ING Malaysia joins sharia fund party

Firm launches new capital protected sharia-compliant fund to Malaysian investors.
MalaysiaÆs ING Funds Berhad has rolled out its latest fund, which unlike its previous launches in 2007 that were derivative-based, allows investors both capital protection and access to global sharia-compliant equities. Launched on 9 May in Kuala Lumpur, the ING Baraka Capital Protected Fund expects to return at an annualized average of between 10% and 12% over the three year life of the fund.

With this new fund, the firm will target investors that have a low to moderate risk appetite and who also want to diversify investments locally and offshore. At the end of the fundÆs maturity period of three years, the ING Baraka Capital Protected Fund will return unit holdersÆ initial capital plus returns from the offshore investments, if applicable.

According to ING Funds Malaysia, all 30 of the sharia-compliant portfolio have a market capitalisation of over $2 billion and will be selected from the Dow Jones Islamic Market World Index, which has a universe of over 2,000 stocks. The allocation will be in Ringgit denominated Islamic Negotiable Instruments (INIs), which will comprise of at least 85% of the portfolio.

Additionally, the fund will also invest about to 10% of the portfolio in the SGAM Alternative Investments (AI) Baraka Options, which is actively managed option portfolio consisting of the SGAM AI Baraka Index. The remaining 5% will be allocated into Islamic fixed-income instruments.

Of the stocks, ING Funds will look at return generating metrics like liquidity, diversification and quantitative measuring, as well past performance. They will also come from an array of as yet unnamed sectors.

The fund will be managed inhouse by ING Funds Malaysia and by SGAM in France. To ensure compliance to sharia principals, MalaysiaÆs Yasaar Limited will act as global sharia consultant, while the Islamic Banking and Finance Institute of Malaysia will be the local sharia advisor for the INIs.

INGÆs latest fund has an approved fund size of 200 million units and requires a minimum initial investment of RM5,000. Entries fees for investing in the ING Baraka Capital Protected Fund have been capped 1.50% of the NAV per unit, while the annual management fee has been set at 1,00% of the NAV of the fund.

In total, ING Funds Malaysia now has 15 funds under management with a total fund size RM1.25 billion. It also plans to launch another two funds by the end of 2007.
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