Unit trust industry expected to grow 25% to 30%

By DALJIT DHESI

PETALING JAYA: The net asset value (NAV) of the unit trust industry is expected to chart 25% to 30% growth this year underpinned by growing investor confidence from improving global capital markets, according to Federation of Investment Managers Malaysia (FIMM) president Tunku Ya’acob Tunku Abdullah.
He said the 25% to 30% improvement in NAV for the year was a reasonable expectation, given the country’s strong economic fundamentals.
As at end-June, the NAV of the industry was RM164bil, an increase of about 22% against RM134bil at end-2008. NAV refers to the value of the underlying assets held by a fund, minus liabilities.

Tunku Ya’acob said the recent stabilisation and gradual improvement in the world capital markets would bring about better investor sentiment.
Once confidence was restored, investors would be more comfortable taking on higher risk levels, he added. He said to date, there had been no major redemptions or panic selling of unit trust funds by investors in Malaysia compared with other markets worldwide.
“According to Bank Negara’s statistics as at April, there was more than RM300bil in savings and fixed deposit accounts. In view of the current low interest rate environment, some of these funds will eventually find their way into unit trust funds which offer better growth potential,” he said in an email reply.

MAAKL Mutual Bhd CEO Wong Boon Choy said the company expected to see continued improvement in investor confidence in the second half of this year.
The Government’s stimulus packages and their related multiplier effects would help cushion the impact of the sharp external downturn and set the stage for economic recovery in the second half year, he added.

Public Mutual Bhd CEO Yeoh Kim Hong said with risk aversion receding, investors were now selectively repositioning their portfolios to participate in the market uptrend.
This had helped the industry pick up in terms of NAV and sales of equity funds, she said, adding that the company expected the industry to remain resilient in the second half year.
However, HwangDBS Investment Management Bhd head of equities Gan Eng Peng felt that the investment appetite of investors had been affected in the last few months as only a small number was focused on making money, opting instead to preserve wealth and “bullet proof” their finances and businesses.

On fund performance, Tunku Ya’acob said judging from the six-month data, local conventional and Islamic equity funds had been doing relatively well.
“Over the six-month period, the conventional or non-Islamic equity fund sector gave an average return of about 17%. Over the same period, the local Islamic equity fund sector recorded an average return of about 16%,” he noted.
Yeoh said on a year-to-date basis, funds invested in regional markets had outperformed those invested solely in the local market as regional markets had broadly outperformed the domestic market.
Selected sector funds such as real estate funds had outperformed other funds as the regional property markets had stabilised, she added.
Gan said the new stock exchange barometer, the FTSE Bursa Malaysia KL Composite Index (FBM KLCI), was expected to further lift the industry in terms of institutional investor participation.

Institutional investors would not confine their investment portfolio to the 30 counters but also tap the larger opportunities available in the market, he said, referring to the 30 index-linked stocks that make up the FBM KLCI.
According to Wong, the soon-to-be-launched online electronic system, known as E-Pilihan Pelaburan Ahli (E-PPA) for the withdrawal of EPF savings for members to invest in unit trusts, will also help improve the industry’s growth.
The new system is expected to cut the current withdrawal process time from one to two weeks currently to three to five days.

Tunku Ya’acob said investor education was essential to push the industry to a higher level as it was vital for investors to understand the merits of investing early and for the long term.
To better communicate the risk profile of each fund to investors, FIMM has introduced the Fund Volatility Factor (FVF) disclosure for unit trust funds of at least three years.
The FVF is a measure of the rise and fall of a fund’s returns over a period of time relative to its average returns.