This outlook was shared during a media briefing held in conjunction with the Recommended Unit Trusts Awards 2025/2026, where 43 outstanding funds from 16 fund houses — including AHAM, Manulife, Principal, Kenanga, RHB, and Eastspring — were recognised for their category-leading performance.
FSMOne Malaysia General Manager Koh Soo Cheng noted a growing shift among local investors, who are increasingly blending unit trusts with ETFs to build more versatile and personalised portfolios. He observed that ETFs offer efficient global exposure, while actively managed unit trusts help investors capture alpha in complex regional markets such as Malaysia and Asia.
“Our Recommended Unit Trusts play a key role in helping investors diversify across equity and fixed income — both locally and globally,” he said.
“We help investors make sense of both passive and active strategies by offering forward-looking insights across asset classes.”
He added that while the US remains in focus, investors are starting to turn their attention to markets like China, where policy and valuation dynamics suggest selective entry points.
Sherman Tam Cheng Wei, Assistant Director at iFAST, said that the global macro environment remains highly polarised, with escalating geopolitical tensions — from Israel-Iran conflicts to US-China trade strains — disrupting capital flows and reinforcing the need for globally diversified portfolios. He also pointed to the consequences of years of aggressive fiscal and monetary policy, particularly in the US, where rising deficits and debt servicing costs are now challenging bond market liquidity and risk appetite.
Sherman highlighted that while major equity indices appear stable on the surface, internal market dynamics tell a different story — narrow leadership, weak breadth, and widening valuation dispersion mean that broad beta exposure is no longer sufficient. Instead, structural positioning and selectivity are becoming increasingly essential.
Malaysia: From Broad Exposure to Strategic Selectivity
FSMOne notes that Malaysian equities ended 2024 on a strong note, buoyed by domestic liquidity and post-Budget optimism. However, the market has since pulled back due to weak earnings, softer external demand, and broader global risk aversion.
Sherman explained that the correction has reset valuations to more reasonable levels, but investors should not expect a quick recovery. The outlook for Malaysia now hinges on stock-picking, patience, and a focus on companies with strong fundamentals, global exposure, and earnings visibility.
China Rebounds; Structural Themes Still Intact
He added that China is showing early signs of a rebound — with policy traction improving, industrial indicators stabilising, and reform momentum building. Against this backdrop and with current valuations remaining depressed, China may present a contrarian opportunity in 2025 for long-term investors.
FSMOne continues to favour structural growth themes such as AI-driven digital transformation, particularly in semiconductors, data infrastructure, and automation. Regionally, the firm is overweight on the “New Asian Tigers” — Japan, South Korea, and Singapore — which offer a mix of reform potential, fiscal discipline, and high-value exports.
Fixed Income Regains Strategic Importance
Domestically, FSMOne maintains a cautiously optimistic outlook on Malaysian equities, supported by long-term themes like FDI inflows, infrastructure development, and strength in the E&E sector. However, execution risks and political noise make a selective approach essential. “Bond yields are no longer negligible — they provide real income, diversification, and a buffer against equity volatility,” Sherman concluded.
“At FSMOne, we aim to guide investors with conviction-driven, risk-calibrated portfolios that reflect today’s realities — not yesterday’s playbook.”
—— Sherman
