When capital growth becomes a moving target, standing still is rarely an option, but chasing every market fluctuation can leave portfolios vulnerable to fatigue and unnecessary risk. Over the past two years, Malaysian equities have provided a clear illustration of this challenge. The FBM KLCI Index experienced a sharp, tariff-driven correction in April 2025, followed by a strong market recovery, before settling into the narrower trading range we see today amid evolving foreign fund flows, currency movements, and global interest rate uncertainty.
In this current sideways market environment, sophisticated investors are increasingly turning their attention to a more dependable source of returns: Dividend Yields.
*FBM KLCI Index showing the range from March 2025 to 10:54, 8th July 2026, Bloomberg
Defining the Dividend Enhanced Mandate
The Phillip Capital Dividend Enhanced Portfolio is an actively managed portfolio available through both cash (PMA) and EPF retirement savings (PMART). The mandate strips away human bias, emotional trading, and momentum chasing. In their place, it installs a strict, rules-based architecture built exclusively around large-cap, cash-rich Malaysian enterprises offering highly resilient dividend distributions.
We believe dividend-yielding equities can offer greater resilience than the broader market, as companies with a consistent track record of dividend payments are often more established and supported by stronger cash flow generation. Companies such as Bank Islam Malaysia Bhd and Petronas Dagangan Bhd demonstrate financial discipline through their commitment to maintaining consistent dividend payouts, even during periods when share prices stagnate or experience pullbacks.
This resilience is driven by a simple mechanism: capital appreciation and dividend income can take turns contributing to overall returns. During market rallies, investors benefit from share price appreciation. When markets move sideways or decline, as they have in recent months, dividend income can become a more meaningful contributor, helping to cushion overall portfolio performance.
The core philosophy of the fund is “Dividends as a Financial Airbag”, built on the principle that consistent dividend payouts can serve as a vital buffer during economic downturns. Similar to how an automotive airbag absorbs impact to protect passengers, a resilient dividend yield can help absorb the effects of macroeconomic shocks.
By transforming corporate earnings distributions into a defensive source of returns, the fund aims to provide a reliable income stream during bearish market cycles, giving investors greater confidence to remain invested without the need to time unpredictable market movements.
The rule-based process removes human bias and emotional trading through a strict quantitative screening of all Bursa Malaysia-listed companies.
Risk Mitigation: Selecting from the highest market-cap brackets minimises liquidity and systematic risk
Formulaic Focus: Stocks are screened dynamically using the traditional formula:
Minimal Intervention: The strategy relies heavily on automation. Human intervention is heavily restricted to execution, with a rule allowing a stock to be held for a maximum period of 3 months under extraordinary circumstances.
Back-testing: Rigorous simulations for strategy.
Proven Outperformance: PMART Dividend Enhanced Advantage
On the domestic front, this dynamic plays out clearly within the Phillip PMART Dividend Enhanced Portfolio. Since its inception in April 2020, the Conventional portfolio has delivered a cumulative return of 68.14%, more than double the FBM KLCI’s 25.13% over the same period, a gap that has widened even through the market swings of the past two years (as of 31st March 2026).
Exhibit 1: Dividend Enhanced Portfolio – Conventional
Exhibit 2: Dividend Enhanced Portfolio – Shariah
Conventional vs. Shariah Differentiation
To accommodate the different investor preferences and ethical requirements, we deliver the rule-based framework through two different pathways, both still maintaining the same 15-stock, equally weighted discipline:
Conventional and Shariah Mandate: Selects the 15 highest dividend-yielding stocks from the eligible universe to maximise consistent cash returns.
Dividend Enhanced Mandate Comparison to Other Fund Returns during Market Crises
The following is funds in comparison to Dividend Enhanced Mandate using KLCI as a benchmark (as of 31 December 2025):
(Source: Lipper, PCM, 31 December 2025)
(Source: Lipper, PCM, 31 December 2025)
As shown in the graph above, the portfolio has delivered steadier growth than comparable funds, demonstrating lower sensitivity to key market events highlighted along the timeline. Funds H and K experienced sharper volatility during periods such as the Yen Carry Trade unwind and US AI Chip Restrictions, while the Dividend Enhanced Mandate remained more resilient. Its focus on large-cap, dividend-paying stocks helped cushion drawdowns and maintain consistent return momentum. This reflects the “financial airbag” philosophy providing stability through dividend income when market sentiment weakens and capital gains slow.
Understanding the Risks
As with any equity investment, the Dividend Enhanced Mandate is subject to market price fluctuations and investment risks. High dividend-yield stocks are often found in slower-growth sectors, as high-growth companies typically reinvest profits rather than distribute them, which may result in more limited upside potential compared to growth-oriented strategies. Certain stocks within the eligible universe may also face liquidity risks, particularly during periods of low market activity. In addition, the strategy relies on a quantitative, rule-based model, with performance dependent on the model continuing to operate as intended. This is why the strategy undergoes rigorous back-testing to validate its robustness.
Fees and Minimum Investment
Through PMART (using EPF savings), investors can start with a minimum investment of RM10,000, increasing to the standard RM30,000 threshold over the following year. A 3% service fee and 1.5% annual management fee apply. Through PMA (cash investment), the minimum investment ranges from RM50,000 to RM200,000, with the same 3% service fee, a tiered annual management fee starting from 1.5% p.a.
Who Should Consider This Mandate
The Dividend Enhanced Mandate is tailored to investors who have a moderate risk profile who are looking for a long-term, stable, income generating equity strategy, whether using their direct cash for investment or their EPF. For investors who value consistent income and downside resilience over speculative, fast-moving gains, it offers a disciplined middle ground.
Disclaimer
The information contained herein does not constitute an offer, invitation, or solicitation to invest in any product or service offered by Phillip Capital Management Sdn Bhd (“PCM”). No part of this document may be reproduced or circulated without prior written consent from PCM. This is not a unit trust or collective investment scheme and is not an obligation of, deposit in, or guaranteed by PCM. All investments carry risks, including the potential loss of principal.
Performance figures presented may reflect model portfolios and may differ from actual client accounts’ performance. Variations in individual clients’ portfolios against model portfolios and between one client’s portfolio to another can arise due to multiple factors, including (but not limited to) higher relative brokerage costs for smaller portfolios, timing of capital injections or withdrawals, timing of purchases and sales, and mandate change (e.g., Shariah vs. conventional). These differences may impact overall performance.
Past performance is not necessarily indicative of future returns. The value of investments may rise or fall, and returns are not guaranteed. PCM has not considered your investment objectives, financial situation, or particular needs. You are advised to consult a licensed financial adviser before making any investment decisions.
While all reasonable care has been taken to ensure the accuracy and completeness of the information contained herein, no representation or warranty is made, and no liability is accepted for any loss arising directly or indirectly from reliance on this material. This publication has not been reviewed by the Securities Commission Malaysia.
