Affin Hwang AM launches first leveraged and inverse ETF

From left: Datuk Dr Ahmad Azman, managing director, SJ Securities; Abd Malik A. Rahman, chairman, Affin Hwang Capital; Selvarany Rasiah, chief commercial Officer, Bursa Malaysia; Tunku Datuk Paduka Jaafar Laksmana Tunku Nong Jiwa, chairman, AIIMAN Asset Management; Teng Chee Wai, managing director, Affin Hwang AM; Datuk Muhamad Umar Swift, CEO, Bursa Malaysia; and Jaekyu Bae, executive VP and CIO of Samsung Asset Management.

KUALA LUMPUR: Affin Hwang Asset Management Bhd (Affin Hwang AM) marked a new milestone for the industry with the launch of the country’s first leveraged and inverse (L&I) exchange traded fund (ETF) which was listed on the Main Market of Bursa Securities on Friday.

To bolster its passive offerings, the company announced the simultaneous listing of four ETFs on Bursa -- two leveraged and two inverse ETFs -- providing investors the opportunity to profit from both bull and bear market trends.

“They were TradePlus NYSE FANG+ Daily (two times) Leveraged Tracker, TradePlus NYSE FANG+ Daily (- one time) Inverse Tracker, TradePlus HSCEI Daily (two times) Leveraged Tracker, and TradePlus HSCEI Daily (-one time) Inverse Tracker.

“The ETFs would employ a futures-based replication strategy to provide leveraged and inverse exposure on the indices, but without the common hassle that comes with derivative trading through warrants/futures such as margining or expiry, ” it said.

Benchmarked against the Hang Seng China Enterprises Index and NYSE FANG+ Index respectively, the ETFs will provide investors the option to either gain a (two times) leverage or hold an inverse (- one time) position on the two indices.

“These would provide investors with the opportunity to either double their investment returns through a Leveraged ETF in up markets, as well as the opportunity to gain returns/hedge against losses by shorting the market through an Inverse ETF in down markets, ” it said.

Affin Hwang AM managing director Teng Chee Wai said innovation has always been a key thrust of the company to bring new product solutions and strategies for its clients to help them diversify and grow their wealth.

“With heightened volatility in markets today, the L&I ETFs would provide investors a tactical window to capitalise on benchmark movements by trading on market news/noise and profit from volatility. There is wealth to be made in both directions of the market, ” he said.

Teng said the company picked the two indices (i.e. Hang Seng China Enterprises Index and NYSE FANG+ Index) for their secular and highly volatile trend which is essential for short-term trading tools like L&I ETFs.

“Investors can then express their market views through these instruments and employ them as building blocks in a portfolio whether as tools for trading or hedging purposes, ” he added.

Bursa Malaysia CEO Datuk Muhamad Umar Swift said the stick market was excited to welcome the country’s first L&I ETF, following the enhancement of the ETF framework earlier this year to elevate the potential of the Malaysian ETF market.

“With the introduction of L&I ETFs, the investing public now has a wider range of low-cost investment opportunities to diversify their portfolios with and seek investment results across different time horizons and risk profiles, ” Umar said.

Samsung Asset Management executive vice president & chief investment officer Jaekyu Bae said it was proud of its valued partner Affin Hwang AM in becoming the first issuer of L&I ETFs in Malaysia.

“Our joint partnership and commitment in promoting growth of the ETF market in Malaysia will continue to be strong in the future. As an ETF pioneer in the industry, Samsung Asset Management launched the first L&I ETFs in Korea and Hong Kong that has driven market vibrancy in their respective stock exchanges.”

“We believe these innovative products will attract investors’ participation from both the institutional and retail sector, as well as be a catalyst in spurring growth of other plain-vanilla ETFs. Samsung will continue to give strong support to Affin Hwang AM in advancing the ETF market in this country through more innovative collaboration," Bae said.

With the company’s two current ETF offerings (i.e. Tradeplus Shariah Gold Tracker and TradePlus S&P New China Tracker) which provides exposure to gold and China’s new economy respectively, today’s new listings would bring the company’s total ETFs to six, making Affin Hwang AM the largest ETF provider in Malaysia (in term of number of ETFs listed) as it continues to expand its product suite.