OSK-UOB Dana KidSave

One of the most desired by an investor, is to achieve diversification in his or her portfolio and what better way to do so then by investing in a balanced fund. A balance in an investment portfolio is also fundamental to appease an investor in times of uncertainties and volatility. Such a balance can appeal to the investor of any age regardless of his or her objectives. Thus, with market uncertainties continuing to prevail over the Eurozone debt crisis and its contagion effect on the global economy, investors remain cautious with their investment choice, seeking to invest in low to moderate risk investments such as a balanced fund.

Hence, OSK-UOB offer you a Shariah-based fund with its balanced asset allocation strategy in equities and investments comprising sukuk, islamic money market instruments, deposits and collective investment schemes. The investment in equities will enjoy potential capital appreciation upswings while any downswings will be cushioned by its investments in the latter which are defensive in nature.

When making investments, the manager may invest up to 30% of NAV in foreign markets. The fund will invest in Shariah-compliant securities/instruments listed on or traded in Asia Pacific ex Japan markets, including Shariah-compliant securities / instruments of companies that are listed on or traded in non-Asia Pacific ex Japan markets (such as NYSE and LSE).

How about Sukuk ?

At lease BBB rating sukuk issued by Malaysian incorporated companies at the point of purchase by RAM Rating Services Bhd or equivalent rating agencies. Foreign sukuk issued by corporations and financial institutions must carry a rating of BB or higher by S&P or equivalent, whereas sukuk issued by supra-nationals, governments and their agencies need not be rated.

Click here to download prospectus

Source: OSK-UOB IM

New Fund: Hwang AIIMAN Select Income

After the successful performance of AIIMAN series and the superb proven track record of Hwang Select Income fund, it's natural for Hwang to launch this new fund by riding on the story of these.

What is the Hwang AIIMAN Select Income fund?

This is a Shariah-compliant mixed asset (conservative) income unit trust fund that seeks to provide investors with regular income stream through Shariah-compliant investments. It also serves as an alternative investment for investors looking to diversify their portfolio into the fast growing Sukuk market and attractive Shariah-compliant equity market.

What it offers you?

1. Potentially Stable Returns and Regular Income by investing in prudently selected Sukuk and quality dividend yielding equities.
   
   
   
2. Peace of Mind: Managed at Low Volatility rates. It aims to deliver positive returns at low volatility rates through various market cycles.
   
   
   
3. A Diversified and Shariah-compliant Investment. Potential for enhanced return due to the opportunity to tap into new attractive Shariah-compliant investment in view of growing demand for Islamic securities, growth fueled by ample liquidity in the Gulf Corporation Council (GCC) and Asia, coupled with the increasing sovereign Sukuk issuers.

Click here to download prospectus

Source: HwangIM

Understanding Exchange Traded Bond and Sukuk (ETBS)

Today, Malaysia achieve its first milestone in Exchange Traded Sukuk, following the launching of RM300million sukuk by DanaInfra Nasional Bhd. This is the first sukuk for retail investors. When we mention about retail investors, which refer to public, are we ready for this kind of new investment? We should better understand first before jumping onto the ship...

In short, ETBS refers to Exchanged Traded Bond and Sukuk. Generally, bonds/sukuk have always been seen as an asset class to hedge when markets are bearish and a means to develop a steady income over many years. But in the past, these was only accessible to high net worth and institutional investors. Now, with ETBS, all investors can have access to the bond/sukuk market with ease, via the stock market.

What are ETBS ?

ETBS are fixed income securities, also known as bonds or sukuk (syariah compliant bond), that are listed and traded on the stock market. ETBS are issued either by companies or governments (the issuer) to raise funds for their needs. ETBS have varying structures such as fixed rate, floating rate and hybrids.

Why Invest in ETBS ?

Here are some of the reasons to invest in ETBS:

1. Flexibility and ease of trading on Bursa Malaysia
2. Transparency, as ETBS are listed on the bourse, investors will have access to real-time prices and volumes, just like shares, with up-to-date information.
3. Diversification by including ETBS in your portfolio, to complement your investments in other asset classes.
4. Additional income stream, from the steady income stream through regular coupon payments.

What are the Factors that determine the price of an ETBS ?

1. Price and Yield
• It's all about demand and supply in the marketplace. High price, low yield. Low price, high yield. Since the coupon payments for an ETBS are generally fixed to the principal value of the bond, what you pay (price) is crucial to determine the yield.
  
  
2. Interest Rates
• ETBS is sensitive to interest rates changes. Supposing the average interest rate available to investors goes up, the ETBS' current yield will become a less attractive investment. This would caused a decline in the price of ETBS; until when the yield becomes competitive with prevailing rates. The reverse occurs, if interest rates go down.
  
  
3. Credit Risk
• Essentially, credit risk is the likelihood that the issuing entity will or will not be able to repay principal amount and its interest element at maturity. As such, corporate ETBS has higher risk than most government ETBS. It was evaluated and rated by rating agencies, such as MARC, RAM, Moody's and S&P. A top rating (AAA) means the ETBS carries the least credit risk (not without risk). Ratings can be upgraded or downgraded, thus, affecting the price.
  
  
4. Maturity
• Longer maturities have more risk and tend to priced lower (or have higher yields), because of uncertainties in future. Eventually when ETBS start to approach their maturity date, their prices start to get close to the par value.

Please take note that the minimum board lot size for ETBS is 10 units, versus 100 units for shares. You can start trading ETBS simply by opening a CDS account, just like share trading. Happy trading!!!

Source: Bursa Malaysia

Budget 2013: Election or Rakyat centric?

General election is around the corner. External environment was not so promising, following the no ending of European debt crisis, world economic slowdown, and recent tension between China and Japan. I believe all of these would be some key factors being taking into consideration to formulate the Malaysia Budget 2013.

Goodies? Bonus? Cash handout?

Themed as "Prospering The Nation, Enhancing Well-Being of the Rakyat: A Promise Fulfilled". Our prime minister, who is also Finance Minister, tabled the 2013 Budget at Dewan Rakyat yesterday. Over here, Finance Malaysia blog would only touches on some key points:

• Economic growth projected to expand between 4.5% - 5.5%
• Federal Government's revenue in 2013 is estimated to increase to RM208.6 billion
• Continuation of BR1M of RM500 to households earning not more than RM3,000 a month and also extended the aid to cover a payment of RM250 for single unmarried individuals aged 21 and above, earnings not more than RM2,000 a month
• RM 16 million a year group insurance scheme for registered hawkers and small businesses for coverage of up to RM5,000
• FM: Once again goodies were dished out to created a feel-good factor for govt and we doubted whether Msia could achieves the 4% budget deficit target in 2013. Anyway, govt could still succeed by increasing the revenue by using these goodies. How? Very simple, that's to entice the non-registered self-employed and businesses to registered so that they are accountable for their earnings.

Spurring retail bond/sukuk market:

• DanaInfra Nasional Bhd to issue retail bonds worth RM300million by end-2012 to finance MRT development projects
• Additional expenses incurred in issuance of retail bonds and retail sukuk to be given double deduction for a period of 4 years from YA2012 to YA2015
• Individuals investors given stamp duty exemption on instruments relating to transactions of retail bonds and retail sukuk
• FM: It's very clear and straight forward that the govt want to see the soon-to-be launched retail bond/sukuk market to prosper, thus, attracting more foreign funds to the country to make it more vibrant and liquid.

Youth-centric offers:

• A one-off rebate of RM200 for the purchase of one unit of 3G smartphone from authorized dealers for youths aged between 21 to 30 years old with monthly income of RM3,000 and below.
• PTPTN loans: 20% discount for full repayment of loan; 10% discount for regular repayment.
• RM250 1Malaysia book voucher for students studying at institutions of higher learning
• FM: It seems too good to be true for PTPTN borrowers. But, it was attractive for probably 1% of them only. Why? We must remember that they borrow because they doesn't have money in the first place, not because they want to leverage. Do you get my meaning? Or, does govt scared if opposition coalition will void all outstanding loans if they took over?

Addressing the skyrocketing property prices:

• RM500 million by PR1MA to build 80,000 houses in major locations nationwide with selling price ranging between RM100,000 and RM400,000 per unit. Among the locations are KL, Shah Alam, JB, Seremban and Kuantan.
• MyFirst Home Scheme will be enhanced by increasing the income limit for individual loans from RM3,000 to RM5,000 per month or joint loans of husband and wife of up to RM10,000 per month.
• Real Property Gains Tax (RPGT) for properties disposed within 2 years will be taxed at 15% (up from 10%) and 10% for between 3rd to 5th year (up from 5%), whereas other term remained unchanged.
• FM: For us, we think that 15% RPGT is still too low if compared to pre-2007, where RPGT for first 2 years disposal was as high as 30% and 25%. Meanwhile, MyFirst Home Scheme was very tough to get it, as far as we concerned. Once again, good luck to those potential property buyers.

Changes to personal income tax:

• Individual income tax rate to be reduced by 1% for each grouped annual income tax exceeding RM2,500 and RM50,000.
• Tax relief on children's higher education scheme (SPNN) increased to RM6,000 per person (from RM4,000 previously).
• FM: The 1% tax reduction seems more effective to help out those mid-income earners, although it's not much. However, we are disappointed once again for the unchanged REITs withholding tax structure which makes M-REITs less attractive compared to regional REITs.

Government servants is the BIG winner AGAIN!!!

• Minimum pension to be increased to RM820 for those who had served the govt for at least 25 years. More than 50,000 pensioners benefited.
• 1.5 months bonus for civil servants.
• FM: Well... Nothing much we can say about it. This is a govt budget. What's wrong if govt servants being the beneficiary? But, should it be again and again? Hmmm...

"Stocks-to-watch" for the coming Monday:

• Genting, GENM, JTI, BAT on the surprise unchanged sin taxes
• Construction companies on the River of Life projects, EPP projects and schools upgrade
• Consumer related players on the expected extra spending by govt servants with bonuses
• Low cost housing developers (etc. Hua Yang) for possible contracts by PR1MA
• Financial institutions with investment banking arm for the launching of retail bond/sukuk market

New Fund: AmGlobal Sukuk

After AmMutual's asia pacific dividend fund early this month, AmIslamic also don't want to lag behind its sister company by introducing AmGlobal Sukuk. The Fund aims to provide capital appreciation by investing primarily in Sukuk both locally and globally.

To achieve the investment objective, the Fund will undertake active management to enhance and optimize returns from investing in sovereign, quasi-sovereign and corporate Sukuk. The sectorial weightings may be adjusted to maximize the performance. There is no minimum rating for a Sukuk purchased or held by the Fund.

What's so special about this Sukuk Fund?

Value-add of the Fund is derived from active tactical duration management, yield curve positioning and credit spread arbitrage. Credit spread arbitrage and yield curve positioning is part of relative value approach that involves analysis of general economic and market conditions and the use of models to analyze and compare expected returns as well as the assumed risks. The Investment Manager will focus on Sukuk that would deliver favourable return in light of the calculated risks.

In addition, the Investment Manager may also consider Sukuk with favourable or improving credit outlook that provide the potential for capital appreciation for these investments. The Fund may invest in Sukuk of varying maturities. The Fund’s investment maturity profile is subject to active tactical duration management in view of the interest rate scenario without any portfolio maturity limitation.

AmGlobal Sukuk is suitable for investors who :

• want steady growth in value by investing in Sukuk as an asset class;
• have Medium to Long Term investment goals; and
• are willing to assume additional risk associated with investing in Sukuk with longer duration and lower credit ratings.

Source: AmIslamic Funds Management
Click here to download the fund prospectus

New Fund: AmDynamic Sukuk

After the spectacular performance of AmDynamic Bond fund, AmInvestment Services Bhd would like to replicate the success of the conventional fund into this newly launched shariah compliant fund.

The Fund aims to provide capital appreciation by investing primarily in Sukuk both locally and globally. To achieve the investment objective, the Fund will undertake active management to enhance and optimize returns from investing in sovereign, quasi-sovereign and corporate Sukuks. The sectorial weightings maybe adjusted to maximize the performance. There is no minimum rating for a Sukuk purchased or held by the Fund.

More about the Fund

Value-add of the Fund is derived from active tactical duration management, yield curve positioning and credit spread arbitrage. Credit spread arbitrage and yield curve positioning is part of relative value approach that involves analysis of general economic and market conditions and the use of models to analyze and compare expected returns as well as the assumed risks. The Investment Manager will focus on Sukuk that would deliver favourable return in light of the calculated risks.

In addition, the Investment Manager may also consider Sukuk with favourable or improving credit outlook that provide the potential for capital appreciation for these investments. The Fund may invest in Sukuk of varying maturities. The Fund’s investment maturity profile is subject to active tactical duration management in view of the interest rate scenario without any portfolio maturity limitation.

The Fund invests globally, including but not limited to Malaysia, Singapore, Indonesia, United Arab Emirates, Saudi Arabia, Bahrain, United Kingdom, Luxembourg, Jersey, Bermuda, Brunei, China, Australia, New Zealand, Japan, Hong Kong, United States of America and Germany. Notwithstanding the above, investments in foreign markets are limited to markets where the regulatory authority is a member of the International Organization of Securities Commission (IOSCO).

AmDynamic Sukuk is suitable for investors who:

• want steady growth in value by investing in Sukuk as an asset class;
• have Medium to Long Term investment goals; and
• are willing to assume additional interest rate risk, duration risk and liquidity risk associated with investing in Sukuks with longer duration and lower credit ratings.

Click here to download the fund prospectus

Source: Fund's prospectus