OSK-UOB Unit Trust Management has launched a new structured investment to the Malaysian retail market. The OSK-UOB Index Covered Fund, which is also the Malaysian firmÆs first wholesale fund, aims to provide capital appreciation by investing in a structured investment linked to the performance of two indices. The new fund will also be seeking to provide 80% capital protection to high-end Malaysian investors on the maturity date, which will likely be in two years.

The two indices that the new fund will be tracking are Hong KongÆs Hang Seng China Enterprises Index and the Nasdaq-100 Index. While the latter includes comprises of 100 of the largest non-financial institutions listed on the Nasdaq exchange, as measured by market capitalisation, the over-the-counter (OTC) options will provide Malaysian investors with exposure to Chinese companies that are listed in Hong Kong.

According to OSK-UOB Unit Trust, the performance of the OTC options will be derived from the volatility of the indices. In other words, the greater the volatility in these two indices, the better the likely returns for investors.

The fundÆs marketers will target a fairly niche sector of MalaysiaÆs investment community. Firstly, the firm believes the Index Covered Fund will gel with investors that are able to take some form of risk and accept partial capital protection. It also believes it will strike a chord with Malaysians that wish to participate in the potential upside of a structured investment that is linked to the volatility of the two indices and those with a relatively short-term investment horizon.

The new fund, which was officially launched on 19 June, will be open for investment for one month. Fees have been capped by the firm at 1.5% of the funds total net asset value (NAV) and the minimum initial investment is set at RM10,000 (approximately $2,900).

The OSK-UOB Index Covered Fund is the latest launch in 2007 of the JV asset management. In May, the firm rolled out its OSK-UOB Golden Dragon Fund, which invests in companies in Greater China.