Home > Uncategorized > i-VCAP fund to gain from rising CPO prices

i-VCAP fund to gain from rising CPO prices

KUALA LUMPUR: Rising palm oil prices bodes well for the soon-to-be listed MyETF MSCI Malaysia Islamic Dividend as 20 per cent of its share basket is made up of oil palm companies.

Last week, crude palm oil (CPO) futures on the Bursa Malaysia Derivatives market surged past the RM2,700 per tonne level after fluctuating between RM2,500 and RM2,700 per tonne for 15 weeks.

Yesterday, the third-month benchmark CPO futures closed at RM2,779 per tonne. In view of the rising palm oil prices, it is expected that the share prices of plantation companies will go up.


Among the plantation companies in the MyETF MSCI Malaysia Islamic Dividend Top 10 holdings are Kuala Lumpur Kepong Bhd, Hap Seng Plantation Holdings Bhd and Ta Ann Holdings Bhd.

“When the market that an exchange-traded fund (ETF) tracks does well, the ETF itself will also perform well,” said Mahdzir Othman, chief executive officer of i-VCAP Management Sdn Bhd, which manages the fund.

ETFs are open-ended investment funds that track the performance of an index by holding a basket of securities that allow investors to gain exposure to various companies or fixed income securities with just one trade.

ETFs face the same market risks as stocks and equity unit trust funds but incur lower fees because they are passively managed. Investors will not incur sales or exit charges when transacting ETFs, except for the usual trading charges.

Currently, there are five ETFs listed on the local bourse.

The first-ever ETF floated on Bursa Malaysia was the ABF Malaysia Bond Index Fund in July 2005. Managed by AmInvestment Bank, it was then the region’s only bond ETF, tracking Malaysian government bonds.

Then came the country’s first equity ETF, the FTSE Bursa Malaysia KLCI (then known as  FBM30etf), which tracks the top 30 stocks by market capitalisation on Bursa Malaysia. This fund, listed in July 2007, is also managed by AmInvestment Bank.

In 2008, i-VCAP Management launched MyETF Dow Jones Islamic Market Malaysia Titans 25, comprising 25 blue-chip syariah-compliant counters.

 Six years on, i-VCAP Management is launching MyETF MSCI Malaysia Islamic Dividend. Priced at around RM1 per unit, this open-ended fund, with an approved size of 500 million units, will be listed on March 21.

 This  ETF is scheduled to pay dividends to investors twice a year. It is projecting a dividend yield of between four and five per cent. Potential investors are invited to subscribe via CIMB Group, Kenanga Investment Bank and RHB Group.

Also present at the briefing yesterday was i-VCAP Management chairman Wan Kamaruzaman Wan Ahmad, who is also Kumpulan Wang Persaraan chief executive officer. He noted that although ETFs have been traded on Bursa Malaysia for almost a decade, retail interest  has yet to really take off.

CIMB Investment Bank equity capital markets director Bingley Sim concurred that the main challenge faced by ETFs in Malaysia is  the low investor awareness. He said CIMB will hold more roadshows, investment conferences and awareness campaigns to educate the public on ETFs. 
“We will play our role to help increase market liquidity by encouraging more participation from new investors.”

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