Greetings, fellow investors and market enthusiasts! Today, we delve into the latest annual report from AHAM Asset Management Berhad concerning the TradePlus MSCI Asia ex Japan REITs Tracker. While quarterly reports often offer a snapshot of ongoing performance, this particular report brings a significant development: the fund’s termination. This isn’t just about numbers; it’s a crucial insight into how fund management adapts to market realities and investor interest.
Despite facing a challenging market environment, the fund managed to outperform its benchmark. However, its small asset size and a resulting high expense ratio ultimately led to a strategic decision to terminate operations. Let’s break down the details and understand what this means for investors and the broader market.
Decoding the Performance: A Look at the Numbers
The financial period from April 1, 2024, to March 26, 2025 (the date of termination), reveals some compelling figures. While the fund experienced a negative return, it notably outperformed its benchmark, a testament to its management strategy. However, the overarching theme remains the fund’s strategic termination due to operational challenges.
Key Financial Highlights:
Current Period (1 Apr 2024 – 26 Mar 2025)
- Fund Return: -6.39%
- Benchmark Return: -8.69%
- Outperformance: 2.30%
- Net Asset Value (NAV): MYR 3,943,668
- NAV per Unit: MYR 0.6518
- Units in Circulation: 6.05 million
- Total Expense Ratio (TER): 3.15%
- Portfolio Turnover Ratio (PTR): 0.98 times
Previous Period (1 Apr 2023 – 31 Mar 2024)
- Fund Return: -6.10%
- Benchmark Return: -6.64%
- Outperformance: 0.54%
- Net Asset Value (NAV): MYR 3,642,014
- NAV per Unit: MYR 0.7212
- Units in Circulation: 5.05 million
- Total Expense Ratio (TER): 2.12%
- Portfolio Turnover Ratio (PTR): 0.39 times
Analysis:
- Fund vs. Benchmark: The fund consistently outperformed its benchmark, registering a 2.30% outperformance in the latest period. This suggests the fund’s momentum-based strategy was effective in navigating the challenging market.
- NAV and Units: The Net Asset Value (NAV) increased slightly from MYR 3.64 million to MYR 3.94 million, accompanied by an increase in units in circulation from 5.05 million to 6.05 million. However, the NAV per unit saw a decline from MYR 0.7212 to MYR 0.6518. This indicates that while new units were created, the overall value per unit decreased, likely due to market conditions and the impending termination.
- Expense Ratios: The Total Expense Ratio (TER) rose significantly from 2.12% to 3.15%. The report explicitly states this was “due to increased expenses of the Fund for the financial period… (date of termination)”. Similarly, the Portfolio Turnover Ratio (PTR) jumped from 0.39 times to 0.98 times, attributed to “higher trading activities for the financial period… (date of termination)”. Both increases are direct consequences of the fund’s liquidation process as it wound down its holdings.
Asset Allocation: A Full Liquidation
As of March 26, 2025, the fund’s assets have been entirely liquidated, and it is now holding 100% in cash. This is a direct result of the fund’s termination. Previously, as of March 31, 2024, the fund’s portfolio was predominantly invested in foreign quoted equities, particularly in Singapore (72.79%), Hong Kong (8.92%), and South Korea (10.20%).
Risks, Strategies, and the Inevitable Termination
The Malaysian equity market faced considerable headwinds during the review period. The FTSE Bursa Malaysia KLCI (FBM KLCI) declined by 8.5% year-to-date as of late March 2025, battered by foreign selling, domestic political uncertainties, and global macroeconomic challenges. Key sectors like financials, telecommunications, and construction remained under pressure.
The fund’s manager, AHAM Asset Management Berhad, highlighted that despite these challenges, the fund remained disciplined with its momentum-based strategy, rebalancing its constituents based on quantitative signals. This allowed the fund to rotate into outperforming sectors like energy and technology, providing some cushion against broader market weakness.
However, the report makes it clear: the decision to terminate the fund was a strategic one. The primary reasons cited were the fund’s persistently small asset size, which led to a relatively high Total Expense Ratio (TER), adversely impacting its performance and making its continued management impractical in the best interests of unit holders. The liquidation process was completed on March 26, 2025.
The investment outlook for Malaysian equities remains cautious, with global monetary policy uncertainty, persistent foreign fund outflows, and geopolitical tensions (like the US-China trade war) continuing to weigh on sentiment. While the government’s commitment to structural reforms offers some medium-term catalysts, the fund’s management concluded that “subdued investor interest in Malaysia-focused passive strategies, coupled with the limited scalability of the Fund” ultimately necessitated its discontinuation.
Summary and Investment Considerations
The TradePlus MSCI Asia ex Japan REITs Tracker, despite outperforming its benchmark, has been terminated as of March 26, 2025. This decision was primarily driven by the fund’s small asset base and the resulting high operational expenses, which made it unsustainable to continue managing in the best interest of its unit holders. The fund’s assets have now been fully liquidated into cash, and net proceeds have been distributed to unit holders.
While the termination might seem like a negative outcome, it underscores the importance of fund viability and efficient management. For investors, this report serves as a reminder that even funds designed to track an index can face challenges that lead to their discontinuation, especially when they struggle to attract sufficient assets under management.
Key points from the report that investors should consider:
- Market Headwinds: The Malaysian equity market faced significant pressures from foreign selling, political uncertainties, and global trade tensions.
- Fund Viability: Small asset size can lead to disproportionately high expense ratios, hindering a fund’s ability to deliver competitive returns.
- Liquidation Process: The fund has successfully liquidated all assets into cash, ensuring a smooth return of capital to unit holders.
- Passive Strategy Limitations: Even well-executed passive strategies can struggle if there isn’t sufficient investor interest or scalability in the targeted market segment.
From a professional standpoint, the termination of the TradePlus MSCI Asia ex Japan REITs Tracker appears to be a pragmatic decision by AHAM Asset Management. While no investor wants to see a fund terminated, continuing to operate a fund that is structurally challenged by its size and expense ratio would likely lead to further erosion of value for unit holders. This move prioritizes the unit holders’ best interests by returning their capital rather than incurring ongoing, potentially unsustainable, costs.
This situation highlights a crucial aspect of the investment landscape: fund viability. What are your thoughts on fund terminations due to asset size and expense ratios? Do you think such decisions are always in the best interest of retail investors? Share your insights in the comments below!
