KUALA LUMPUR (Dec 6): Affin Hwang Asset Management Bhd (Affin Hwang AM) has rolled out its first exchange traded fund (ETF), which aims to provide investors with investment results that closely track the performance of gold prices through a Shariah-compliant investment structure.
Dubbed "TradePlus Shariah Gold Tracker", the fund will invest a minimum of 95% of its net asset value (NAV) in physical gold bars purchased from London Bullion Market Association (LBMA)-accredited refineries, with the remaining balance invested in Islamic money market instruments and/or Islamic deposits for liquidity purposes.
In a statement today, Affin Hwang AM managing director Teng Chee Wai said the fund is the first of its kind in the domestic market, which will provide investors with a low-cost and efficient entry point to gain exposure to gold, by tracking the LBMA Gold Price AM index — a commonly used benchmark for gold ETFs globally.
On the performance of gold, Teng said the precious metal remains one of the most popular form of investments that is proven to be a quality long-term store of value.
“For instance, in the last two bear market cycles during the 1997 Asian Financial Crisis and 2008-GFC (February 1997-August 1998; December 2007-March 2009), we saw the performance of gold moving counter to the benchmark FBM KLCI, which was down 75.2% and 39.6% respectively, while gold returns had soared above 20%.
"Thus, investors are able to prevent losses from being amplified during heightened periods of market volatility, especially in view of potential geopolitical risks and flare-ups that continue to be a mainstay of markets for time to come,” Teng added.
Bursa Malaysia Bhd chief executive officer Datuk Seri Tajuddin Atan said the stock exchange has rolled out several initiatives to support ETF listing and trading, aimed at improving the Malaysian ETF market's liquidity and vibrancy.
These include a new market-making incentive for ETFs. The government has also announced that ETF trading on Bursa will be exempted from stamp duty, starting next year.
"This is set to spur ETF trading activities even further,” Tajuddin added.
Certified by advisory firm Amanie Advisors, which also acts as the fund’s Shariah adviser, TradePlus Shariah Gold Tracker's investment structure requires each unit of the fund to be physically-backed and segregated on an allocated basis in a secure vault.
Investors are provided with an option for physical redemption (subject to fees & charges), for a minimum redemption unit block of 500,000 units, which is equivalent to an estimated 5kg of gold, Affin Hwang AM said.