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Sunday, March 23, 2008

New SC rules on unit trusts

(The Star, 27 Feb 08)

KUALA LUMPUR: The Securities Commision (SC) will be issuing revised guidelines on unit trust funds on March 3.

Chairman Datuk Zarinah Anwar said the revisions were intended to streamline several rules and requirements to ensure they were in line with international standards and that Malaysian unit trust products were globally competitive.

“The implementation of these standards and other international best practices will greatly enhance the transparency of information, alleviate market uncertainty, reduce the cost of compliance and raise the industry's level of integrity,'' she said at the Edge-Lipper Malaysia Funds Award 2008 yesterday.

She said some of the main amendments included the removal of investment restrictions such as investment limits in options and futures, removal of cash borrowing restrictions to meet redemption requests, and doing away with the need to seek SC approval to invest in foreign markets, subject to certain conditions.

She said although unit trust funds were predominantly retail products, it was also important to attract sophisticated and institutional investors who were more receptive to higher risks for higher returns.

“To attract this group to unit trust products, the SC has also relaxed the rules for wholesale funds,” she said, adding that some of the regulations such as the frequency of valuation and repurchase of units would be relaxed and qualified investors for wholesale funds expanded.
Zarinah said within the investment management industry, the unit trust funds were the largest contributors to assets under management.

“Over the last five years, the local unit trust industry grew at a phenomenal pace, and we continue to hold the largest market share in Asean, at about 45% in terms of mutual funds and unit trust assets under management,” she said.
Last year, the number of funds in operation grew 26%, bringing the total number of domestically incorporated unit trust funds to 495, of which 128 are Islamic funds. The net asset value of unit trust funds grew 39% to a record high of RM169.4bil, while that of Islamic funds spiked 84% to RM16.86bil.

With the liberalisation of investments abroad, total foreign investments increased 79% to RM15.16bil, representing nearly 10% of assets under management.

Zarinah added it was important for unit trust managers to move away from focusing on margins and work instead on building scale and efficiency to ensure long-term sustainability.”

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