More options in unit trust, positive response to liberalisation move

PETALING JAYA: The liberalisation of the local unit trust industry will lead to retail investors having more unit trust management companies to choose from, say industry observers.

At Invest Malaysia yesterday, Prime Minister Datuk Seri Najib Tun Razak said that foreign firms will be allowed to fully own unit trust management companies in Malaysia effective immediately.

This measure is aimed at improving investments and promoting the country’s financial system, as it gears up towards achieving developed nation status by 2020.

World Bank senior country economist Fredrico Gil Sander told StarBiz that liberalising specific financial services like unit trust management companies was in line with the broader liberalisation of the services sector.

In 2009, the Government introduced some liberalisation measures allowing foreign ownership of up to 70% in standalone investment banks, unit trust management companies, stockbrokers and insurance companies from 49% before.

CIMB Group chief executive Datuk Seri Nazir Razak was also supportive of the move. “This is good for consumers because the industry will be more competitive.

“I would also add that with more competition locally, Malaysian companies need to respond by going international to compete in other markets,” he said at the conference.

On behalf of foreign fund managers, Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose said he was delighted with the prime minister’s announcement yesterday.

“This is a further removal of constraint for us, which of course, we are delighted with,” he said.

Previously, foreign fund managers were only able to sell wholesale funds to institutions and high net worth individuals of more than RM3mil.

He added that the liberalisation would open the “flood gates” to other fund managers. “This is assuming that you have to become a licensed fund manager here,” he said.

An industry observer said the move gave more options to investors.

“With the liberalisation, investors would have access to various fund managers and other investment products,” he said.

He added that investors would have the opportunity to further diversify their investment portfolios.

Although this could signal more competition to local fund managers in an already diverse retail unit trust industry, the industry observer said it could present opportunities for local fund managers to work with the foreign fund managers to create new products.

The equity shareholding for unit trust management companies would also be liberalised in the spirit of the Asean Economic Community, and to further encourage growth and competition within the unit trust industry, Najib said in his keynote address.

Hwang Investment Management Bhd chief marketing officer Chan Ai Mei said there would be some temporary setbacks as the local industry adjust to the more competitive landscape.

“Certain partnerships or tie-ups will no longer be a viable option anymore,” she said, adding that the industry was likely to evolve to two-tier players; the big firms offering a wide array of products and services, and small niche players offering focused solutions.