AFMB's investment philosophy revolves around providing added value to the portfolios by making professional investments decisions, exercising prudence, discipline and flexibility in execution, taking cognizant of the following 3 Cs:

1. Capital preservation
2. Consistent returns
3. Creation of value

The primary objective is to provide investors with tailor-made strategy that would generate return performance in accordance with clients' and unit trust funds' objectives. This is achieved through well-managed, diversified portfolios of equity and fixed income as well as adding value by managing the investments in each asset class to outperform the respective benchmark market return.

AFMB uses qualitative top-down and quantitative approach in managing its investment portfolio. The top-down approach begins with a review of the Malaysian economy and its financial markets in the context of global economic scenario and capital flows. This sets the basis for the overall asset allocation decision. Stock selection for equity portfolios will then be carried out after an analysis on the outlook for the broad domestic economy, the individual sectors within the economy, and the companies within each sector.

AFMB also uses an in-house Investment Decision Model ("IDM"). IDM is a highly quantitative and disciplined process that leverages technology (spreadsheet based system) to overcome the natural limitations of human decision-making. It relies on market consensus from secondary research from various stock broking and two (2) data providers namely, Bloomberg and QC Systems as well as in-house research. We extract more than 200 data inputs of stocks in our radar and determine in-house market consensus. The information from Bloomberg is being captured and simulated on a real-time basis with the IDM.

On a qualitative basis we try to identify undervalued companies with superior earnings prospects. It is our focus and conviction that a company's fundamentals drive its earnings and those earnings, both short and long-term, ultimately drive the stocks price performance. Therefore, we seek to capture both short-term earnings growth, as well as long-term earnings advantage through rigorous fundamental analysis using the IDM.

On average, the price of a stock reflects the market's consensus view of how well the company is positioned to generate future earnings. While this is generally true, we know that a company's stock price may be temporarily higher or lower than its fundamental, or fair value, intrinsic value, relative to similar companies. But in reasonably efficient markets any discrepancy between the current price and the fair value of a stock will be corrected over time. For this, IDM converts the technical charts which generally foretell the market trend into mathematical and logical functions which then becomes part of our investment decision with an unbiased conclusion.

Our broad, fundamental perspective, coupled with our unique, technology-based ability to remain objective, has helped us to turn around the performance of portfolio under our management on private mandates as well as unit trust funds.

For fixed income investments, assessment of the global and domestic scenario will be undertaken to evaluate the impact on the fixed income asset class in Malaysia before asset allocation decision. Emphasis is placed on credit-worthy, investment-grade issuers of debt with due consideration given to the credit standing of individual issuers. Credit quality, value and yield-spread are considered collectively.

The model allows us to use the power of comprehensive, definitive and unbiased information to make sound investment decisions. We are able to evaluate more information on a much wider universe of stocks with far greater efficiency than a typical qualitative fundamental fund manager. This approach and methodology eventually assists us in making consistent, systematic and unbiased investment decision.

At the helm of the organisation, the Board Risk Management Committee ("BRMC") serves as an oversight to the risk management process of the company. Roles of the BRMC include identifying principal risks of the Company and ensuring the implementation of appropriate systems to mitigate and manage these risks. The BRMC, through the Risk Management Committee (RMC), sets, where appropriate, objectives, performance targets and policies to manage the key risks faced by the Company.

The key responsibilities of the RMC are to provide regular quarterly reporting and update the BRMC on key risk management issues as well as ad-hoc reporting and evaluation on new product proposals. The RMC is also responsible to champion and promote the Enterprise Risk Management and to ensure that the risk management process and culture are embedded throughout the Company.

At the forefront, operating departments are responsible for identification and management of risks within their operations. The operating departments are also responsible for compliance of all daily activities with the approved policies, guidelines and procedures.

Investment and Research Committee (IRC)

The AFMB's IRC consist of the CEO or any person delegated by the CEO, Licensed Capital Markets Services Representative(s), and Independent personnel (other than staff of investment department).

They meet once every two weeks and are responsible for:

• Selecting appropriate strategies to achieve the proper performance of the portfolio in accordance with the investment management policies formulated;
• Ensuring that the strategies selected are implemented properly and efficiently by the Fund Managers;
• Monitoring, measuring and evaluating the investment management performance of the portfolio;
• Ensuring that the investment management of the portfolio compliance with the client's mandate, SC Guidelines or any regulations, securities laws and internal investment restrictions and policies.

For the purpose of determining the equity and fixed income exposure level for the portfolio under management the following factors are discussed in the meeting:

• Current economic and investment environment;
• Rate of change of the market since the previous weeks;
• International market condition;
• Negative or positive market development; and
• Relative market valuations.