i-VCAP to roll out more, different types of ETFs

KUALA LUMPUR: i-VCAP Management Sdn Bhd, a wholly owned subsidiary of ValueCAP Sdn Bhd, plans to launch up to six exchange-traded funds (ETFs) this year, including in different currencies, to provide more options or investment alternatives for investors to boost ETF trading volume in Malaysia.
i-VCAP CEO Khairi Shahrin Arief Baki said at the moment, the volume of ETFs in Malaysia is still not at its expected level, thus there is a need to have more products in the market.
“If we look at the developed markets, such as in the US with the likes of BlackRock, they come up with a lot of products every year and that has spurred the market.
“We’re looking at launching more products at our side, which we believe will help to build the ETF volume with more offerings and we’re looking at different types of products,” he told a press conference after the prospectus launch of its fifth Islamic ETF, the MyETF Dow Jones US Titans 50 (MyETF-US50) here today.
i-VCAP head of business development Zulkifli Ishak said there is a lack of foreign currency-denominated instruments out of Malaysia and those planned should be attractive to foreign investors.
“The target market is not only Malaysia, we’re also targeting Europe and the Middle East because they lack syariah-compliant investments, especially those denominated in dollar.”
Zulkifli said it is working with its syariah advisers to consider the possibility of launching inverse and leveraged ETFs and to address related issues as such investment instruments use futures contracts, which are considered not syariah-compliant.
It is also looking to collaborate with other players in this area as inverse and leveraged ETFs can create interest and liquidity in the market.
Zulkifli noted that in Taiwan, the growth of ETFs came after the introduction of inverse and leveraged ETFs.
“If the syariah-compliant issue is not addressed, we hope other players will come and launch inverse and leveraged ETFs,” he said.
MyETF-US50 will be the first US dollar-denominated syariah-compliant security to be listed on Bursa Malaysia, scheduled for Feb 28. Upon listing, it will be the 10th ETF listed in Malaysia, and the country’s sixth syariah-compliant ETF.
MyETF-US50’s initial approved fund size is up to 500 million units, with an initial issue price of US$1 (RM3.96) per unit. The minimum size of a subscription application under the initial subscription is 100 units.
MyETF-US50 aims to provide investment results that closely correspond to the performance of its benchmark index, the Dow Jones Islamic Market US Titans 50 Index (DJIM US Titans 50). This gives investors exposure to the 50 largest syariah-compliant US companies by float-adjusted market capitalisation with a single investment.
“With (US President Donald) Trump pushing for a tax reduction agenda, we see that the earnings per share for listed companies will improve by 7%-9%. This will translate into better revenue for companies and give good returns to investors,” said Zulkifli.