FMUTM welcomes BNM’s revision to foreign investment limits
23rd MARCH 2005
The Federation of Malaysian Unit Trust Managers (FMUTM) hails Bank Negara Malaysia’s (BNM) announcement today that “The limit that can be invested abroad by unit trust management companies (UTMCs) is also increased to 30% from 10% of the Net Asset Value (NAV) attributed to residents”.
The latest move by BNM is timely and certainly a step in the right direction. It will provide the depth and breath for our capital markets to develop, and the impetus for unit trust funds to diversify investments and in the longer term, we should expect to see better returns. In essence, the unit trust industry is convinced of the urgency and priority to liberalize the management of investment funds to allow for greater geographical portfolio diversification, which in turn can enhance investment returns. In fact, investing a portfolio across mixed asset classes in different markets translates into a better risk-return profile for funds.
The timing is spot-on; first the Employees’ Provident Fund (EPF) was recently given the nod to invest RM 1.9 billion in listed securities overseas, and now the UTMCs are granted greater flexibility to launch substantial forays in markets abroad. All this augurs well for FMUTM’s aspirations to encourage its members to diversify and widen their business boundaries and serve as an additional avenue for UTMCs to offer higher yields to their unitholders (investors).
FMUTM has long been lobbying for a liberalization of the foreign investment limit for unit trust funds. Indeed, the Federation had submitted a proposal to BNM on 8 July 2002 entitled “Proposal To Revise Foreign Investment Limit For Unit Trust Funds”. In particular, we had recommended that specifically designed funds for full investments abroad be allowed. Among other reasons, the earlier restriction limits have posed problems for our industry members to manage funds abroad efficiently and effectively on an economical scale.
Ultimately, the vision to build a strong and sustainable economy premised on an internationally competitive financial and capital market environment would then become more achievable in the long term.
FROM THE DESK OF TUNKU DATO’ YA’ACOB TUNKU ABDULLAH,
PRESIDENT, FEDERATION OF MALAYSIAN UNIT TRUST MANAGERS
23 March 2005
Issued on behalf of the Federation of Malaysian Unit Trust Managers. Members of the Press requiring assistance may contact Mr. Lee Siew Hoong, Executive Director, at tel no: +(60)3 – 2093 2600 or fax no: +(60)3 – 2093 2700 or e-mail: email@example.com