MalaysiaÆs biggest fund house, Public Mutual, will tap demand for both sharia-compliant and overseas exposures with a new international dividend fund. The Public Islamic Asia Dividend Fund (PIADF) is being marketed by the firm as a moderate-risk equity fund, which it claims will appeal to investors with a focus more on income and less on capital growth.

The fund will comprise of a large equity exposure, with Public Mutual projecting that between 75% to 90% of its total net asset values (NAV) will come from this asset class. Of the PIADFÆs total NAV, up to 70% will be invested offshore in Asia-Pacific markets.

Within the universe of listed companies acceptable to sharia principles (similar to Western ethical funds), the fund will seek fundamentally undervalued stocks expected to pay attractive dividends of 3% or more, says Teh Hong-Piow, chairman. He says these dividends are now common in many regional markets.

Earlier this month, parent Public Bank mandated the firm to run a wholesale money-market fund, PB Cash Plus Fund. In January, Public Mutual was also active with several new fund launches, including the Public Far-East Balanced Fund and the Public Global Balanced Fund, which invest in similar markets to its new Islamic dividend fund.

The launch of its latest fund comes after a booming start to the year for MalaysiaÆs unit trust industry following the countryÆs government's decision to relax rules in April 2005, allowing unit trust funds to be invested overseas. Since the regulatory change, approximately 60 offshore funds have been launched, amassing a fund size of RM11.55 billion ($3.34 billion).