The Securities Commission Malaysia has announced that it will liberalise the unit trust fund framework, enabling retail funds to invest in and offer a wider range of investment instruments and activities. Accordingly, this will enable management companies to develop more innovative products whilst ensuring adequate investor protection.
Under the new framework, a robust investment ecosystem is expected to provide a catalyst for product offerings as part of a wealth management solution to meet investors’ retirement objectives, including the offering of wealth decumulation products. The liberalisation is also in line with the Capital Market Masterplan 3’s aspiration to become a capital market that is relevant, efficient, and diversified in the next five years – benefitting each and every stakeholder.
According to SC, unit trust funds continue to be the largest component of the Malaysian Collective Investment Scheme industry. As of 31 October 2021, there are 39 locally-incorporated management companies approved to offer 734 unit trust funds with a total net asset value (NAV) of RM551.36 billion. “These enhancements will enable retail funds to offer more diverse offerings to meet the demand and risk appetites of a wide range of investors. It will encourage the growth and development of unit trust management companies and also, enable investors to rebalance their short and long term objectives with more diversified investment offerings,” said SC Chairman Datuk Syed Zaid Albar.
The amendments in the Guidelines on Unit Trust Funds (Guidelines) will take effect on 1 March 2022, it took into account the SC’s findings following an extensive benchmarking exercise and feedback received from the public consultation process.
Additionally, the SC has engaged with key stakeholders to ensure a seamless implementation of the amendments. The key amendments to the enhanced Guidelines include expanding the list of permissible investments by unit trust funds, enhancing the operational processes in managing a fund, and providing further clarity on existing requirements for market participants.
Other measures include allowing unit trust funds to undertake more activities for the purpose of efficient portfolio management. Risk management requirements at enterprise and fund levels have also been strengthened, including the requirement for fund information to be made available on the management companies’ websites. Consequential amendments to the Guidelines on Private Retirement Schemes and Guidelines on Exchange-traded Funds will also be implemented, with appropriate modifications.
