Wednesday, September 3, 2008

Bright Future Ahead

The domestic unit trust industry accounts for more than 70% of the Malaysian investment management industry.

THE unit trust industry grew further during the first six months, with the launch of new funds, which brought about an increase in the number of units in circulation. Thirty-five new funds were introduced, bringing the total to 530 as at end-June.

Investors continued to view unit trusts as a viable investment instrument, as reflected by the growth in the number of accounts and units in circulation of 14.4% and 10.7%, respectively.

The Islamic unit trust segment continued to grow with the launch of eight new funds to reach 136, while the net asset value (NAV) increased 6.6% to RM18bil as at end-June from RM16.9bil as at end-2007.

The NAV of the overall unit trust industry, however, decreased 5.6% to RM159bil and accounted for 17.7% of the market capitalisation of Bursa Malaysia as at end-June 2008 (end-2007: 15.3%), in line with the decline in the KL Composite Index.

Unit trust fund managers continue to diversify into foreign markets following the liberalisation of the threshold for investments abroad, which was progressively raised to 50% of NAV of resident funds in April 2007.

During the first six months of 2008, 27 new unit trust funds were launched for investment in foreign markets. As at end-June, 11 funds had invested RM401mil in foreign assets, bringing the total number of funds invested in foreign markets to 160 with investments totalling RM13.3bil.

The growth of real estate investment trusts (REITs) and exchange-traded funds (ETFs) has gradually gained momentum. While the total number of REITs, including two Islamic REITs, listed on Bursa Malaysia remained at 13, the total asset size rose to RM7.7bil as at end-June (end-2007: RM7bil).

Meanwhile, Asia's first Islamic ETF was listed on Bursa Malaysia in January, bringing the total to three ETFs during the first six months of the year. The market capitalisation of ETFs rose to RM1.2bil as at end-June from RM531.8mil as at end-2007.

The REIT industry is set to grow further following the recent measures announced in August to enhance Bursa Malaysia as a destination for REIT listings as well as to promote a vibrant and competitive REIT industry.

The measures include raising foreign equity in REITs to 70% from 49%, providing greater flexibilities for REIT managers to manage their portfolios, and allowing REIT managers to issue units up to 20% of its fund size without seeking the mandate from unitholders.

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