PETALING JAYA: Bank Islam Malaysia Bhd unveiled a new wholesale Islamic fixed income fund, BIMB Shariah IncomePlus Fund (BSIF) via its wholly-owned subsidiary BIMB Investment Management Bhd.
The bank stated the fund aims to provide sophisticated investors with a low risk investment portfolio offering a regular monthly income distribution, in the form of cash or additional units. There is no lock in period, and no penalty on partial withdrawal.
It explained that the BSIF invests in a portfolio of cash and sukuk as underlying assets that offers a higher cumulative returns to investors while preserving their capital. The fund also offers daily liquidity allowing sophisticated investors to convert their units, wholly or partially into cash and they may redeem their investment on any business day.
Sophisticated investors are able to purchase units of the fund with a minimum initial investment of RM10,000 with subsequent additional investments starting from RM5,000 and its annual management fee is 0.15% per annum (p.a.) with a trustee fee of 0.03% p.a.
BIMB Investment’s chairman, Mohamed Ridza Mohamed Abdulla stated that the fund is tailor-made for corporate investors that seek low risk investment but with higher returns than the traditional term deposits.
“The launch of this fund is timely given the current low interest rate environment. BSIF offers corporate investors the opportunity to diversify and rebalance investment portfolio in cash and high investment-grade sukuk,” he said in a press release.
Bank Islam revealed that the fund is also tax-exempted and the tax vouchers will be shared with investors and 70%-90% of the fund will be invested in cash instruments and 10%-30% of the fund will be invested in sukuk instruments.
BIMB Investment’s CEO Najmuddin Mohd Lutfi pointed out corporations have witnessed a 100 bps reduction in the overnight policy rate (OPR) which has brought it to 2.00%.
“Looking forward, the benign inflation outlook provides further room for monetary easing with prospects of another 25 bps cut from the current OPR level,” he said.
Najmuddin touted the fund as an alternative for corporate investors given the low deposit rate due to the reduction in the benchmark rate and with an exposure of at least 10% to high investment-grade sukuk provides a kicker to BSIF’s returns.
He stated that based on the bank’s indicative portfolio, the fund has a potential to generate a return of 3.18% per annum p.a. despite the current low interest rate environment.
