The Securities Commission Malaysia (SC) has liberalised the unit trust fund framework, enabling retail funds to invest in and offer a wider range of investment instruments and activities. This will enable management companies to develop more innovative products whilst ensuring adequate investor protection.
The new framework will also support an investment ecosystem that is more diversified, and provide a catalyst for product offerings as part of wealth management solution to meet investors’ retirement objectives, including the offering of wealth decumulation products. The liberalisation is also in line with the Capital Market Masterplan 3’s aspiration to become a capital market that is relevant, efficient and diversified in the next five years – benefitting each and every stakeholder.
Unit trust funds continue to be the largest component of the Malaysian Collective Investment Scheme industry. As at October 31, 2021, there are 39 locally-incorporated management companies approved to offer 734 unit trust funds with total net asset value (NAV) of RM551.36 billion.
“These enhancements will enable retail funds to offer more diverse offerings to meet the demand and risk appetites of a wide range of investors. This will encourage the growth and development of unit trust management companies and also, enable investors to rebalance their short and long term objectives with more diversified investment offerings,” said SC Chairman Datuk Syed Zaid Albar.
“More importantly, this will bridge the regulatory gap between domestic and international offerings and allow local funds to remain competitive in the face of a rapidly evolving market environment.”
The amendments in the guidelines on unit trust funds (guidelines) will take effect on March 1, 2022. The amendments to the guidelines took into account the SC’s findings following an extensive benchmarking exercise and feedback received from the public consultation process. Additionally, the SC has engaged with key stakeholders to ensure a seamless implementation of the amendments.
Key amendments include expanding the list of permissible investments by unit trust funds, enhancing the operational processes in managing a fund and providing further clarity on existing requirements for market participants. Other measures include allowing unit trust funds to undertake more activities for the purpose of efficient portfolio management.
Risk management requirements at enterprise and fund levels have also been strengthened, including the requirement for fund information to be made available on the management companies’ websites.
Consequential amendments to the Guidelines on Private Retirement Schemes and Guidelines on Exchange-traded Funds will also be implemented, with appropriate modifications.
Click on the links below for more information:
- Public Response Paper
- Guidelines on Unit Trust Funds and Prospectus Guidelines for Collective Investment Scheme
- Compliance Function for Fund Management Companies