Pheim ASEAN Islamic Fund

PAIF strives to provide the best possible returns  over a long-term period by investing primarily in Shariah-Compliant Equities and Shariah-Compliant Equity Related Securities of companies listed on or traded in the ASEAN market.

Suitable for investors who prefer long-term capital appreciation, are willing to accept high risks, and want to have a portfolio of investment in the ASEAN region rather than a restricted portfolio of domestic securities. 

The Fund seeks to provide capital appreciation. To pursue this goal, the Fund will invest primarily in ASEAN market including but not limited to Malaysia, Singapore, Indonesia, Thailand, Philippines and Vietnam, in accordance with Shariah requirements. 70% – 95% of the NAV of the Fund will be invested in Shariah-Compliant Equities and Shariah-Compliant Equity Related Securities (including Shariah-Compliant Warrants); 0% – 20% of the NAV of the Fund will be invested in Islamic Collective Investment Schemes (including Islamic REITs); and the remaining NAV of the Fund will be invested in Sukuk and Islamic Liquid Assets. The performance benchmark of this Fund is a 5.5% growth in NAV per annum over the long-term.

With a population accounting for approximately 8.64% of the world’s population, the ASEAN regional bloc has a combined GDP of about USD 3.9 trillion ranking 5th among major economies as at December 2023. Home to the 3rd largest labour force in the world, the region has one of the world’s youngest and fastest-growing labour forces which has driven ASEAN to achieve one of the strongest GDP growth rates globally.

With these factors in play, the ASEAN economy is set to overtake Japan to become the 4th largest economy in the world by 2030. Almost 380 million people in ASEAN are under the age of 35, and the middle class in the region is expected to more than double in size to 334 million by 2030. Middle class households are also expected to nearly double by 2025, which will spur rapid increase in demand for goods and services. With increased urbanisation over 90 million people are expected to move to urban areas by 2030, this will spur USD 7 trillion in investment in infrastructure, housing and commercial space.

ASEAN is blessed with commodity deposits, with Indonesia having the largest nickel reserves in the world at 22% (21m tonnes) of known reserves in the world, and Philippines having the sixth largest (4.8m tonnes). In addition, Indonesia is the second largest producer of tin after China, and has the second largest tin reserves in the world. ASEAN is endowed with land and a climate that is well suited for agriculture. Indonesia and Malaysia combined is the largest producer of crude palm oil in the world, while Vietnam and Thailand are the second and third largest rice exporters. Vietnam is also the second largest producer of coffee in the world after Brazil, and the largest producer of cashew nuts. Meanwhile, Philippines and Thailand combined is the largest producer of pineapple in the world.

Though not as swift as the US or China, the pace of ASEAN’s journey in digital innovations and e-commence infrastructure developments has picked up rapidly in recent years. Coupled with the introduction and adoption of disruptive technologies such as Mobile Internet, Big data, Internet of Things, Automation of knowledge work and Cloud Technologies, these developments are spawning an increasing number of investment opportunities.

ASEAN member States’ economies and equity markets are in different stages of development. The region offers investment opportunities in diverse businesses operating under varying economic, governmental and business environment. In addition, ASEAN member states are prime beneficiaries Supply Chains and Manufacturing Relocations out of China as a result of continuing US-China trade and geo-political tensions.

The respective forward Price per Earnings (P/E) estimates for the ASEAN equity markets and other Asian equity markets  remained healthy. From a valuation perspective, with 2024E P/E of ASEAN equity markets expected to range from 10.1x to 13.9x, it is still reasonable after factoring in the region’s economic and earnings growth potential.