KUALA LUMPUR: Kenanga Investors Bhd today listed the Kenanga KLCI Daily 2X Leveraged ETF (KLCI2XL) and the Kenanga KLCI Daily (-1X) Inverse ETF (KLCI1XI) (OneETF) on the Main Market of Bursa Malaysia Securities Bhd, marking its foray into exchange-traded funds (ETF) by means of leveraged and inverse (L&I) ETFs.
The L&I ETFs are benchmarked against the FTSE Bursa KLCI.
Both KLCI2XL and KLCI1XI adopt a futures-based replication investment strategy in order to provide daily performance that closely corresponds to their respective tracked indexes.
Kenanga Investment Bank group managing director Datuk Chay Wai Leong said it is continuously working to broaden its range of products and solutions to complement the varied goals investors have. While ETFs in Southeast Asia are still in its early stages, it has been garnering strong traction and showing tremendous growth potential.
“OneETF by Kenanga provides investors with a low-cost alternative to diversify and hedge their portfolios. With its multitude of benefits, we look forward to ETFs becoming a mainstream investment option. The introduction of L&I ETFs, particularly the inaugural KLCI-based OneETF, will further invigorate our local bourse by offering investors a wider range of innovative products catering to varying risk appetites,” he said in a statement.
Kenanga Investors executive director and CEO Ismitz Matthew De Alwis said KLCI was decided upon due to the company’s conviction in its own expertise within the Malaysian equities environment.
“The KLCI has been appreciating ever since its steady recovery from the financial crisis of 2008, which is a market behaviour inverse ETFs can help investors with by providing the opportunity to hedge downside risk. Meanwhile, leveraged ETFs enable those with a bullish view of the market to possibly maximise potential returns. Investors will be able to cushion the sharp shifts that may occur as our OneETFs are traded on a real-time daily basis; this is especially significant for institutional investors due to their large exposure,” he added.
Unlike a conventional ETF, the KLCI2XL aims to achieve a return of two times the FBM KLCI 2X Daily Leveraged (Price) Index via futures as margin contracts and money market instruments amongst others while KLCI1XI uses short selling, derivatives trading and other leveraged investment techniques to perform inversely to the FBM KLCI Daily Short (Price) Index. Investors will be able to increase their yield without having to scrutinise the fundamentals of the underlying index components which is a form of passive management.
