    Morningstar Asia Limited, a subsidiary of Morningstar, Inc., a leading provider of independent investment research, has announced the winning funds for its 2021 Morningstar Fund Awards Malaysia. The annual Morningstar Malaysia Fund Awards recognise retail funds that have added the most value for investors within the context of their relevant peer group in 2020 and over longer time periods. Morningstar selects the winners using a quantitative methodology, along with a qualitative overlay. Weightings to one-, three-, and five-year risk-adjusted performance are factored into the methodology.

    “The market volatility resulting from the pandemic in 2020 highlighted the importance of investors staying the course and maintaining perspective. The 2021 Morningstar Fund Awards winners stand out for their ability to serve the best interests of investors and deliver excellent returns over the longer term. We applaud all winners for their outstanding achievements,” said Nick Cheung, chief executive officer for Morningstar Asia Limited.

    Wing Chan, Morningstar’s director of manager research practice, EMEA & Asia, remarked, “After a year of exceptional market performance, global financial markets are increasingly pricing in a strong economic rebound this year. Combined with an elevated risk appetite, investors are advised to be mindful of stretched asset valuations and risk of a market pullback. This year’s winners demonstrated their abilities to navigate through turbulent times and delivered competitive long-term results for investors.” The winners of the 2021 Morningstar Fund Awards Malaysia are:

    FUND CATEGORY AWARDS WINNERS
    Best Asia-Pacific Equity Affin Hwang Select Asia Pacific (ex Japan) Dividend Fund
    Best Malaysia Bond Fund AMANAHRAYA UNIT TRUST FUND (BOND FUND)
    Best Malaysia Bond (Shariah) Fund AMANAHRAYA SYARIAH TRUST FUND (SYARIAH BOND FUND)
    Best Malaysia Large-Cap Equity Fund Public Industry Growth Fund
    Best Malaysia Large-Cap Equity (Shariah) Fund Public Islamic Alpha-40 Growth Fund

    The Morningstar fund category awards are based on Morningstar fund data as of 31 December 2020. The awards methodology emphasises the one-year period, but funds must also have delivered strong three- and five-year returns after adjusting for risk within the awards peer groups in order to obtain an award. In selecting winners, fund returns are adjusted for risk using the Morningstar Risk, a measure which imposes a higher penalty for downside variation in a fund’s return than it does for upside volatility.

  • All You Need to Know About the PERMAI Assistance Package 2021

    All You Need to Know About the PERMAI Assistance Package 2021

    In 2020, the Malaysian Government announced four stimulus packages worth RM305 billion to keep the economy running against the backdrop of a global pandemic. Coupled with the initiatives under Budget 2021, it was hoped that 2021 would be a year of swift economic recovery given Malaysia’s past success in managing the Covid-19 outbreak. However, record high cases and widespread community infection had necessitated the re-imposition of the Movement Control Order (MCO 2.0) and a declaration of a National Emergency, the first of its kind for the country in this century.

    In response to these new developments, the Malaysian Government has announced the PERMAI Assistance Package worth RM15 bil. This round of economic assistance aims to at provide vital support to businesses and the general public who may be affected by MCO 2.0. Continued cash assistance to selected groups, improvements in the i-Sinar program, tax reliefs for screening and detection, and loan moratorium extensions stand out as key policy announcements to help uplift the ailing Malaysian economy amid this crisis.

    Despite many hoping that 2021 would see a return to “business-as-usual” practices, it seems that greater uncertainties now lie ahead. For now, the only thing that remains certain is that economic challenges remain and may only abate once global vaccine rollouts have reached optimum levels. In the meantime, taxpayers are faced with further economic uncertainties along with questions as to how these initiatives will help them weather this storm.

    Key Highlights at a Glance

    The focus is on the extension and enhancement of existing schemes that were introduced in 2020, including various tax exemptions and relief, cash assistance. This includes bringing forward the final payment of the Bantuan Prihatin Nasional (BPN 2.0) to 21 January 2021, while households earning up to RM5,000 per month will receive RM300 each, with single individuals earning up to RM2,000 per month receiving RM150 as the first instalment payment under phase one of Bantuan Prihatin Rakyat (BPR) scheme.

    Other highlights include:

    • Expansion of tax relief for full health screening expenses, increased from RM500 to RM1,000 under Budget 2021, to cover COVID-19 screening.
    • The period of claiming special deduction on rental discounts given by landlords of private business premises to Small and Medium Enterprises (SME) is extended to 30 June 2021 and the deduction is expanded to include rental reduction given to non-SMEs.
    • The period of claiming the special tax relief of up to RM2,500 on the purchase of mobile phones, computers and tablets is extended to 31 December 2021.
    • The period of full Sales Tax exemption for purchase of locally assembled cars and 50% exemption of Sales Tax for purchase of imported passenger cars is extended to 30 June 2021.
    • Enhancement and extension of the Wage Subsidy Programme for a further period of 1 month with subsidy of RM600 per employee per month for all eligible employers operating in the states affected by the Movement Control Order (MCO).
    • Relaxation of the condition for Excise Duty and Sales Tax exemption on the disposal of taxi owned more than a period of 7 years to 5 years.
    • Extension of the effective period of inability to perform contractual obligations under the Temporary Measures for Reducing the Impact of COVID-19 Act 2020 to 31 March 2021.

    Image from crowe.com/my

    Employers and Businesses

    In a bid to curb an economic recession, the government has pledged to continue schemes that aim to distribute funds, speed up processes and delay loans. Discounts have also been promised for essential services, with an electricity rebate to all Tenaga Nasional Berhad (TNB) users at a rate of 2 sen per kilowatt-hour from 1 January 2021 to 30 June 2021. Six business sectors will also receive 10% off on their electricity bills from January to March 2021, comprising of hotel operators, theme parks, convention centres, shopping malls, local airline offices as well as travel and tour agencies.

    Other highlights include:

    • Moratorium on MARA loans will be given until 31 March 2021 and MARA will provide a 30% rental discount on business premises for 6 months from November 2020 to April 2021.
    • A guarantee of RM1 billion is given for the Bus and Taxi Hire Purchase Rehabilitation Scheme where a 50% guarantee on financing from hire purchase and leasing companies will be provided for selected buses such as sightseeing buses, and taxis.
    • The implementation of microcredit schemes to micro-enterprises and SMEs that had been announced previously will be expedited.
    • One-off financial assistance of RM500 will be given to tourist guides, drivers of taxis, school buses, tour buses, rental cars and e-hailing vehicles.
    • An allocation of RM300 million is provided to accelerate the implementation of the SME and Micro SME e-Commerce Campaign and Shop Malaysia Online campaign.
    • Enhancement of the Danajamin PRIHATIN Guarantee Scheme with the maximum financing limit increased to RM1 billion and the scope of financing expanded to include working capital with a guarantee period of up to 10 years. The scheme is also now open to foreign-owned companies operating in Malaysia as long as Malaysians make up at least 75% of their workforce.
    • The conditions for the Employment Insurance Scheme program will be relaxed for those who lost their jobs during the enforcement of the MCO.
    • An allocation of RM24 million is provided to fund the full contribution under SOCSO’s Self-Employment Social Security Scheme for delivery riders.
    • An additional allocation of RM650 million is given for the expansion of the Prihatin Special Grant Plus assistance to cover 500,000 SMEs in the 7 MCO states with a payment of RM1,000 each, while 300,000 SMEs in other states will receive RM500 each.

    People

    For citizens, the various allocations are aimed at sustaining the general population, especially those in the B40 and M40 categories, with a focus on essential goods and services that aim to tide them through this trying period of time. RM50 mil will be allocated to the Food Basket Program, which will provide essential food items worth RM100 for each eligible household, while the Employees Provident Fund (EPF) will advance RM1,000 from the amount applied under the i-Sinar Category 2 facility.

    Other highlights include:

    • The free internet connectivity of 1Gb per day initiative will be extended until the end of April 2021.
    • A matching grant with government-linked companies of RM25 million is allocated under the GLIC/GLC Disaster Relief Network for the provision of community assistance to the elderly, homeless, disabled and flood victims.
    • Electricity rebates to all TNB users, both domestic and non-domestic at a rate of two sen per kilowatt-hour, which is equivalent to a reduction in electricity bills of up to 9% for a period of 6 months, from Jan 1 to June 30, 2021
    • Moratorium facility including extension of the moratorium and restructuring of loan repayment will continue to be offered by banks.
    • PTPTN borrowers affected by the pandemic or floods can apply for a 3-month PTPTN loan repayment moratorium and application for this moratorium can be made until 31 March 2021.

    Healthcare Initiatives

    There are several initiatives being extended to frontliners who are tirelessly serving the nation, with funds allocated to healthcare services and personnel in a bid to ensure that the fight against Covid-19 will continue. A one-off payment of RM500 to healthcare frontliners and RM300 to other frontliners will be paid in the first quarter of this year, while the existing special monthly allowance of RM600 to healthcare frontliners and RM200 to other frontliners will continue until the COVID-19 pandemic is over.

    Other highlights include:

    • An additional 3,500 healthcare personnel will be recruited at the end of January 2021 with an allocation of RM150 million.
    • An allocation of RM1 billion will be provided to the Ministry of Health, National Security Council and other relevant agencies for supplies specifically for the healthcare frontliners.
    • An allocation of RM100 million is dedicated for private hospitals to treat Covid-19 and non-Covid-19 patients.
    • RM3 billion is allocated for the Covid-19 National Immunisation Programme.

    Accelerating the Bantuan Prihatin Rakyat (BPR) Assistance

    Bantuan Prihatin National (BPN) 2.0 was introduced by the Government in a special announcement under Kita Prihatin on 23 September 2020. Currently, the amount of assistance channelled under BPN 2.0 is as follows:

    • B40 households – RM1,000
    • B40 single individuals – RM500
    • M40 households – RM600
    • M40 single individuals – RM300
    • The BPN 2.0 payment will be made in two instalments. The first instalment payment was made on 26 October 2020 and the second instalment is expected to be paid in January 2021.

    A similar scheme known as the Bantuan Prihatin Rakyat (BPR) was introduced by the Government in the Budget 2021 to replace the previous Bantuan Sara Hidup. However, information on this payment scheme was not made available during the Budget 2021 announcement. It is proposed that the second instalment payment of the BPN 2.0 will start from 21 January 2021 onwards, but there was no mention on the payment date for BPR.

    Click here to read the full special report from Crowe Malaysia.

    By Crowe Malaysia