Page 167 - Profile's Unit Trusts & Collective Investments - March 2025

Fund Manager Interviews

Our strategic emphasis on fundamental strengths and active selection in such uncertainty enabled
the portfolio to weather short-term setbacks and finish the year on a positive note. Our strategy
kept pace with the benchmark throughout this turbulent period, recovering from losses in the
second half of the year to finish in line with it.
On reflection, despite challenges stemming from style-related headwinds, heightened political
uncertainty surrounding the US election, trade tariffs and the dominance of mega-cap technology
stocks in benchmark returns, our disciplined approach to active management and rigorous stock
selection enabled us to deliver commendable performance relative to our peers. Looking ahead, we
remain confident in our ability to navigate the evolving global landscape by upholding our
commitment to strategic decision-making underpinned by robust analytics and a focus on
long-term shareholder value.
In terms of risk management, what methods or strategies are you able to use to protect your
clients’ investments?
We take a holistic view of risk, recognising that it may arise from multiple sources. Given that
our investment process is systematic, we guard against any potential model misspecification by
ensuring that the Maxima Signals are based on robust data, our models are rigorously developed,
and each trade recommendation during a portfolio rebalance is fully validated by an experienced
portfolio manager. Furthermore, our strict portfolio construction constraints limit concentration
by ensuring that exposures are relatively evenly distributed across holdings and that active country
and sector exposures do not exceed 5%. As a result, our portfolio alpha is generated primarily from
style and idiosyncratic sources. We also regularly consult with our market risk team to review
portfolio composition and thoroughly discuss exposure, liquidity, trading, as well as risk and
performance attribution.
Please comment on the year ahead and, if possible, estimate the performance of your fund
over 2 or 3 years. What are your targets and objectives for the year ahead?
As we begin to navigate 2025, we expect the AI theme to remain a central focus to global
investors. We anticipate that AI-driven advancements will extend beyond large-cap technology
companies into smaller firms and across diverse industries. This broadening adoption of AI
technologies is likely to unlock new growth opportunities and enhance productivity in sectors such
as healthcare, finance, manufacturing and consumer goods. Consequently, we believe it is prudent
to monitor companies that effectively integrate AI into their operations and stand to benefit from
increased efficiency and innovation. Ultimately, these innovations filtering into improved financial
health metrics of companies who are successful in that endeavor.
Geopolitical developments are also set to continue to play a significant role in shaping market
dynamics as the new US administration takes office. We expect policy shifts and changes in
international relations to be closely scrutinised, with potential implications for trade, regulation
and global cooperation. The government’s stance on matters such as climate change, technology
regulation and international trade agreements could both create opportunities and present
challenges for businesses operating on domestic and international scales. Thus, we recommend
remaining vigilant to geopolitical events and assessing their potential impact on specific industries
and regions.
Central bank policies will remain crucial in influencing market conditions as authorities
attempt to balance the dual objectives of managing inflation and lowering interest rates. We
recognise that the ongoing efforts to control inflation without stifling economic growth will
require careful navigation by central banks worldwide. Accordingly, we advise that investors
closely monitor central bank communications and policy decisions, as alterations in interest rates
are likely to affect borrowing costs, consumer spending and investment returns. The interplay
between inflation control measures and interest rate adjustments may drive market volatility,
underscoring the importance of maintaining a disciplined and flexible investment approach
throughout the first quarter of 2025. We believe that our distinctive approach, which derives
considerable idiosyncratic returns through stock selection, is well positioned to thrive amid a
landscape of varied economic developments.

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