GROWTH & INCOME INDEX 2014 UNIT TRUST FUND INVESTOR BEHAVIOUR STUDY MALAYSIA

Transcription

1 GROWTH & INCOME INDEX 204 UNIT TRUST FUND INVESTOR BEHAVIOUR STUDY MALAYSIA June 204

2 CONTENT Foreword By Eastspring Investments Executive Summary The Growth & Income Index Investors Current and Projected Holdings Unit Trust Fund Allocation Preference Key Findings The Growth & Income Index Income Fund Ownership & Projected Holdings Unit Trust Fund Allocation by Geography Investor Confidence in Different Asset Class Shariah Fund Ownership & Understanding Appendix Methodology Eastspring Growth & Income Index About Eastspring Investments Media Enquiries

3 FOREWORD It has been six months since the introduction of the Growth & Income Index and Asia Unit Trust Fund Investor Behaviour Study. We are, once again, pleased to release the Growth & Income Index and Unit Trust Fund Investor Behaviour Study 204 focusing on Malaysia. This updated Index and study offers a fresh perspective on future shifts in Malaysian investor s asset allocation appetite. Malaysia s retail unit trust fund investments is currently worth about RM344 billion and growing. This total Net Asset Value of the industry represents 20.0% of the Bursa Malaysia Market Capitalisation. With a large domestic savings pool worth RM trillion for intermediation through the capital market, there is great opportunity for further expansion of this industry. 2 Eastspring Investments development of this measurement tool provides important insight into what current and intending unit trust investors are planning and allows the industry to better meet Malaysian investor needs through the development of appropriate products. This year we also took a look at investors preferences and understanding of Shariah-compliant unit trust funds. I trust you will find this study of value. We look forward to sharing more investor insights with you in the future. Lynn Cheah Chief Executive Officer / Executive Director, Eastspring Investments Berhad : Source: Summary of Statistics as at 3 March 204, 2: Keynote Address by YBhg Datuk RanjitAjit Singh Chairman, Securities Commission Malaysia at The Edge-Lipper Malaysia Fund Awards 204, Kuala Lumpur, 8 February 204 2

4 EXECUTIVE SUMMARY THE GROWTH & INCOME INDEX Eastspring Investments Growth & Income Index of Malaysia indicates that investors in Malaysia show intention to move toward income funds in the next six months with an Index score of 4 (a score of 46 was recorded from last wave), indicating investors remain income-oriented in the next six months. Unit trust fund intenders in Malaysia, with an Index score of 42, show a favourable attitude toward income funds as well. INVESTORS CURRENT AND PROJECTED HOLDINGS Looking into the unit trust fund holders existing allocation, 32% is allocated into growth funds, 36% to income funds and 32% into growth & income funds. With close to 0% of unit trust fund investors planning to change allocation in the next six months, from asset class to market selection, an apparent shift is expected to be seen. Compared to data from July 203, more investors (approximately 20% increase) are actively looking at re-shaping their portfolio, indicating a shift in investment behavior. Allocation into growth funds is expected to drop to 29% and income funds category is anticipated to go up to 39%. Focusing on prospects that plan to invest in unit trust funds in the next six months, they are planning to allocate 42% of their portfolio into income funds, and only 25% in growth funds. UNIT TRUST FUND ALLOCATION PREFERENCE The orientation of investors is predominantly home market, on-shore Malaysia funds, forming 2% of home-market funds in one s portfolio. However, investors intend to diversify by seeking funds from China, Emerging markets, Global and Japan, in next six months by under-weighting domestic funds. Main objectives for investment remain stable compared to last year; investment objective is primarily for retirement, getting better rates than savings accounts, and/or saving for the rainy days. 3

5 THE GROWTH & INCOME INDEX The Eastspring Investments Growth & Income Index of Malaysia stands at 4, indicating investors have a slight orientation toward income funds. Malaysian investors who plan to invest in unit trust fund are particularly keen on income funds with an Index score of 42. Unit trust fund intenders are much more heavily inclined towards income funds than those who are currently investing in unit trust fund. Growth & Income Index Increasing income orientation in next six months (N6M) Increasing growth orientation in next six months (N6M) (46) Current unit trust fund holders Unit trust fund intenders 203 index are shown in brackets Source: Investor type (A9) Base: Respondents who intend to still hold unit trust funds in the next six months (204: 283; 203: 28) THE INDEX OFFERS FRESH INSIGHT INTO FUND INVESTORS PLANNED ASSET ALLOCATION OVER THE NEXT SIX MONTHS IN MALAYSIA. OVERALL GROWTH-INCOME INDEX REMAINS "INCOME-ORIENTED IN THE NEXT SIX MONTHS. 4

6 INCOME FUND OWNERSHIP & PROJECTED HOLDINGS According to the study, Asian high dividend equities remains as one of the most popular income asset classes among income fund holders with 50% of them owning it in Malaysia, an increase of 5% from last year. This is followed by Asian multi-asset income which witnessed a surge from 32% to 43% ownership and Asian bonds (42%). However, it is foreseeable that there will be a noticeable outflow from Asian bonds in the next six months. The increase in ownership/purchase intent of multi-asset income & high dividend equities funds across Asian and Global markets signal an uplift in investors risk appetite. Income Fund Ownership Current vs. Next 6 months (N6M) % Current Change (% pts) Asian Global High dividend equities Bonds Multi asset income Corporate bonds High yield bonds Multi-asset income High dividend equities High yield bonds Emerging markets US Debt Government bonds High yield bonds Corporate bonds Next six months Source: Which of the following fund type do you currently own? (A4); What are the income generating funds that you intend to hold after the change in your income fund portfolio? / What are the income fund types that you intend to hold? (A6) Base: Current income fund investors (204: 95; 203: 98) Investment involves risk. Past performance is not indicative of future performance. Investors should read the relevant offering document for full details in particular information on investment risks before investment and to seek professional advice where appropriate. ASIAN HIGH DIVIDEND EQUITY INCOME FUND REMAINS AS THE MOST PREVALENT INCOME FUND TYPE THIS WAVE. THE INCREASE IN OWNERSHIP ON MULTI-ASSET INCOMES ACROSS ASIAN AND GLOBAL MARKETS SIGNALS AN UPLIFT IN INVESTORS RISK PROFILE. BONDS AND DEBTS IN GENERAL ARE EXPECTED TO FALL BY A CONSIDERABLE AMOUNT. 5

7 UNIT TRUST FUND ALLOCATION BY GEOGRAPHY Home market funds make up the large majority in Malaysian investors unit trust fund portfolio due to local regulation. Nonetheless, the survey indicated that investors are starting to look into other global opportunities, particularly for funds from China, Emerging markets and Japan. % Unit Trust Fund Allocation and Intention to Change in the Next Six Months (Mutual Fund Holders) Global Emerging 6 Others markets North America 4 Holders who do not plan to Europe make any changes India 56% (6%) 6 China Holders who plan to 6 change allocation in the 2 Japan next six months Geography 8 Current allocation 3% (33%) APAC Malaysia 2 Holders who do not plan to continue investing in mutual funds in next six months 8% (6%) 2 Geography N6M allocation 64 Base: All current unit trust fund holders (including those who do not intend to invest in N6M) Base: All current unit trust fund holders intend to continue investing in N6M Data in brackets ()s are 203 data Source: Do you plan to change the allocation of your investment in unit trust funds to particular geographies, asset classes, income or growth funds, or using particular payment method in the next six months? (A2); Do you plan to change the allocation of your investment in unit trust funds to particular geographies, asset classes, income or growth funds, or using particular payment method in the next six months? (A5); After your change in fund allocation by [type], how would you like your new allocation to look like? (A6) Base: Unit Trust fund holders (204: 224; 203: 224); Unit Trust fund holders intending to continuing investing in the N6M (204: 20; 203: 2) Among holders who plan to change GEOGRAPHY allocation in the next six months (3%) Unit trust fund allocation (among those changing allocation) 204 Current 204 N6M 204 Change (% pts) China 8% 3% Emerging markets 6% 0% Global 6% 0% Japan % 4% Europe 3% 4% APAC 9% 0% India 2% 2% North America 3% 2% 0 0 Malaysia 60% 42% -8 Source: Do you plan to change the allocation of your investment in unit trust funds to particular geographies, asset classes, income or growth funds, or using particular payment method in the next six months? (A2); Do you plan to change the allocation of your investment in unit trust funds to particular geographies, asset classes, income or growth funds, or using particular payment method in the next six months? (A5); After your change in fund allocation by [type], how would you like your new allocation to look like? (A6) Base: Unit trust fund holders (204: 224; 203: 224); Unit trust fund holders intending to continuing investing in the N6M (204: 20; 203: 2) MORE INVESTORS ARE PLANNING TO RE-SHAPE THEIR ALLOCATION BY GEOGRAPHY IN THE NEXT 6 MONTHS. THE FOCUS IS SHIFTING AWAY FROM LOCAL MARKET TO OFFSHORE INVESTMENT. 6

8 INVESTOR CONFIDENCE IN DIFFERENT ASSET CLASS The outlook for cash and bonds are expected to slide, hinting at a possible outflow in future. Alternatives investment has the 2nd highest current confidence along an expected drastic growth. Confidence in Asset Classes 204 vs. 203 (T2B) % Cash Stocks Bonds % pts -4% pts -8% pts Alternatives Foreign currency Real estate % pts -4% pts -4% pts 204 N6M confidence in asset class 203 N6M confidence in asset class +% -% Significantly different at 95% level of confidence +/-% No significant difference at 95% level of confidence Source: Please indicate whether you think it is a good time or bad time to invest in each of the following asset classes now (B2); Now please indicate whether you think it is a good time or bad time to invest in the same list of asset classes in six months time (B3) Base: All respondents (204: 300; 203: 300) SHARIAH FUND OWNERSHIP & UNDERSTANDING Current ownership of Shariah funds (Unit trust fund holders) Planned ownership of Shariah funds in N6M (Unit trust fund intenders) % % Owners 42 Intenders 56 Shariah funds Shariah funds Non-owners 58 Non-intenders 44 Source: Do you currently hold any Shariah compliant unit trusts? Do you plan to hold any Shariah compliant unit trusts in the next six months? (B.4) Base: Unit trust fund holders (224); Unit trust fund intenders (6) ONLY TWO-FIFTH OF THE CURRENT HOLDERS OWN SHARIAH FUNDS TODAY. INTENDERS SHOW A STRONGER PREFERENCE THAN CURRENT HOLDERS, WITH MORE THAN HALF OF THEM PLANNING TO INVEST IN SHARIAH FUNDS IN THE NEXT 6 MONTHS.

9 SHARIAH FUND OWNERSHIP & UNDERSTANDING (CONT ) % Reasons for Intention to Increase Shariah Fund Investment % chosen I expect that my investments in Shariah compliant funds will perform well 56 I prefer to invest in Shariah compliant funds for religious / ethical reasons 52 My investments in Shariah compliant funds are less volatile / more stable than the alternatives 46 I plan to increase the capital in all my investments, including Shariah compliant funds 42 Source: Why do you want to increase your investment in Shariah compliant funds? (B.5A) Base: Shariah fund holders who intend to increase Shariah fund investment (48); Perception and understanding of Shariah funds Agreement with following statements Shariah compliant funds are generally more ethical because of the choice of sectors in which they are invested Shariah compliant funds are generally safer because of the choice of sectors in which they are invested 5 39 Shariah investments appreciate less than conventional investments 4 45 I have a good understanding of the principles of Shariah finance Shariah banking and investment are only available to certain groups of people (e.g. Muslims, Malays etc.) 33 3 Completely agree and Slightly agree Neither agree nor disagree Source: To what extent do you agree with the following statements? (B4) Base: All respondents (300) THERE IS A PERVASIVE LACK OF UNDERSTANDING IN SHARIAH INVESTMENT. MORE THAN 60% OF INVESTORS ARE NOT CONFIDENT WITH THEIR UNDERSTANDING OF SHARIAH FINANCE. TWO-THIRD BELIEVE SHARIAH BANKING ARE ONLY FOR CERTAIN GROUPS OF PEOPLE OR ARE UNSURE. MOST INVESTORS ALSO THINK SHARIAH INVESTMENT APPRECIATES LESS. 8

10 APPENDIX METHODOLOGY The Eastspring Investments Unit Trust Fund Investor Behaviour Study is an annual survey designed to track current asset allocation and investment attitudes of unit trust fund investors, understand the key drivers of decision making, measure market confidence, understand the perception on risk profile of income-generating funds and evaluate investment intentions for the next six months. Eastspring Investments, the Asia asset management arm of UK-based Prudential plc, today announced the results of its 2nd wave of Unit Trust Fund Investor Behaviour Study. The study was conducted in March and April 204 and involved online interviews with 300 investors in Malaysia. EASTSPRING GROWTH & INCOME INDEX The Growth & Income Index is a one number score that describes the net direction of preferences of unit trust fund investors (including those intending to invest in unit trust funds) as either shifting toward income funds or shifting toward growth funds in the next six months. The Index score of an individual investor is aggregated up to give a market level Index score: A score between 0 and 49 indicates that the overall investment direction of the market is moving towards INCOME FUNDS. A score between 5 and 00 indicates that the overall investment direction of the market is moving towards GROWTH FUNDS. 9

11 ABOUT EASTSPRING INVESTMENTS Eastspring Investments, part of Prudential Corporation Asia, is Prudential's asset management business in Asia. We are one of Asia's largest asset managers, with operations in 4 markets (including sales and corporate offices in the US, UK and Luxembourg), more than 2,000 employees and about US$05 billion ( 62.8 billion) in assets under management (as at 3 March 204). We were named Asia s leading retail fund manager for 203 in an annual survey by Asia Asset Management. 2 More than one-third of Eastspring Investments' total assets are sourced from third party clients including a wide range of retail and institutionalinvestors. Eastspring Investments also manages the assets of life and pension products sold by Prudential Group. In the Asia region, we operate in Japan, Malaysia, Singapore, South Korea, Taiwan, Hong Kong, the United Arab Emirates, Vietnam and Indonesia, and have joint venture operations in India, China and Hong Kong. Together with Eastspring Investments, Prudential Corporation Asia (PCA) comprises the life insurance businesses of Prudential plc in Asia spanning 3 markets: Cambodia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, and Vietnam. Prudential plc is an international financial services group with operations spanning Asia, the US and the UK. For more information on Eastspring Investments, please visit Disclaimer This document is prepared for information purposes only and may not be published, circulated, reproduced or distributed in whole or part, whether directly or indirectly, to any other person without the prior written consent of Eastspring Investments Berhad. It should not be construed as an offer or solicitation for the subscription, purchase or sale of any securities mentioned herein. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. Investors may wish to seek advice from a financial adviser before making a commitment to invest in units of any of our funds. Eastspring Investments Berhad and its related and affiliated corporations together with their respective directors and officers may have or may take positions in the securities mentioned in this document and may also perform or seek to perform other investment services for the corporations whose securities are mentioned in this document as well as other parties. The graphs or charts are included for illustrative purposes only. Past performance is not necessarily a guide to future performance. The predictions, projections, or forecast on the economy, securities markets or the economic trends of the markets are not necessarily indicative of the future or likely performance of Eastspring Investments Berhad or any funds managed by Eastspring Investments Berhad. The value and any income accruing to the investments, if any, may fall as well as rise. An investment is subject to investment risks, including the possible loss of the principal amount invested. Eastspring Investments companies (excluding JV companies) are ultimately whollyowned/indirect subsidiaries of Prudential plc of the United Kingdom. Eastspring Investments companies (including JV s) and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America. Prudential plc, incorporated and with its principal place of business in England, and its affiliated companies constitute one of the world's leading financial services groups and has been in existence for over 60 years. It provides insurance and financial services directly and through its subsidiaries and affiliates throughout the world. Prudential plc is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America. 2 Asia Asset Management Fund Manager Survey 203, (Sept 203). This annual survey ranks participating fund managers in Asia ex Japan, Australia and New Zealand ("region') based on assets sourced in the region as of June 30,

12 GROWTH & INCOME INDEX 204 UNIT TRUST FUND INVESTOR BEHAVIOUR STUDY MALAYSIA Media Enquiries: Judy Yap Director, Brand and Communications Tel: Fax: