Malaysia’s securities regulator may open up private retirement schemes to exchange-traded funds.
Mohammad Faiz Azmi, chairman of Securities Commission Malaysia (SC), said the regulator is reviewing the structure of private retirement schemes to give individuals greater control over how their savings are invested.
The SC’s current guidelines allow private retirement funds to invest in transferable securities, money market instruments, derivatives, and real estate.
According to Mohammad Faiz, younger investors are increasingly turning to foreign ETFs.
“When you talk to the younger ones, they are all investing in ETFs abroad…If I bring the ETF here or mirror it here, then you don’t have to buy it in US dollar. This is the thing we need to look at…This is what the market wants,” he said at the launch of the SC’s new five-year capital market master plan on March 9.
He said ETFs allow fund providers to create cost-effective products as well as cater to the needs of investors looking for thematic products.
Malaysia launched its first ETF in 2005. It now has 13 listed ETFs with combined assets of about 2.4 billion ringgit (US$611 million), a tiny fraction of the 546 billion ringgit of assets managed by the unit trust industry.
Malysia also lags far behind neighbouring Singapore where the ETF industry has grown to $15 billion since the first fund was launched in 2003.
