Principal Islamic sees investment from institutional funds to continue

The company is hopeful for more outsourcing of funds by institutional investors like the EPF funds

by ASILA JALIL / Pic credit:

PRINCIPAL Islamic Asset Management Sdn Bhd is hopeful for more outsourcing of funds by institutional investors like the Employees Provident Fund (EPF) funds despite the withdrawals allowed by the fund under the stimulus measures due to the Covid-19 pandemic.

The company’s ED and CEO Datuk Syed Mashafuddin Syed Badarudin (picture) said the group has yet to see any reduction in terms of contributions from such institutions although the matter also depends on the market movement.

Most of the institutions are also looking into other asset classes to diversify and achieve their objectives, instead of just sticking to equities, he said.

“There has not been any capital taken back and in fact, we are hopeful for further injection into new strategies that we are promoting with them. We are still hopeful there will be an injection towards the later part of this year.

“It is still encouraging how these institutions are looking at different strategies to achieve their diversification intention or objectives.

“They are not just looking into plain vanilla equities or fixed income. They are also looking at other asset classes like real estate, private equity and many others,” he told The Malaysian Reserve in an interview recently.

Principal Islamic Asset Management obtained its licence to operate as an Islamic fund management company in 2008. As of end-march, its assets under management stood at RM11.7 billion.

It is an affiliated company of Principal Asset Management Bhd and currently serves its customers via its sister companies in Indonesia, Thailand and Singapore.

Syed Mashafuddin said the company’s business grew to 25% last year and it is looking to grow within the same range this year.

As the country is put under another round of Movement Control Order until June 14, he said the company is concerned about the lockdown impacts on the greater economy.

However, he is still positive on the growth Malaysia is expected to record this year even in the Islamic investment space.

“For the rest of the year, there remains a big opportunity for equity space in the Asia Pacific. We still think the space is underinvested and there is still earnings growth momentum and valuations.

“In the Malaysian space, we are also focusing on the recovery angle, cyclical stocks, financials in the Islamic space, anything that is travel-related. These are all reliant on the vaccine being effective and numbers going down,” he said.

Commenting on the acceleration of digital services in the investment space, Syed Mashafuddin said there has not been much evolution or move towards the digital landscape for the group as their customers tend to be more institutional and corporate based.

He, however, viewed the rise in services like robo-advisors and other areas of digitalisation as an opportunity to complement the operations of Principal Islamic.

“Our funds can be placed on the platforms. So, we may not directly have a digital platform but we can have our funds there and they could be distributed digitally via an online platform.

“In that perspective, it does present a good opportunity for the entire Principal Islamic Asset Management in the region,” said Syed Mashafuddin.

Moving forward, he said the company is focusing its growth strategies into Asean and the Middle East and North Africa region where Islamic finance is thriving and rapidly growing.

He added that the company is also exploring ways to work with institutions and corporates such as takaful and insurance companies to expand its reach.

“Predominantly, our customers tend to be corporate and institutional clients, but we are trying our very best to diversify into the retail segment through our partners in distribution such as the banks. We need to have a good strategy which is relevant in the market and is of interest,” he added.