Unit trust sector sees growth despite increase in cost of living

By KEVIN WONG / Graphic By TMR

The unit trust sector continues to experience growth funded by money from the public with disposable income, despite the rising cost of living.

“The higher costs has led to lower savings, especially within the mass market segment.

The mass affluent and high-net-worth individuals, however, are more insulated from such effects,” said Chan Ai Mei, the chief marketing and distribution officer of Affin Hwang Asset Management Bhd.

Chan said Affin Hwang Asset Management managed to grow its asset under administration size by over RM11 billion last year to RM47.3 billion as of Dec 31, 2017, despite having to face challenges.

“This growth was broadbased and felt across all our business segments including our high-net-worth investor (HNWI) base, institutions, retail, as well as our agency distribution channels.

“We still see pockets of growth and strong liquidity in the market where it should drive the less impacted (mass affluent and HNWI) to invest, as there is still plenty of wealth in the market,” she told The Malaysian Reserve.

She added it will be a constant challenge for asset managers to meet investor needs and to outperform in a rising interest-rate environment as the industry is itself in an increasingly dynamic market environment.

In terms of market outlook for 2018, Chan said it is expected to see a continuation of developments with global growth returning.

“With current growth now broadening out across countries and sectors, markets should continue to hum along and see greater participation of growth from laggards last year. We are anticipating gradual pullbacks in liquidity due to the tightening of monetary policy,” she said.

On that note, the company advised investors to remain diversified across different sectors, geographies, currencies, as well as asset-classes.

In regards to the outlook for the asset management sector, Chan said it is expected to be a robust environment for players where they should be supportive of their growth.

“The latest regulatory developments which include the latest guidelines by the Securities Commission Malaysia (SC) on its sustainable and responsible investment framework and also exchange-traded fund task force will help catalyse growth for the industry, as well as drive issuance of more innovative products in the market,” she said.

The total net asset value of unit trust funds stood at RM421.38 billion as of Nov 30, 2017, a month-on-month (MoM) decrease of RM3.46 billion, or 4.24%, recorded in Oct 31, 2017, based on statistics by the SC.

Some 558.98 billion units were in circulation in the month of Nov 30, 2017, a MoM increase of 2.91 billion.