Manulife launches new Singapore equity income strategy

[SINGAPORE] Manulife Investments on Tuesday (Mar 3) announced the launch of a new Singapore-focused equity and income growth strategy under the Monetary Authority of Singapore’s (MAS) Equity Market Development Programme (EQDP).

Manulife said the Singapore Opportunities Income Strategy aligns with EQDP’s broader market-building efforts, and is aimed at capturing the opportunities emerging as MAS’ enhancements strengthen the overall ecosystem, “particularly in areas of the market that remain under-researched”. 

The new strategy will exclusively invest in Singapore-listed equities and equity-related securities across market capitalisations, with a particular emphasis on small and mid-cap companies. Manulife noted that “lower coverage and persistent valuation inefficiencies” in this segment create a “compelling opportunity set”. 

It added that the strategy is aimed at delivering a “balanced income and growth outcome through active stock selection”.

“Income is generated primarily through dividends, complemented by disciplined profit-taking as stocks approach fair value, while retaining exposure to longer-term growth opportunities,” said the wealth and asset manager.

“Rather than operating as a pure dividend strategy, the portfolio is constructed to balance income stability with capital appreciation, enabling investors to benefit from valuation reratings arising from corporate restructuring, capital management initiatives and market reforms,” it added.

Stock selection will be driven by a “bottom-up, fundamentals-based investment framework”. Manulife said this will involve assessing companies across growth prospects, cash-flow generation, management quality and valuation, with a “strong emphasis on identifying clear catalysts for potential rerating”.

The strategy will “typically hold 30 to 50 high-conviction positions”; these positions will comprise a portfolio built with strict “risk discipline, liquidity awareness and diversification”.

Although the portfolio will be benchmarked to the FTSE ST All-Share Index, Manulife said that portfolio construction will remain “conviction-led rather than index-replicated”, so capital can be allocated dynamically to areas of mispricing.

Chan Hock Fai, head of equities for Singapore at Manulife, noted that the firm continues “to see valuation gaps in small and mid-cap companies, where research coverage is limited, and catalysts for change are increasingly evident”.

The Singapore Opportunities Income Strategy’s launch comes against a backdrop of strong local market performance. Manulife noted that local equities returned nearly 36 per cent in the past year, outperforming regional peers. Dividend yields also stand at about 4.8 per cent, placing the city-state among the highest in Asia and major developed markets.

At the same time, Singapore’s “appeal as a financial and wealth hub continues to strengthen”, Manulife said, adding that this is “supported by resilient macroeconomic fundamentals, including sustained per-capita (gross domestic product) growth, robust foreign direct investment flows and sizeable national reserves”.