KUALA LUMPUR: UOB Asset Management (Malaysia) Bhd (UOBAM (Malaysia)) had on Wednesday launched the United-i Global Balanced Fund, its first Shariah-compliant global balanced fund.
The fund seeks to help Malaysian investors achieve stable income with lower volatility by investing in a diversified, global portfolio of Shariah-compliant asset classes.
Importantly, the fund applies Shariah filters to selected Shariah-compliant global equities and Sukuk to generate income and capital appreciation.
The fund is suitable for investors with a moderate risk appetite and a medium- to long-term investment horizon.
UOBAM (Malaysia) CEO Lim Suet Ling said the fund’s objective is to reduce investment volatility through Shariah screening which filters out non-Shariah sectors such as gambling, weapons and tobacco companies as well as those companies that are overleveraged or have unproductive cash piles.
“This ensures that only companies with low debt ratios and strong fundamentals are included for selection, providing investors with potentially lower investment risk and competitive returns,” she said.
Lim said the fund manager draws upon UOBAM (Malaysia)’s multi-asset expertise to decide its asset allocation strategy and to manage volatility and returns across the portfolio.
“The United-i Global Balanced Fund’s investments are diversified across Asia, Europe, Middle East and the United States.
"Further diversification is achieved through asset class allocation which ensures that the source of the fund’s returns are not concentrated in one asset class but spread across different classes that exhibit little correlation with each other," she said.
The fund is managed by UOBAM (Malaysia) with UOB Islamic Asset Management Sdn Bhd (UOBIAM) acting as the sub-manager, responsible for making asset allocation and investment decisions.
UOBIAM will manage about 50% of the fund’s net asset value, which will be invested in sukuk and Islamic money market instruments and Islamic deposits with financial institutions.
Wellington Management Singapore Pte Ltd will manage the other 50% by investing in shariah-compliant equities.
UOBIAM CEO Suhazi Reza the fund provides diversification to both Shariah-compliant global equities and sukuk in one fund. He explained the fund is suitable for investors looking fot Shariah compliant products.
The advantage, he said, was lower volatility in Shariah investing and yet has comparable returns. Investors, he added enjoyed the benefits of Shariah investing and social responsible investing.
Apart from the industry screen, which is qualitative and prohibits certain sectors, there is also the financial ration screen.
There is a leverage compliance where the debt/market value of equity (36 months average) must be below 33% and hence this removes companies which are over-leveraged.
The cash compliance is that the cash/market value of equity (36 month average) is less than 33%.
He said this is important to ensure the company that the company should not have too much cash rich but instead should use its cash productively.
Suhazi said Shariah securities have lower volatility due to less exposure to sectors that are direcrly exposed to an economic downturn, for example financial and gaming; low debt ratios, lower cash position and serves the real economy.
UOBIAM chief investment officer Muhammad Zulfadzlie Zulkifli said the fund is looking at Indonesia as one of the major markets to invest in under the Shariah compliant assets and Sukuk.
The initial minimum investment is RM1,000 and is available in US$, AU$, pound sterling, renminbi and S$ share classes. The fund is available at all United Overseas Bank (Malaysia) Bhd branches.