Kuala Lumpur-based Affin Hwang Asset Management has introduced its first smart beta ETFs with the launch of the TradePlus MSCI Asia ex Japan REITs Tracker and the TradePlus DWA Malaysia Momentum Tracker, according to a statement from the firm.
The products were listed today on the local bourse, the firm said.
Smart beta ETFs are innovative forms of ETFs that apply a series of objective factors when selecting its component companies, the statement said. These component companies are then ranked and weighted according to specific factors such as earnings growth, price momentum or dividend yield.
Affin Hwang’s move to introduce smart beta products in the market comes after the Securities Commission Malaysia (SC) revised its guidelines on ETFs in 2018 to allow the issuance of leveraged and inverse (L&I) products, synthetic ETFs, physical commodity ETFs and smart beta ETFs.
Since the revision of the guidelines, six L&I products have been launched in Malaysia, including four from Affin Hwang AM, and two from Kenanga Investors. The number of ETF products has also grown to nearly 20 from just 11 in 2018, according to data from Bursa Malaysia.
The strategies
Affin Hwang AM worked with MSCI for its Reits-focused smart beta product and Nasdaq for the Malaysia Momentum Tracker, according to a spokesman of the firm.
The firm makes use of the dividend factor for its TradePlus MSCI Asia ex Japan REITs Tracker to select the highest and most consistent dividend-yielding Reits in the region, according to the statement. The product is also Malaysia’s first Reits-focused ETF, data from Bursa Malaysia shows.
“Against a backdrop of high volatility in the market, investors can add a measure of stability in their portfolios through consistent dividend payouts from Reits,” it said.
Meanwhile, the TradePlus DWA Malaysia Momentum Tracker makes use of price momentum as its smart beta factor.
“Being the country’s first momentum strategy on Bursa, investors can potentially reap higher returns by capturing stocks with the most upswing momentum to ride the recovery of the local stock market,” the statement said.
Now managing eight ETFs, including the two new products, Affin Hwang AM now manages the most number of ETF products listed on the local bourse, according to the statement.
The other ETF providers in the country include i-VCAP Management, AmFunds Management and Principal Asset Management, according to data from Bursa Malaysia.
