BIMB Arabesque Investment

Disclaimer: IFSG does not intend to offer or solicit anyone to buy these investments, wherever the recipient of this message may be. All investments involve risks and may result in loss. The above information and contents of Investments are for educational purposes only.  You should seek assistance from a licensed financial advisor on investment matters.

Brief information: BIMB-Arabesque i Global Dividend Fund 1 is an open-end wholesale feeder fund incorporated in Malaysia. The Fund aims to achieve long-term capital appreciation. The Fund invests a minimum of 70% of its assets in the target fund and a maximum of 30% in Islamic fixed deposits and/or Islamic money market instruments.

This article is currently undergoing the vetting process.

Introduction to Arabesque i Global Dividend 1 SG (BIMB):

The Arabesque i Global Dividend 1 SG has received authorisation from the Securities Commission Malaysia, allowing its issuance to investors. It is a qualified sustainable and Responsible Investment (SRI) Fund, indicating its commitment to sustainability and responsible investing. However, the Securities Commission Malaysia does not recommend or endorse the fund, and it disclaims any responsibility for the accuracy or completeness of the associated Product Highlights Sheet.

What are you investing in?

Investing in the Target Fund of the Shariah-compliant BIMB-ARABESQUE i Global Dividend Fund 1 offers unique benefits. Developed in collaboration with renowned professors from prestigious institutions, such as Harvard and Oxford, the fund’s investment strategy selects the best combination of stocks in any market conditions.

Investors can expect potential annual income distribution of 6% and capital growth from their investment. The Target Fund also adheres to the United Nations Global Compact Principles for Responsible Investments (UNPRI). It incorporates extra-financial information on environmental, social, and governance (ESG) issues to drive performance and reduce portfolio risks.

In summary, investing in the Target Fund provides the opportunity for income and capital growth, while incorporating ESG considerations and benefiting from a research-backed investment strategy.

Top 10 Holdings	% of TNA
Thule Group Ab	1.28
Tokyo Electron Ltd	1.28
Texas Instruments Incorporated	1.28
Denaher Corporation	1.27
Lasertec Corp	1.26
Hames International Sca	1.26
Booking Holdings Inc	1.25
Sika Ag	1.25
Pandora A/S	1.24
Fortinet Inc	1.24

How do you grow your money by investing in Arabesque i Global Dividend 1 SG (BIMB)?

The Arabesque i Global Dividend 1 SG (BIMB) will invest at least 90% of its NAV into the Target Fund and up to 10% into Islamic fixed deposits, money market instruments, or liquid assets. It follows a passive strategy, with investment decisions made at the Target Fund level. The fund manager may temporarily adjust investments during adverse market conditions to protect unit holders’ interests, but any change in the Target Fund requires unit holders’ approval.

What makes Arabesque i Global Dividend 1 SG (BIMB) Shariah Compliant?

Business Activity Screening

Sharia investment principles do not allow investment in companies which are directly active in, or derive more than 5% of their revenue (cumulatively)2 from the following activities (“prohibited activities”): 

• Alcohol
• Adult Entertainment
• Cinema
• Conventional Financial Services1
• Defense / Weapons
• Gambling / Casino
• Hotels
• Music
• Online Dating2
• Pork related products
• Tobacco

For Financial  Screening

Sharia investment principles do not allow investment in companies deriving significant income from interest or companies that have excessive leverage. MSCI uses the following three financial ratios to screen for these companies:

• Total debt over total asset
  33.33% 30.00%
• Sum of cash and interest-bearing securities over total assets
  33.33% 30.00%
• Sum of accounts receivables and cash over total assets
  33.33% 30.00%

ESG rating of Arabesque i Global Dividend 1 SG (BIMB)

ESG Overall Score: 72
Environmental Score: 71	Social Score: 74	Governance Score: 72
Controversies score: 89

With an overall score of 72, the fund demonstrates a moderate commitment to environmental, social, and governance factors. The environmental score of 71 indicates that the fund takes into account environmental considerations in its investment decisions. The social score of 74 suggests that the fund focuses on social aspects such as employee relations, community engagement, and product safety. The governance score of 72 signifies attention to corporate governance practices within the fund’s investments.

However, it’s worth noting that the fund has a relatively higher controversies score of 89, which suggests potential controversies or negative incidents associated with its holdings. This indicates that there may be areas of concern or issues that need to be addressed within the fund’s investments.

Keep in mind that this analysis is based solely on the provided ESG scores and does not provide a comprehensive understanding of the fund’s specific holdings or investment strategy. For a more detailed assessment, it is recommended to review the fund’s prospectus or consult with BIMB for further information.

Analysis of Arabesque i Global Dividend 1 SG (BIMB)

Analysis	Over a 1 Year Period	Over a 3 Year Period
Alpha	-0.20	-0.37
Annualized Standart Deviation	9.32	10.54
Beta	0.55	0.57
Correlation	0.85	0.77
Information ratio	-0.21	-0.23
Max Drawdown	-6.38	-23.37
R/R Ratio	0.19	0.04
R-square	0.72	0.60
Sharpe ratio	0.06	-0.02
Sortinio	0.04	-0.02
Tracking error	2.33	2.65
Treynor ratio	0.28	-0.11
Value at Risk normal	-3.91	-4.87
Value at Risk normal ETL	-5.03	-6.15
Value at Risk Quantile	-4.58	-5.29
Variance	7.24	9.25

 

• Alpha conclusion of BIMB:

Alpha is like your “extra credit” in school. If the benchmark index (what you are comparing against) goes up by 5%, and your investment in BIMB goes up by 6%, that extra 1% is your Alpha. The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has had a negative alpha of -0.20% over one year and -0.37% over three years. This indicates that the fund has underperformed its benchmark during those periods.

• Annualised Standard Deviation Conclusion of BIMB:

Think of this as a “roller coaster rating.” A higher number means the ride has more ups and downs, making it potentially riskier but also possibly more rewarding. The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has an annualized standard deviation of 9.32% over one year and 10.54% over three years. This indicates moderate volatility or risk associated with the fund’s returns during those periods.

• Beta Conclusion of BIMB:

Beta tells us how closely BIMB follows its benchmark index. If the index goes up or down, we can expect BIMB to behave similarly. A Beta close to 1 means it’s behaving almost exactly like its benchmark.

The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a beta of 0.55% over one year and 0.57% over three years. This indicates that the fund has exhibited lower volatility compared to the overall market during those periods.

• Correlation conclusion of BIMB:

Correlation is like a dance partnership. If BIMB and its benchmark are perfectly in sync, they correlate close to 1. The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a correlation of 0.85% over one year and 0.77% over three years. This indicates a relatively strong positive relationship between the fund’s returns and the benchmark or asset being compared.

• Information ratio Conclusion of BIMB:

The information ratio is a measure of a fund’s risk-adjusted performance relative to a benchmark. It indicates the excess return generated by the fund per unit of risk taken, with a positive value indicating outperformance and a negative value indicating underperformance.

In this case, the negative information ratios of -0.21% and -0.23% suggest that the fund’s risk-adjusted performance has been lower than its benchmark over the one-year and three-year periods. This implies that the fund has not generated sufficient excess return to compensate for the level of risk it has taken.

• Maximum Drawdown Conclusion of BIMB:

This is the “worst-case scenario” number. It shows you the biggest drop BIMB experienced at any point in the given time frame. The Arabesque i Global Dividend 1 SG fund, managed by BIMB, experienced a maximum drawdown of -6.38% over one year and -23.37% over three years, indicating significant declines in value during those periods.

• Risk Reward Ratio Conclusion of BIMB:

This is like the “value for money” metric of investing. A positive number means you’re getting more rewards (returns) than risks, which is generally a good sign.

The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a low risk-to-reward (R/R) ratio of 0.19% over one year and 0.04% over three years. This indicates that the potential rewards generated by the fund have been relatively low compared to the level of risk taken.

• R-Square Conclusion of BIMB:

An R-squared close to 1 means that most of BIMB’s performance can be explained by its benchmark’s performance. It is useful to know if you are considering investing in BIMB or just sticking with a fund that tracks its benchmark.

The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has R-square values of 0.72% over one year and 0.60% over three years. This indicates that a relatively small percentage of the fund’s return variation can be explained by its benchmark or index.

• Sharpe Ratio Conclusion of BIMB:

This ratio measures how much reward you’re getting for each unit of risk. The higher the number, the better the risk-reward trade-off. Lower values indicate that the investment may not be worth the risks involved.

In this case, the negative information ratios of -0.21% and -0.23% suggest that the fund’s risk-adjusted performance has been lower than its benchmark over the one-year and three-year periods. This implies that the fund has not generated sufficient excess return to compensate for the level of risk it has taken.

• Sortino Ratio Conclusion ofBIMB:

The Arabesque Global Dividend 1 SG (BIMB) fund has a one-year Sortino Ratio of 0.04%, indicating a modest return relative to its downside risk over the past year. However, its three-year Sortino Ratio is -0.02%, suggesting that its performance over the past three years has been worse in relation to the risk involved. 

• Tracking Error Conclusion of BIMB:

This tells us how well BIMB is mimicking its benchmark. A lower number is good here, as it means it is tracking its benchmark well.

The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a tracking error of 2.33% over one year and 2.65% over three years. This indicates a significant deviation in performance from its benchmark during those periods.

• Treynor Ratio Conclusion of BIMB:

Think of this as another “bang for your buck” measure but taking into account how the market is doing. Higher numbers are better, showing you’re getting a good return for the market risk you’re taking.

In this case, the positive Treynor ratio of 0.28% over one year suggests that the fund has generated a positive risk-adjusted return relative to its systematic risk during that period. However, the negative Treynor ratio of -0.11% over three years indicates that the fund’s risk-adjusted performance has been negative when considering its systematic risk over that longer timeframe.

• Value at Risk Conclusion for BIMB:

VaR is like your weather forecast but for investment loss. It gives you an estimate of how much you could lose with a certain level of confidence. The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a Value at Risk (VaR) of -3.91% over one year and -4.87% over three years. These figures represent the estimated maximum potential loss the fund could experience during those periods.

• Value at Risk Normal ETL Conclusion for BIMB:

Value at Risk Normal Expected Tail Loss (VaR ETL) is a risk measurement tool that estimates the average tail loss beyond normal based on historical returns, assuming an asymmetric normal distribution. The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a Value at Risk (VaR) with a normal Expected Tail Loss (ETL) of -5.03% over one year and -6.15% over three years. These figures represent the estimated average losses beyond the VaR level.

• Value at Risk Quantile Conclusion:

In conclusion, the Value at Risk (VaR) Quantile estimates VaR by ordering the historical return series from lowest to highest. It measures the potential maximum loss of an investment portfolio at a specified confidence level. 

The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a Value at Risk (VaR) with a quantile of -4.58% over one year and -5.29% over three years. These figures represent the estimated threshold below which a certain percentage of the fund’s returns are expected to fall.

• Variance Conclusion: 

Variance is another measure of how much BIMB’s performance varies. Higher variance means higher unpredictability. But remember, with high risk can come high reward — or, unfortunately, high loss.

The Arabesque i Global Dividend 1 SG fund, managed by BIMB, has a variance of 7.24% over one year and 9.25% over three years. These figures represent the volatility measures or returns dispersion around the mean during those respective periods.

Conclusion

BIMB’s Arabesque i Global Dividend 1 SG fund demonstrates a relatively favourable ESG performance with an overall ESG score of 72. The fund’s environmental score is 71, social score is 74, and governance score is 72. These scores suggest that BIMB incorporates environmental, social, and governance factors into its investment approach and shows a commitment to responsible investing.

In terms of risk and volatility, the fund has an annualized standard deviation of 9.32% over one year and 10.54% over three years. This indicates moderate volatility associated with the fund’s returns during those periods.

When evaluating the fund’s tracking error, which measures how closely the fund’s performance tracks its benchmark, it indicates a significant deviation in performance from its benchmark. The tracking error is 2.33% over one year and 2.65% over three years.

Additionally, the fund’s controversies score of 89 suggests a relatively low level of involvement in controversial activities or events.

It’s important to note that while these metrics provide insights into BIMB’s ESG performance and risk characteristics, they should not be the sole factors considered when making an investment decision. It’s recommended to conduct further research, review the fund’s prospectus, consult with a financial advisor, and assess other factors such as financial performance, investment strategy, fees, and alignment with personal investment goals.

Happy Investing!