MyETF Dow Jones U.S. Titans 50 exchange traded fund (ETF) recently debuted on Bursa Malaysia Securities Berhad (‘Bursa Securities’) as Malaysia’s first US Dollar denominated security to be listed on the domestic bourse. MyETF-US50 is managed by i-VCAP Management Sdn Bhd, a wholly-owned subsidiary of ValueCAP Sdn Bhd.
Retail and institutional investors subscribed to a total of 11.84 million units during the initial offer period which ended on 9 February 2018. MyETF-US50 had an initial approved fund size of up to 500 million units, with an initial issue price of USD1.00 per unit.
MyETF-US50 aims to closely correspond to the performance of its Benchmark Index, the Dow Jones Islamic Market U.S. Titans 50 (“DJIM US Titans 50”) Index, consisting of the 50 largest Shariah-compliant U.S. companies by float-adjusted market capitalisation. MyETF-US50 is entirely tradeable in U.S. Dollars on Bursa Securities.
Khairi Shahrin Arief bin Baki, Chief Executive Officer of i-VCAP, said that the underlying index from Dow Jones was selected because it highly corresponds to the S&P 500 Index on a 5-year basis. The S&P 500 achieved a return of 19.4% in 2017 and continues to be one of the most watched benchmarks in the world.
“The U.S. equity market has always been and will continue to be the main recipient of global equity allocation. This makes MyETF-US50 an attractive investment tool as it provides a unique opportunity for retail and institutional investors to access the U.S. market via Shariah-compliant blue chips, entirely in U.S. Dollars,” Khairi said.
The DJIM US Titans 50 Index tracks 50 Shariah-compliant U.S. blue chip companies including Apple Inc., Microsoft Corp, Facebook Inc., Johnson & Johnson, Exxon Mobil Corp., Alphabet Inc. (Google’s holding company), Chevron Corp., Home Depot Inc., and Intel Inc., plus 40 more blue chip US companies.
Sharifatu Laila Syed Ali, Managing Director and Group CEO of ValueCAP, said: “The listing of MyETF-US50, denominated and entirely tradeable in U.S. Dollars, is a significant milestone for ValueCAP and in promoting our role further in the Malaysian capital market.
“It is a testament to our Group’s commitment to driving the Malaysian ETF industry to the next phase and enhancing the vibrancy of the domestic capital market by providing more diverse and innovative product offerings. Innovative products like this provide investors with alternative passive strategies to ride market volatility.”
Chief Executive Officer of Bursa Malaysia Berhad, Datuk Seri Tajuddin Atan said, “We are very excited with the listing of the MYETF-US50 as it is the first foreign currency securities listing on Bursa Malaysia. I believe this is an important step towards enhancing the breadth and depth of Bursa Malaysia’s offerings as well as the Malaysian ETF market.
“This ETF will establish Bursa Malaysia as a multi-asset and multi-currency exchange that is set to attract more issuers and investors into our capital market. We will continue to play our part to enhance the eco-system to support ETF listings and intensify investor engagement to spur ETF trading activities even further.”
ETFs: An Attractive and Accessible Investment Product
ETFs are one of the fastest growing investment products, with the global ETF market hitting a record high of USD4.8 trillion in assets last year, an increase of 36.3% from the previous year . This upward trend is expected to continue, with ETF assets anticipated to reach USD7.6 trillion by 2020 .
The growing interest in ETFs stems from the low fees, transparency, liquidity, and diverse exposure they offer investors in terms of geography and specific themes. In the case of MyETF-US50, investors are able to instantly diversify their portfolio as they can add the top 50 blue chip U.S. companies to their portfolio with a single investment, for a total expense ratio of less than 0.5%.
While the Malaysian ETF landscape has continued to evolve tremendously over the past decade, in line with a global shift towards passive strategies, there is still room for growth. In an effort to enhance trading volume and spur investor interest in ETFs, i-VCAP plans to issue more ETFs this year based on investors’ needs and market demand to add diversity to the industry’s product offerings.
i-VCAP will also work closely with Securities Commission Malaysia, Bursa Malaysia, and other industry stakeholders in supporting education programmes to spark investor interest in ETFs. At the same time, through the ETF Taskforce led by the Securities Commission and Bursa Malaysia, i-VCAP together with the rest of the industry players are cohesively working together to continuously enhance the local ETF ecosystem towards a more conducive and rapidly-growing ETF market.
“While i-VCAP is well-positioned to tap into the growth potential inherent in the Malaysian ETF landscape, launching new ETFs is only part of the equation. In order for ETFs to really gain traction, we also have to ensure that retail, sophisticated, and institutional investors are fully-informed and understand the benefits and risks of ETFs as an investment tool.
“General awareness of ETF investing is still lacking, particularly with regard to its trading flexibility, liquidity, and affordability with lower management fees and transaction costs as compared to an actively managed fund,” Khairi added.