Affin Hwang Asset Management (Affin Hwang AM), one of Malaysia’s five biggest private asset managers in terms of assets under management (AUM), has launched the country’s first commodity-based exchange-traded fund (ETF).
The ETF, known as Tradeplus Shariah Gold Tracker (Tradeplus Gold), aims to closely track gold prices. It will be listed on the Malaysian stock exchange on December 6.
At least 95% of the ETF’s net asset value will be invested in physical gold bars, and the balance in Islamic money market instruments and deposits.
“The fund, which will be passively managed, is suitable for investors who seek exposure into gold through a shariah-compliant investment structure, and have a moderate risk tolerance level,” Affin Hwang AM says in the prospectus for the ETF issued on November 28.
Affin Hwang AM is the domestic manager of the fund, while AIIMAN Asset Management (AIIMAN), formerly Asian Islamic Investment Management, is the external fund manager.
The two managers are also spending a total of about US$5 million to create Tradeplus Gold units, which will “be made available to the public only after the fund is listed”, according to the prospectus. It’s not clear how these units will work, and Affin Hwang AM did not immediately respond to questions from Asia Asset Management (AAM).
Gold is traditionally seen as a store of value and is considered to be a safe haven during times of financial uncertainty.
Gold currently trades at about $1,283 an ounce, up from the $1,100 level in 2015, though down from around $1,900 in 2012.
According to a fund manager from another asset management firm, the Tradeplus Gold fund has the right qualities to attract retail investors.
“Retail investors’ awareness and interest on ETFs have been generally low… However, they are relatively familiar with gold investment. Launching a gold ETF may help improve the awareness and take-up rate of ETFs in the long run,” the fund manager tells AAM, speaking on condition of anonymity.
Affin Hwang AM, which is 30% owned by Japan’s Nikko Asset Management International Ltd, had AUM of over 41 billion ringgit (US$9.97 billion) as at end-September 2017.
