BIMB Invest eyes RM100m for Shariah-ESG fund within 1 year


BIMB Investment Management Bhd (BIMB Invest) is expected to achieve a subscription of RM100 million of its BIMB-Arabesque ValueCAP Malaysia Shariah-ESG Equity Fund within a year.

The fund, launched together with BIMB Invest’s strategic partners, Arabesque Asset Management Holding Ltd in UK and ValueCAP Sdn Bhd, is the first Shariah equity fund in Malaysia approved under the Securities Commission Malaysia’s sustainable and responsible investment (SRI) guidelines introduced in December 2017.

ValueCAP, which is equally owned by Khazanah Nasional Bhd, Retirement Fund Inc (KWAP) and Permodalan Nasional Bhd, is participating as cornerstone investor, with an initial investment of RM50 million in the fund.

“We’re expecting an additional RM50 million from investors, so together with ValueCAP’s RM50 million investment, this should reach RM100 million by one year from now,” BIMB Invest CEO Najmuddin Mohd Lutfi told reporters at the launch in Kuala Lumpur yesterday.

As the fund is mainly targeted at corporate and institutional investors, BIMB Invest as its manager is hoping to get the likes of pension funds, and insurance and takaful firms on board.

“We’re talking to players like the Employees Provident Fund and KWAP. Generally, institutional investors have been very supportive of environmental, social and governance (ESG)- and SRI-driven investments.

“We also have ValueCAP as an anchor investor, so hopefully that will attract more institutional investors to support the ESG initiatives,” Najmuddin said.

ESG-driven investing is becoming increasingly widespread, as more investors are looking to invest in initiatives with positive impact on people and the environment.

BIMB Invest chairman Nik Mohd Hasyudeen Yusoff added that Malaysia today has emerged as the largest SRI market in Asia ex-Japan and the second-largest Islamic fund market worldwide, with about US$56 billion (RM226 billion) of global assets under management (AUM).

On expected returns, Najmuddin said the fund, which is BIMB Invest’s fourth ESG fund, will be benchmarked against the FTSE Bursa Malaysia KLCI (FBM KLCI).

“We expect to outperform the FBM KLCI, which is expected to del iver an average return of between 7% to 8% per annum over a full market cycle of about three and a half years. So, we hope to do better than that with this fund,” he stated.

The fund will invest in about 100 local listed companies that are Shariah-compliant as well as in line with ESG practices, with investments made on a rule-based manner accounting for companies’ financial and sustainability performance.

It will analyse the ESG factors of each company using Arabesque’s proprietary methodology, the Arabesque S-Ray, which daily assesses the performance of companies based on the United Nations Global Compact normative principles of human rights, labour rights, the environment and anti-corruption, and their performance in ESG matters.

The Arabesque S-Ray combines over 200 ESG metrics with news signals from over 50,000 sources across 15 languages, through machine learning and big data technology.

The portfolio of the fund will be rebalanced monthly, while the fund is offered for subscription in ringgit at RM1 for 14 calendar days during the initial offer period from July 5 until July 18, 2018.

BIMB Invest’s first ESG fund, the Shariah-ESG Global Equity Fund, was launched in 2015 and now has about RM550 million in AUM.

It delivered returns of 25% for the 2017 financial period, in addition to declaring annual income distribution yield of 8% this year and 7.1% last year.