Affin Fund Management may be a relatively small asset manager, but it has substantial ambitions for growth. The Kuala Lumpur-based firm, a subsidiary of Affin Investment Bank, aims to hit RM1 billion ($300 million) in assets under management this year, up from the current level of RM700 million.
Chief executive Mohamad Ayob says the quickest way of attaining that target would be to secure several fixed-income mandates that were submitted for consideration to institutional investors last year.
"Once we cross that billion-ringgit mark, the next numbers will come more easily," he tells AsianInvestor. "Investors generally prefer to transact business with a fund house with large assets under management, as it gives them confidence on the credibility and capability of the company."
In addition to managing institutional mandates, the company also develops and manages unit-trust funds, Malaysia's equivalent of mutual funds. Hence, it may hope to benefit from the investment withdrawals being made from the state-run retirement scheme, Employees Provident Fund (EPF). Contributors are shifting increasing amounts of their EPF savings into unit-trust funds, seeking higher returns. EPF withdrawals to invest in unit trusts have climbed from RM1.9 billion in 2004 to RM3.33 billion in 2008.
Ayob is ready to hire new staff on the assumption that the fund's assets will grow. "We believe there is a need to bring in the expertise first, rather than wait for the mandates to come," he says.
He is looking for an experienced fixed-income trader or portfolio manager and wants to strengthen the marketing and business-development team, for both institutional mandates and unit trusts. "When the fund size grows, we will then need to expand the back-office staff," adds Ayob.
Affin Fund has 45 staff, but Ayob aims to increase that to 50 by the end of June. "We've spoken to a few people, but no decision has been made yet," he says. In the meantime, the firm has managed to retain its key people, despite approaches made to them. "New outfits are setting up desks here -- both foreign and local -- looking for COOs, investment heads and the like," says Ayob.
As for the investment appetite of Malaysian investors, equities remain the mainstay as a proportion of the industry's total net asset value. With market liberalisation taking place, the number of foreign-focused equity funds launched between 2006 and 2008 outnumbered the number of local equity funds launched during the same period.
"Affin Fund tried to introduce a commercial real estate investment private equity fund in early 2007, but had to abort the attempt due to a poor response from potential institutional investors," says Ayob. As a result, he plans to stick to equity and fixed income, and currently the firm's investments are all in domestic equity and fixed income.
As for sharia-approved investments, Affin Fund manages three funds: Dana Islamiah Affin, with RM136 million in AUM; Affin Islamic Equity Fund (RM151.4 million); and Affin Islamic Money Market Fund (RM2.7 million). All figures are as of 31 December.