The shift from fixed income remains following increase in awareness of the segment

by ASILA JALIL / Pic by MUHD AMIN NAHARUL

THE Covid-19 pandemic has helped trigger a change in investors’ risk appetite with more shifting money from fixed income investments into equities following a rally in healthcare stocks last year.

Principal Islamic Asset Management Sdn Bhd ED and CEO Datuk Syed Mashafuddin Syed Badarudin said the fund manager saw a substantial number of investments being made in the equity market compared to before the pandemic hit the nation.

“There was a time when the healthcare (sector) was very big and grew very fast last year and a lot of money was going into equities.

“There was a shift from fixed income into equities and that continues now. We believe there are still opportunities for growth in the equity investment area,” he told The Malaysian Reserve in an interview yesterday.

Despite the uncertainty surrounding the pandemic, Syed Mashafuddin said the situation presented an opportunity for the Islamic investment space as it gained traction due to its stability amid the volatile market environment.

Principal Islamic saw growing interest in the retail space on Islamic investment as the awareness of the segment grows. He added that there was also an increase in non-Muslim customers investing in Islamic instruments during the period throughout the pandemic.

“We are getting a lot more non-Muslim investors due to the nature of Islamic products, which are stable in returns, especially during times of volatility.

“A lot of investors, regardless of faith, have been saying that returns have been better in the Islamic investment space and that has spilled over to Malaysia which had led to the rise in Shariah Index last year,” he said.

Principal Islamic had some RM11.7 billion worth of assets under management at the end of March.

He said the rising interest among nonMuslim investors is not only reflected in the operations of Principal Islamic, but also applies to other management fund companies that are seeing more investments coming in from the market segment.

In the coming years, Syed Mashafuddin said the Islamic finance segment will see a lot more new sukuk being issued to raise funds either in the US dollar or the ringgit space.

Expansion in infrastructure and various other areas will lead to a “healthy supply” of sukuk.

He added that investors today are also “getting more sophisticated” and are on the lookout for asset classes that yield better returns on their investments.

“There are different kinds of risk appetite that allow them to diversify their assets or risks. From that perspective, it is up to us to meet that appetite and demand, including in the environmental, social and governance market.

“I am encouraged by how the market is developing and a lot more interesting instruments will emerge from fund managers like ourselves,” he added.