Malaysia has a well-established fund management industry that caters to institutional investors as well as qualified retail investors. According to the Securities Commission Malaysia (SC), assets under management (AUM) typically originate from unit trust funds, corporate bodies, the Employees Provident Fund (EPF) and wholesale funds.
As at end-December 2022, the domestic fund management industry’s AUM stood at RM906.46 billion – somewhat lower than the RM951.05 billion of a year earlier. The bulk (47.6%) of these funds were invested in equities, followed by fixed-income securities (23.3%). At the same time, the top five fund management companies in Malaysia accounted for 55.4% of the industry’s total AUM (2021: 54.8%).
The unit trust segment remained the key contributor of the industry’s AUM as at end-December 2022, with a net asset value (or NAV) of RM487.94 billion (end-December 2021: RM526.89 billion). Of this, about 78% was attributable to conventional funds while the other 22% stemmed from their Shariahcompliant counterparts.
As prescribed under Sections 288(2) and 289(1) of the Capital Markets and Services Act 2007 (CMSA), only a management company approved by the Securities Commission Malaysia (SC) can act as a fund management company. To be eligible for such a licence, a local company must comply with the following criteria:
A foreign company, on the other hand, must adhere to the following requirementss:
The SC issued the Guidelines on Sustainable and Responsible Investment Funds in 2017, to promote the further growth of SRI funds in Malaysia. The Guidelines – applicable to both conventional and Shariah-compliant funds – allow them to be designated as SRI funds and broaden the selection of SRI products in the market, thereby attracting more investors to the SRI sphere. They cover funds under the SC’s purview (e.g. unit trust funds, REITs, ETFs, and venture capital and private equity funds) and encompass additional disclosure and reporting requirements, to encourage greater transparency in the investment policies and strategies of SRI funds.
To facilitate the development of the unit trust fund industry, the SC undertook a comprehensive review of the Guidelines on Unit Trust Funds at the end of 2019. The issuance of a public consultation paper to seek feedback on its proposals followed in November 2020.
In November 2019, the SC launched the Fund Management Industry Digitisation Group (FMDG). The objective was to accelerate the digitisation of the fund management industry, to enhance investors’ digital experience and improve the industry’s overall operational efficiency. The FMDG working group is made up of members from the SC, BNM and industry members comprising fund distributors, fund managers and trustees.