TheEdge
KUALA LUMPUR: OSK-UOB Unit Trust Management Bhd is trimming its bets on equities this year but will boost exposure in other asset classes such as bonds to safeguard its portfolio of more than 30 funds amid a volatile global investment landscape.
While still optimistic on the Malaysian capital markets, the firm is also planning to embark on more overseas-oriented schemes this year to widen its investment scope, and introduce a new Islamic unit trust fund.
“Our direction is more on conservative funds that give investors lower volatility,” OSK-UOB executive director and chief executive officer Ho Seng Yee told reporters here yesterday after the launch of the “OSK-UOB Malaysia Dividend Fund.”
With the latest fund, OSK-UOB has 34 offerings, 47% or 16 of which are equity products, its website shows.
From left: UOB-OSK Asset Management Sdn Bhd executive director/CEO Lim Suet Ling, chief investment officer Jason Chong and OSK-UOB Unit Trust Management Bhd executive director and chief executive officer Ho Seng Yee at the launch of the OSK-UOB Malaysia Dividend Fund in Kuala Lumpur yesterday.
Global anticipation of the US sinking into a recession is triggering concerns that the world’s largest economy will import fewer products from Asian countries including Malaysia.“We are positive on Malaysian equities. Malaysia can be viewed as a safe haven by investors during times of uncertainties. Both the economy and stock market are somewhat insulated from global shocks,” said Ho, who is a council member of the Federation of Malaysian Unit Trust Managers, which represents 69 unit trust players.
“Reports have shown that 86% of Malaysia’s gross domestic product (GDP) is derived from domestic demand, more than 90% of 2008 projected GDP growth of 6%-6.5% is expected to come from domestic demand growth and 77% of stocks by market capitalisation on Bursa Malaysia comprise domestic oriented companies,” Ho said.
Lipper head of research for Asia (excluding Japan), Kenneth Koh, said: “Malaysia is also being increasingly touted for its defensive qualities, although if January’s wild swings are any indication, increased stock market volatility will be the norm going forward.”
Meanwhile, the OSK-UOB Malaysia Dividend Fund, will invest at least 70% of its net asset value (NAV) in growth, and high-dividend yielding stocks on the local exchange to achieve expected annual returns of up to 14%, said Ho.
The 14% yearly gains were computed based on a forecast 10% capital gain, and 4% dividend yield via a relatively defensive portfolio including shares of gaming, telecommunication, and tobacco companies.
At 25 sen apiece, the open-ended 1.2 billion unit trust fund translates into a RM300 million scheme which will also park up to 30% of investors’ money in other instruments such as bonds, and the money market.
OSK-UOB posted a net profit of RM5.4 million on an operating revenue of RM71.2 million in the six months to June 30, 2007 versus RM5.6 million net profit and RM66.2 million revenue in the full year ended Dec 31, 2006, according to the Malaysia Dividend Fund prospectus.
OSK-UOB, 70%-30% owned by OSK Investment Bank Bhd and United Overseas Bank (Malaysia) Bhd, plans to launch some 10 new unit trust funds this year to expand its fund size by about 25% to RM5 billion from about RM4 billion last year.
According to the Securities Commission, as at last Jan 31, Malaysia had 531 approved unit trust funds with a combined NAV of RM170.02 billion which accounted for 16% of Bursa Malaysia’s RM1,057.33 billion market capitalisation.
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