Business

Thursday August 13, 2009

Still relatively easy to buy AS 1Malaysia units

By IZWAN IDRIS and VANMALA SUBRAMANIAM


PETALING JAYA: A quick walk-in survey at participating banks has revealed that it is still relatively easy to buy Permodalan Nasional Bhd’s (PNB) latest fund, the RM10bil Amanah Saham 1Malaysia (AS 1Malaysia), a week after its launch.

Bank officers in charge of selling the funds said the quota reserved for Malaysian Chinese saw the strongest takeup rates, but units were still available for subscription.

It was also revealed that there is some confusion over the latest offering in the marketplace, despite the fund being structured largely along the same principle as the previous fixed-price funds sold by PNB.

To put things into perspective, the AS 1Malaysia takeup rate had reached RM1.7bil barely a week after the RM10bil fixed-price fund was open to investors.

Support from the public can be described as overwhelming by most measures, but one has been accustomed to hearing funds offered by PNB being sold out in a matter of hours.

According to Mohd Azmi Mohd Sibi, a customer service manager at CIMB Bank branch in Taman Tun Dr Ismail, there was hardly a queue on the first day the unit trusts were available.

“Demand has been slow for AS 1Malaysia compared with previous offerings. Maybe because of the economic climate, people are being extra-cautious about where and how they invest their money,” he told StarBiz yesterday.

In July, additional units in Amanah Saham Malaysia (ASM), also a fixed-price fund, worth RM1.6bil were snapped up completely the first day it went public.

Meanwhile, the “slower than usual” takeup rate can also be linked to the fact that PNB had sold some RM5.3bil worth of fixed-price funds just months before the AS 1Malaysia hit the market.

This begs the question of whether the appetite for new funds has dried up, or has PNB’s strategy of selling too much in one go somewhat created less urgency from the investing public?

To be fair, the AS 1Malaysia created a lot of interest from the public when it was open for sale on Aug 5.

The Star reported that queues at PNB headquarters at Jalan Tun Razak in Kuala Lumpur started as early as 5.30am on the first day of the AS 1Malaysia sale. The same report also observed that the crowd there had thinned out by 11am.

Meanwhile, PNB chief executive officer Tan Sri Hamad Kama Piah Che Othman was quoted as saying earlier this week that some RM1.4bil worth of units in AS 1Malaysia were sold during the first two days of its launch.

On Aug 11, Bernama reported that total sales had reached RM1.67bil.

During the first month of sale, there is restriction imposed along racial lines and limit on number of units that an individual can purchase. PNB will lift these restrictions from Sept 5 onwards.

Like the ASW 2020 and ASM, the AS 1Malaysia is also categorised as an equity fund with a fixed net asset value of RM1 per unit.

In total, PNB has 11 funds in its stable, of which five are classified as fixed-price funds.

Both ASM and ASW 2020 gave annual returns that averaged about 7% during the past three years. Two other fixed-price funds are Amanah Saham Didik and Amanah Saham Bumiputera (ASB).

ASB, launched in 1990, is the largest fund managed by PNB.

In AS 1Malaysia’s prospectus it is noted that the fund’s returns will be benchmarked against the five-year Malaysian Government Securities (MGS). The current yield of five-year MGS is about 3.7%.

These fixed-price funds, AS 1Malaysia included, are not marketed as capital-guaranteed funds as defined by the Securities Commission’s unit trust guidelines.

However, investors do enjoy some form of capital protection as the net asset value of these funds are fixed at RM1 always. It means that buying and selling of these equity funds are done at RM1 per unit, regardless of the direction of the share market.

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