Affin Hwang AM launches first shariah-compliant commodity ETF

Affin Hwang Asset Management Berhad launches the first exchange traded fund (ETF) – the TradePlus Shariah Gold Tracker (GOLDETF) in the country.

It was successfully listed on the Main Market of Bursa Securities today.

GOLDETF is aimed to provide investors with investment results that closely track the performance of gold prices, through a shariah-compliant investment structure.

To meet its investment objectives, the Fund will invest a minimum of 95 per cent of the fund’s net asset value (NAV) in physical gold bars purchased from LBMA accredited refineries, with the remaining balance invested in Islamic money market instruments and/or Islamic deposits for liquidity purposes.

Affin Hwang AM managing director, Teng Chee Wai said, “we are proud to roll-out our first ETF to the market, which will enhance our overall product offerings and provide a broader suite of solutions for our investors.

"Our move to enter into the passive investment space is a natural path for us, to expand our investment offerings and capabilities to continue to be a distinguished asset management player in the industry.”

“With no similar offerings, the Fund is the first of its kind in the domestic market which will provide investors with a low-cost and efficient entry point to gain exposure to gold, by tracking the LBMA Gold Price AM index – which is a commonly used benchmark for gold ETFs globally,” said Teng.

Bursa Malaysia Berhad chief executive officer, Datuk Seri Tajuddin Atan said, “we are very excited with the listing of Malaysia’s first shariah-compliant commodity ETF.

"This ETF will allow investors to buy and sell gold in the same manner as trading shares on Bursa Malaysia: easy, low cost and transparent. Bursa Malaysia has rolled out several initiatives to support ETF listing and trading, aimed at improving liquidity and vibrancy of the Malaysian ETF market.

"This includes, among others, a new market making incentive for ETFs.

"In addition, the Government has also announced that ETF trading on Bursa Malaysia will be exempted from stamp duty starting next year. This is set to spur ETF trading activities even further”.

On the performance of gold Teng said, "as a safe haven asset, gold is and remains one of the most popular form of investments that is proven to be a quality long-term store of value.

"Its role as a natural hedge and low correlation to other asset-classes will allow investors to diversify their portfolio effectively by reaping better risk-adjusted returns and lower portfolio volatility.”

“For instance in the last two bear market cycles during the 1997 Asian Financial Crisis and 2008-GFC (Feb 1997 – Aug 1998; Dec 2007 – Mar 2009), we saw the performance of gold moving counter to the benchmark FBMKLCI which was down -75.20 per cent and -39.60 per cent, respectively (Source: Bloomberg, Lipper), whilst gold returns had soared above 20 per cent.

"Thus, investors are able to prevent losses from being amplified during heightened periods of market volatility, especially in view of potential geopolitical risks and flare-ups that continue to be a mainstay of markets for time to come,” said Teng.

Certified by advisory firm Amanie Advisors, which also acts as the Fund’s Shariah Adviser – its Shariah-compliant investment structure requires each unit of the Fund to be physically-backed and segregated on an allocated basis in a secure vault. Investors are provided with an option for physical redemption (subject to fees & charges), for a minimum redemption unit block of 500,000 units which is equivalent to an estimated 5kg of gold.

Units of the Fund starts trading today on Bursa Securities under its stock short name ‘GOLDETF’ and stock code ‘0828EA’. Investors can buy and sell units throughout the trading day like any other publicly-traded shares, with a minimum board lot size of 100 units.