Malaysia: Unit trust industry in double-digit growth mode

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bursa_malaysiaIn line with a positive equity market performance, the Malaysian unit trust industry is expected to grow at double-digit rates over 2013, analysts say. Furthermore, the Capital Market Masterplan 2 (CMP2), put in place by Malaysia’s Securities Commission, predicts that the net asset value of unit trust funds would increase up to RM800 billion ($258.5 billion) by 2020. With the current industry growth rates, this could indeed become a reality.

Mutual funds, or unit trust funds, as commonly called in Malaysia, have been showing a remarkable growth rate in concert with the currently bullish equity market performance. During the past two decades, the segment has been one of the fastest growing within Malaysia’s finance industry and is today a strong component of the domestic capital market.

As per official records, the industry achieved an aggregate net asset value of RM249.68 billion ($80.67 billion) in 2011, while at the end of 2012 the value grew further to RM294.85 billion ($95.58 billion), which makes an 18 per cent year-on-year growth rate. Also in 2012, unit trusts accounted for 20 per cent of the market capitalisation at the Bursa Malaysia, being one of the main drivers of the domestic equity market.

Since the listing of the first Malaysian Unit Trust managed by Malayan Unit Trust Limited in 1959, the industry has made great strides in developing new and sophisticated products that led the government to introduce various regulatory frameworks in order to monitor the evolution of this growing industry. Unit trust transactions are also controlled by the Securities Commission (SC) Malaysia, following their impressive economic performance during the 1990s.

Today, the domestic market, strictly regulated by the SC, is composed of 43 unit trust management firms that have a portfolio of 607 unit trust funds. Among them, 171 are non-conventional funds with Sharia-compliant assets, while 436 are conventional funds.

In 2012, no less than 53 new funds have been newly listed. The road map in the Capital Market Masterplan 2 aims at reaching a net asset value of unit trust funds of up to RM800 billion ($258.5 billion) by 2020.

From a regional perspective, the future is promising as a more integrated unit trust market is on the horizon. Many efforts have been made so far to boost cross-border flows between ASEAN members with a particular focus on the cross-border collective investment schemes (CIS) offering. This initiative, promoted by Malaysia, Singapore and Thailand, aims at offering ASEAN CIS-compliant funds within participating ASEAN countries, once approved by an ASEAN regulator.

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Reading Time: 2 minutes

In line with a positive equity market performance, the Malaysian unit trust industry is expected to grow at double-digit rates over 2013, analysts say. Furthermore, the Capital Market Masterplan 2 (CMP2), put in place by Malaysia’s Securities Commission, predicts that the net asset value of unit trust funds would increase up to RM800 billion ($258.5 billion) by 2020. With the current industry growth rates, this could indeed become a reality.

Reading Time: 2 minutes

bursa_malaysiaIn line with a positive equity market performance, the Malaysian unit trust industry is expected to grow at double-digit rates over 2013, analysts say. Furthermore, the Capital Market Masterplan 2 (CMP2), put in place by Malaysia’s Securities Commission, predicts that the net asset value of unit trust funds would increase up to RM800 billion ($258.5 billion) by 2020. With the current industry growth rates, this could indeed become a reality.

Mutual funds, or unit trust funds, as commonly called in Malaysia, have been showing a remarkable growth rate in concert with the currently bullish equity market performance. During the past two decades, the segment has been one of the fastest growing within Malaysia’s finance industry and is today a strong component of the domestic capital market.

As per official records, the industry achieved an aggregate net asset value of RM249.68 billion ($80.67 billion) in 2011, while at the end of 2012 the value grew further to RM294.85 billion ($95.58 billion), which makes an 18 per cent year-on-year growth rate. Also in 2012, unit trusts accounted for 20 per cent of the market capitalisation at the Bursa Malaysia, being one of the main drivers of the domestic equity market.

Since the listing of the first Malaysian Unit Trust managed by Malayan Unit Trust Limited in 1959, the industry has made great strides in developing new and sophisticated products that led the government to introduce various regulatory frameworks in order to monitor the evolution of this growing industry. Unit trust transactions are also controlled by the Securities Commission (SC) Malaysia, following their impressive economic performance during the 1990s.

Today, the domestic market, strictly regulated by the SC, is composed of 43 unit trust management firms that have a portfolio of 607 unit trust funds. Among them, 171 are non-conventional funds with Sharia-compliant assets, while 436 are conventional funds.

In 2012, no less than 53 new funds have been newly listed. The road map in the Capital Market Masterplan 2 aims at reaching a net asset value of unit trust funds of up to RM800 billion ($258.5 billion) by 2020.

From a regional perspective, the future is promising as a more integrated unit trust market is on the horizon. Many efforts have been made so far to boost cross-border flows between ASEAN members with a particular focus on the cross-border collective investment schemes (CIS) offering. This initiative, promoted by Malaysia, Singapore and Thailand, aims at offering ASEAN CIS-compliant funds within participating ASEAN countries, once approved by an ASEAN regulator.

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