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08 Apr | Wednesday
i-VCAP Launched MyETF–MSEAD IPO - World’s First SEA Shariah Exchange Traded Fund
Malaysia’s latent Exchange Traded Fund (“ETF”) market received a much needed boost with i-VCAP Management Sdn Bhd (“i-VCAP”) launching its Shariah-compliant, MyETF MSCI SEA Islamic Dividend (“MyETF-MSEAD” or “Fund”) – the world’s first Islamic South East Asia underlying ETF.  

The prospectus launch for MyETF-MSEAD was held today at Bursa Malaysia with a tentative listing on Bursa Securities Market scheduled for May 7, 2015. MyETF-MSEAD is an open-ended fund with an approved fund size of 500 million units. Investors can subscribe to the Fund (subscription period up to April 22, 2015) at RM1.00 per unit with a minimum subscription size of 100 units.

The launch of MyETF-MSEAD is poised to inject fresh impetus into Malaysia’s ETF market which for the most part, is still considered nascent.  The Fund will leverage on MSCI’s robust benchmark index which represents regional dividend yielding stocks (MSCI SEA IMI Islamic High Dividend Yield 10/40 Index published by MSCI Inc). The Fund provides an opportunity for investors to have an investment exposure into the potential economic growth of South East Asia region.

Investors would be pleased to note that the MyETF-MSEAD offers immediate diversification into a basket of Shariah-compliant dividend yielding stocks in five leading countries within South East Asia region, which consists of Malaysia, Singapore, Indonesia, Thailand and Philippines.  The Fund comes with relatively low fees, transparency and liquidity via stock-like trading capability. The underlying securities and Net Asset Value are disclosed daily to investors via Bursa Securities and the MyETF Series’ website.   As demand for new financial or investment instruments increases, MyETF-MSEAD creates greater depth and variety for medium to long term retail and institutional investors.

The launch of the Fund is also in line with Malaysia’s effort, being the current Chairman to the caucus, in promoting ASEAN’s growth prospect and financial integration framework.  In addition, it is also hoped that the shariah compliant MyETF-MSEAD can further position Malaysia as the global hub for Shariah investment products.

At present, Malaysia has six existing ETFs listed on Bursa Securities. These are ABF Malaysia Bond Index Fund, FTSE Bursa Malaysia KLCI, CIMB FTSE China 25, CIMB FTSE ASEAN 40 and two of i-VCAP’s existing funds, MyETF-DJIM25 and MyETF-MMID.  MyETF-DJIM25 benchmarks the Dow Jones Islamic Market Malaysia Titans 25 Index, comprised of 25 “blue-chip” Shariah-compliant companies.  MyETF-MMID, which was launched early last year, benchmarks the MSCI Malaysia IMI Islamic High Dividend Yield 10/40 Index, focusing on dividend yielding stocks listed on Bursa Securities.

Speaking at the launch event, i-VCAP’s CEO, Mahdzir Othman, highlighted that ETFs present a cost efficient, transparent and convenient investment option for investors.  ETF is a proven and well accepted product in developed financial markets and that it is timely that Malaysian investors follow suit.

“The global ETF market is currently valued at more than USD2.9 trillion and continues to grow. The reason for this is that investors globally see its value.   Investors in Malaysia however have yet to appreciate and understand the key benefits of investing in ETFs.  Besides investor education, efforts also need to be carried out to enhance the ETFs investment eco-system that involves other players like the stockbrokers, regulators and other intermediaries.  We hope all parties will make a concerted effort to create a vibrant and dynamic ETF market in Malaysia,” shared Mahdzir.

He also added that the presence of ETFs is a further sign of increased sophistication and progress in Malaysia’s equity market as more asset classes come to the fore.

“As we look to further develop domestic financial markets to be on par with other countries, there is a need for a greater variety of products and sophistication. ETFs are part of this process. With support from regulators and industry players, in the long run, ETFs will prove to be a very viable proposition for Malaysians,” he added

While often misunderstood, an ETF is similar to a mutual fund except that it can be bought and sold like a share as it is traded in real time on a stock exchange. Like a unit trust, it provides exposure to a basket of securities but charges much lower fees as they are passively managed. In addition, investors will not incur any sales or exit charges at all times when investing in ETFs except for the normal transaction charges when trading through the exchange.

On Bursa Securities, units are transacted via board lots (100 units). ETFs can be backed by different asset classes, geographical and industry exposures and investment styles or strategies.


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