ENVISIONING THE FUTURE
27th MAY 2005
The Malaysian unit trust industry made great strides amidst a demanding and changing financial environment in 2004. Total Net Asset Value (NAV) of unit trust funds increased from RM70.08 billion as at end-2003 to RM87.39 billion as at end-2004, representing an impressive growth of 24.7% for the year under review. This sterling performance was far better than the 14.3% appreciation in the local bourse’s benchmark (Bursa Malaysia Composite Index), which already ranked as the sixth best performing market in the world last year (Source: Lipper Asia Ltd). Consequently, the industry’s NAV accounted for a higher percentage of Bursa Malaysia’s market capitalisation at12.1%, which is 1.15 percentage points above the previous year’s level.
“I am delighted to report that 2004 shaped up as a demanding yet progressive and successful year. The Malaysian unit trust industry as a whole made impressive gains, … industry players launched a record number of 61 new funds, contributing in no small measure to the industry’s mounting assets and widening array of unit trust products and services,” said Tunku Dato’ Ya’acob Tunku Abdullah, the President of the Federation of Malaysian Unit Trust Managers (FMUTM), in presenting the Federation’s Annual Report 2004 at its 11th Annual General Meeting held today.
“The Federation will continue to nurture collective and concerted efforts by the industry as well as encourage various initiatives by its members to develop innovative products and services, and generate new growth areas, including overseas investments and private pension funds,” added Tunku Dato’ Ya’acob.
The Asia Pacific region in general and the Malaysian economy in particular performed well in 2004, with Malaysia experiencing a robust GDP growth of 7.1%, despite a year of unexpected (global) political events, natural disasters and the biggest surge in oil prices since 1979. Private sector unit trusts in Malaysia grew 33% in NAV during the year under review to a record high of RM38.4 billion, with equity products representing the major proportion or 45% of industry assets. Islamic unit trust funds also grew rapidly in popularity in the country among both Muslim and non-Muslim investors.
According to Lipper Asia Limited, most fund sectors, in tandem with the healthy appreciation of the benchmark Bursa Malaysia Composite Index, registered strong gains last year, returning on average 7.14%. However, this is lower than the 20.39% average return recorded in 2003. Equity Index Tracking funds were the best performers during the year, with the sector average gaining 15.89% in value. Mixed-Asset Growth funds ranked second with a 10.57% gain, followed by Mixed-Asset Income funds which returned 9.07%.
Malaysia had a bumper year in terms of fund offerings in 2004. Equity funds made up the largest number or 36% of the (61) new fund launches, followed by bond funds and mixed-asset funds which took up 18% and 13%, respectively, of the total fund offerings. A large proportion of these were Islamic funds, which represented 23% of the new funds on offer for the year and were among the most successful products in terms of unit subscriptions.
In 2004, the FMUTM continued to liaise with the regulators and authorities, as well as its members, on the five key areas of priority and growth as detailed in the President’s Statement contained in the Annual Report 2004.
Prospects for the Malaysian unit trust industry are envisioned to be bright. Growth momentum is positive and unit trust fund penetration remains low. Moreover, ongoing changes in regulations and business liberalisation to allow greater flexibility and changes in fund management will provide more breadth and depth to both conventional and Islamic capital markets. Barring any unforeseen circumstances and earnings surprises on the downside, Bursa Malaysia is generally expected to maintain its positive growth trend in 2005, auguring well for equity funds.
Going forward, “The key to success is envisioning the future,” commented Tunku Dato’ Ya’acob. “It is no secret that we have taken the initiative to start the ball rolling in the evolution process; in shaping and moulding the role of FMUTM as it moves inexorably towards successfully redefining and restructuring itself into an association representing all organisations involved in managed funds… the future holds even greater promise for the new expanded entity,” he concluded.
The FMUTM was formally incorporated on 7 August 1993 as a Company Limited By Guarantee but became operational with a full-time Secretariat in July 1995. FMUTM provides a common platform for member companies offering investment management products and services to discuss issues relating to the industry.
FROM THE DESK OF TUNKU DATO’ YA’ACOB TUNKU ABDULLAH,
PRESIDENT, FEDERATION OF MALAYSIAN UNIT TRUST MANAGERS
27 May 2005
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