Securities Commission Liberalises Unit Trust Framework To Allow Wider Range Of Investments
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The Securities Commission Malaysia (SC) has announced that it is revising its unit trust fund framework so that retail funds can soon invest in, as well as offer, more investment instruments and activities. This liberalisation of the Guidelines on Unit Trust Funds is expected to take effect starting from 1 March 2022.

In a statement, the SC stated that a key amendment to the Guidelines is to expand the list of permissible investments by unit trust funds. Additionally, it will also enhance the operational processes in fund management, and improve clarity on existing requirements for market participants.

“Other measures include allowing unit trust funds to undertake more activities for the purpose of efficient portfolio management. Risk management requirements at enterprise and fund levels have also been strengthened, including the requirement for fund information to be made available on the management companies’ website,” said the SC, adding that these updates will enable management companies to develop more innovative products and up the quality of their services.

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The SC also explained that the new framework will contribute to a more diversified investment ecosystem, and serve as a catalyst for product offerings as part of a wealth management solution that meets investors’ retirement objectives. These include the offering of wealth decumulation products – described as instruments that help you manage your retirement assets so that they can generate the income necessary to fund your golden years.

The liberalisation is also in line with the goals set in the Capital Market Masterplan 3, one of which is to become a relevant, efficient, and diversified capital market within the next five years. Furthermore, the SC has carried out an extensive benchmarking exercise, obtained feedback via a public consultation process, as well as engaged with key stakeholders to ensure that the amendments can be seamlessly implemented.

Meanwhile, the chairman of the SC, Datuk Syed Zaid Albar chimed in to say that these enhancements are intended to help retail funds better meet the growing demands and risk appetites of its investors. This is especially since unit trust funds currently make up the largest component of the Malaysian Collective Investment Scheme industry, with 39 locally-incorporated management companies offering 734 unit trust funds as of 31 October 2021. Its total net asset value stands at RM551.36 billion.

“This will encourage the growth and development of unit trust management companies, and also enable investors to rebalance their short- and long-term objectives with more diversified investment offerings. More importantly, this will bridge the regulatory gap between domestic and international offerings, and allow local funds to remain competitive in the face of a rapidly evolving market environment,” Datuk Syed Zaid further commented.

Aside from liberalising the Guidelines on Unit Trust Funds, the SC also noted that it is introducing significant amendments to the Guidelines on Private Retirement Schemes and the Guidelines on Exchange-Traded Funds (ETFs). These will come with appropriate modifications.

(Source: Securities Commission)

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