Awards Winner – Equity Small/Mid-Cap

Let’s learn about the fund a little bit through our short interview with the winner.

How was the portfolio positioned to navigate the market volatility in 2022?

In 2022 with prolonged Russia-Ukraine conflict, stubbornly high inflation, and rising interest rate environment, the fund was able to successfully navigate the volatile market conditions thanks to MFC’s strong investment philosophy which includes incorporating top-down and bottom-up analysis into investment decision, focusing on undervalued stocks, and utilizing an active management style. For example, by incorporating a top-down approach into the investment decision, the fund adjusted its cash-holding proportion to be commensurate with downside risk during the volatile market condition. Furthermore, by incorporating a bottom-up approach with emphasis on high expected return, low risk, and clear catalysts, we were able to select undervalued stocks that generate high returns for the fund.

What are the strengths of your investment team that make the fund successful?

Strengths of our investment team that make the fund successful include the following 1) strong teamwork and communication within the equity team 2) continuous improvement in investment process to combat the ever-changing investment environment 3) active fund management strategy 4) strong and efficient stock valuation process that allow the team to quickly find new undervalued stocks before other investors 5) incorporating the insight and strategies of successful investors who can generate outstanding returns during each market conditions in the past and present 6) understanding the view and sentiment of each player in the market such as fundamentalists, technicians, retails, institutions, and foreign investors and incorporating into fund strategies. These strategies helped us generate excess return (Alpha) for the portfolio and allowed us to manage the portfolio risk appropriately as the market conditions changed.

Comparing with 2022, what is your view on Thailand’s economic outlook and Thai equities; especially small/mid-cap equity?

The global economy in 2023 is expected to slow down especially in the developed market due to the tightening interest policy rate of the central banks to combat inflation. Even though, the inflation rate across the world has already decelerated, central banks across the world continue its monetary tightening policy. As for Thailand, we expect the economy will be able to grow mainly from the expansion of consumption and the return of foreign tourists. However, Thai economy faces some downside risks from the slowdown of global economy especially in the export sector and the volatile market conditions. With these risks, the upside of the SET index market may be limited. Thus, our current strategy is to be selective on stock selection. Some stocks still have upsides due to the ongoing strong earnings momentum and the industry that is currently booming.

What is your opinion regarding ESG investment in Thailand. How does it tie to your portfolio investment decision?

The ESG investment received significantly increased in attention in Thailand during the past few years, mirroring the global trend, as the ESG investment has proven itself to generate sustainable growth as well as deceasing the short-term risk for the company. The company that incorporated ESG into their strategy symbolize its commitment on sustainability both for the environment and for the company. In addition, by incorporating ESG into its investment decision, the companies will be able to generate sustainable return than their counterparts from the superior risk management. Moreover, the ESG driven companies usually enjoy a lower cost of capital as well as better access to the capital market. Thus, long-term investing in ESG driven companies will not only generate sustainable return for the investor but also will generate lower price volatility for the portfolio than its counterparts. MFC Asset Management put strong emphasize on ESG investment and continues to evolve our investment process to better incorporated ESG investing into our investment decision.

How would you recommend to investors who interested in Equity Small/Mid-cap fund?

MFC Mid Small Cap Fund is an active management fund style that invested in Small/Mid-Cap stocks that have strong fundamentals and high growth potential within SET and MAI Index. The fund is suitable to investors that have quite high-risk tolerance as Small/Mid-cap stocks face higher volatility than Large-cap stocks which expected higher investment return. Investors who are interested in the fund can visit the company website (www.mfcfund.com), MFC Wealth application, or contact Investment Consultant of MFC Asset Management for more information.