Malaysian investors turn to foreign funds

Added 22nd December 2015

The AUM of foreign-invested strategies in Malaysia was up 30.5% to $6.8bn (M$29.6bn) for the first ten months of the year, according to Morningstar data.

Malaysian investors turn to foreign funds

During the same period, 24 foreign-invested funds were launched with an average asset size of approximately M$56mn, according to a Cerulli Associates report citing Morningstar data.

Foreign-invested feeder fund AUM rose 34.5% to M$6bn.

Over the past two years, foreign fund houses have more active in Malaysia, the report said.

Aberdeen Islamic World Equity Fund increased AUM by about 150% to M$256.3m. “UOB Asset Management has launched both wholesale funds and retail funds, while Amundi and Manulife expanded their Malaysian operations via acquisitions in 2014-2015.”

From January to October 2015, Schroders and BlackRock managed M$2.3bn and M$1.4bn of assets, respectively, via the master-feeder structure. That compares to M$1.5bn and M$600m, respectively, at the end of 2013.

“Even though increasing demand for foreign products presents an opportunity for foreign asset managers, distribution costs remain high and brand awareness can be rather costly to build,” the report said.

“For instance, fund houses tapping the market via master-feeder routes will find that fees are usually split three-ways between master fund manager, feeder fund manager and distributor. As of October, average feeder fund AUM was about M$86m and average equity fund management fees were roughly 1.6%.”

A key reason local investors are turning to foreign products is negative sentiment for the home market. Political uncertainty, an economy concentrated on commodity exports and high market valuations have resulted in caution and concern, FSA reported earlier.

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