SC to amend unit trust fund guidelines
Among other things, the new guidelines will allow offerings to be made in multiple currencies, encouraging unit trust funds to be distributed overseas
The Securities Commision (SC) plans to amend its guidelines on unit trust funds that will, among other things, allow offerings to be made in multiple currencies.
"This will encourage unit trust funds to be distributed overseas and facilitate investment by foreign investors who may have found it difficult to cope with vagaries of the exchange rate," chairman Tan Sri Zarinah Anwar told reporters yesterday after delivering her keynote address at The Edge-Lipper-StarMine Awards 2010.
Unit trust players supported the move, saying that it would enhance the funds' appeal to overseas investors.
Under the new guidelines, each unit trust fund can offer multiple classes of units that meet different investor needs, over a single investment pool.
Each class of units will have different features such as the fees and charges imposed and the currency in which it is denominated.
"Thus, the fund can be sold to different target market segments like retail and institutional investors, depending on the class that is selected. This 'multi-class structure' fund can also offer classes denominated in currencies other than the ringgit, thus expanding the fund's appeal to overseas investors," Federation of Investment Managers Malaysia (FIMM) president Tunku Datuk Ya'acob Tunku Abdullah told Business Times via email.
FIMM has been working closely with the SC on the new guidelines, which it believes will bring Malaysia in step with broader international trends and give more depth and breadth to the capital market.
Zarinah said the multi-class structure would enable better matching of the investment preferences for different investor groups.
"Investors need more choices. So the idea behind the amendments is to allow greater flexibility," she said.
For example, investors will be able to choose whether they prefer paying an upfront fee with lower annual fees or higher annual fees in lieu of an upfront fee.
"Anything that gives more flexibility and options to the investor is good for the industry," said Wong Mien, chief executive officer at TA Investment Management Bhd, which manages a fund size of about RM700 million.
Meanwhile, Zarinah said that a tiered system for approving applications to establish funds would be implemented.
This is because the SC has been moving towards a full-fledged post-vetting regime for fund disclosures.
"Unit trust management companies will be tiered based on the quality of their applications (which include disclosures in their offer documents), with those at the uppermost tier being subject to post-vetting (and hence faster approvals) and those at the lower tiers being subject to different degrees of pre-approval review," she said.
The Securities Commision (SC) plans to amend its guidelines on unit trust funds that will, among other things, allow offerings to be made in multiple currencies.
Unit trust players supported the move, saying that it would enhance the funds' appeal to overseas investors.Under the new guidelines, each unit trust fund can offer multiple classes of units that meet different investor needs, over a single investment pool.
Each class of units will have different features such as the fees and charges imposed and the currency in which it is denominated.
"Thus, the fund can be sold to different target market segments like retail and institutional investors, depending on the class that is selected. This 'multi-class structure' fund can also offer classes denominated in currencies other than the ringgit, thus expanding the fund's appeal to overseas investors," Federation of Investment Managers Malaysia (FIMM) president Tunku Datuk Ya'acob Tunku Abdullah told Business Times via email.
FIMM has been working closely with the SC on the new guidelines, which it believes will bring Malaysia in step with broader international trends and give more depth and breadth to the capital market.
Zarinah said the multi-class structure would enable better matching of the investment preferences for different investor groups.
"Investors need more choices. So the idea behind the amendments is to allow greater flexibility," she said.
For example, investors will be able to choose whether they prefer paying an upfront fee with lower annual fees or higher annual fees in lieu of an upfront fee.
"Anything that gives more flexibility and options to the investor is good for the industry," said Wong Mien, chief executive officer at TA Investment Management Bhd, which manages a fund size of about RM700 million.
Meanwhile, Zarinah said that a tiered system for approving applications to establish funds would be implemented.
This is because the SC has been moving towards a full-fledged post-vetting regime for fund disclosures.
"Unit trust management companies will be tiered based on the quality of their applications (which include disclosures in their offer documents), with those at the uppermost tier being subject to post-vetting (and hence faster approvals) and those at the lower tiers being subject to different degrees of pre-approval review," she said.
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