February 28, 2014 / 4:10 AM / 4 years ago

Khazanah unit to list Malaysia's second sharia, exchange-traded fund

KUALA LUMPUR, Feb 28 (Reuters) - i-Vcap Management Sdn Bhd, which is partly owned by Malaysia’s sovereign fund Khazanah Nasional, will list the country’s second tradeable, sharia-compliant fund on Kuala Lumpur’s stock exchange on March 21.

“Islamic exchange traded funds (ETFs) are suitable for investors seeking a low cost, passive approach to investing in an equity portfolio which comprises sharia-compliant companies,” i-Vcap chief executive officer Mahdzir Othman told reporters.

The fund’s creation shows a growing appetite for new investment tools in Malaysia, the world’s second-largest market for Islamic finance after Saudi Arabia, that meet sharia principles.

It comes two months after the securities commission introduced a new method to screen stocks for sharia-compliance, which added 16 new firms to the list and excluding 158 others.

The MyETF MSCI Malaysia Islamic Dividend ETF can be traded on the stock exchange and offers access to a basket of 16 to 30 sharia-compliant stocks at lower cost than through a mutual fund.

Malaysia’s stock exchange currently has five listed ETFs including i-Vcap’s MyETF-DJIM25, which was the first sharia-based ETF in Asia. That fund counts Axiata Group Bhd , Sime Darby Bhd and Felda Global Ventures among its largest holdings.

“The challenge lies in educating investors and to provide more ETF options,” said Mahdzir.

i-Vcap is a subsidiary of Valuecap Sdn Bhd, which is owned equally by Khazanah, Permodalan Nasional Bhd and Malaysia’s retirement fund EPF.

Reporting by Al-Zaquan Amer Hamzah; Editing by Richard Borsuk

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