Malaysian investors continue to favour products that provide regular income streams, as five of the top 10 funds that had the highest net inflows last year were income funds, according to data from Morningstar Direct.
Top 10 funds by net inflows in 2019
| Name |
Fund category |
Net inflow 2019 (RM m) |
| RHB Asian Income Fund |
Mixed-asset |
1,060 |
| Affin Hwang Aiiman Income Plus Fd |
Fixed income |
930 |
| Affin Hwang Perwira Fund |
Mixed-asset |
875 |
| Maybank Malaysia Sukuk |
Fixed income |
870 |
| RHB Asian Income Fund – Multi Currencies |
Mixed-asset |
797 |
| Hong Leong Income Fund |
Fixed income |
747 |
| PB Islamic Bond Fund |
Fixed income |
653 |
| Affin Hwang Select Bond Fd |
Fixed income |
633 |
| AmBond |
Fixed income |
568 |
| Public Islamic Infrastructure Bond Fund |
Fixed income |
533 |
Source: Morningstar Direct. In US dollars. Data excludes money market funds and fund of funds
RHB Asset Management’s Asian Income Fund led the inflows with RM 1bn ($230m) in net new money, according to Morningstar data. The product is a locally-wrapped version of Schroders’ Asian Income Fund, which is a mixed-asset product that invests in high-yielding stocks and bonds.
RHB AM’s product is followed by two income-generating funds managed by Affin Hwang Asset Management. Affin Hwang AM last month launched a global high income feeder fund that invests in JP Morgan Asset Management’s Income Fund.
Jaslyn Ong, Singapore-based analyst at Cerulli Associates, believes that the income theme will continue this year.
“The trend will most likely continue in 2020, where multi-asset, especially those with an income theme, and bond funds will continue to see inflows due to low investor sentiment.”
Equity outflows
Ong explained that Malaysian investors were seeking stable returns in bond and income products last year as the Malaysian equity market was underperforming. In 2019, the MSCI Malaysia Index had a negative return of 2%, according to data from FE Fundinfo.
Indeed, Malaysian investors pulled out from equity products. Of the top 10 categories that had the largest outflows, seven were equity funds, which include those that invest in domestic and offshore securities, Morningstar data shows.
Top 10 fund categories with the largest net outflows
| Equity fund category |
2019 (RM m) |
| Equity – Asia Pacific ex-Japan |
(851) |
| Equity – Malaysia Large-cap (Sharia) |
(762) |
| Equity – Malaysia Large-cap |
(581) |
| Equity – Greater China |
(473) |
| Equity – Country Focus |
(457) |
| Blended – Conservative |
(276) |
| Equity – Malaysia Mid/Small-cap (Sharia) |
(248) |
| Equity – Global |
(204) |
| Blended – Other |
(95) |
| Other – Miscellaneous |
(80) |
Source: Morningstar Direct. Data excludes money market funds and fund of funds
“Malaysian investors are on a risk-off stance at the moment and with the under-performance of the Malaysian equity market, there has been little doubt that equities would have outflows,” Cerulli’s Ong said.
On the flipside, fixed income products were the clear winners last year, with domestic bond funds leading the industry in terms of net flows, followed by balanced and Asia bond funds.
Top 10 fund categories with largest inflows
| Fund category |
2019 (RM m) |
| Bonds – Malaysia |
6,837 |
| Bonds – Malaysia (Sharia) |
3,951 |
| Blended – Balanced |
1,977 |
| Bonds – Asia |
1,669 |
| Bonds – Other |
1,491 |
| Blended – Flexible |
960 |
| Blended – Balanced (Sharia) |
601 |
| Property – Indirect Asia |
517 |
| Property – Indirect Non-Asia |
201 |
| Equity – Asia Pacific ex-Japan (Sharia) |
143 |
Source: Morningstar Direct. Data excludes money market funds and fund of funds
“Inflows [into fixed income funds] were largely driven by fixed maturity products, which typically gave 4-5% returns,” Cerulli’s Ong added.
In total, Malaysia’s mutual fund industry, excluding money-market funds, grew 17.4% to RM 168bn last year, with net inflows of RM 14.6bn led by fixed income products.
|
2019 net inflows / (outflows) (RM $m) |
2019 AUM ($bn) | 2019 market share (%) |
2018 AUM (RM bn) |
|
| Allocation (mixed-asset) |
3,222 |
21 | 12.48% |
17 |
| Equity |
-(2,547) |
104 | 62.24% |
100 |
| Fixed income |
13,922 |
39 | 23.37% |
23 |
| Miscellaneous |
-(159) |
3 | 1.68% |
3 |
| Unclassified |
186 |
0 | 0.24% |
0 |
| TOTAL |
14,624 |
168 | 100% |
143 |
![iStock-1186178292_1920x1080[38]](https://s34456.pcdn.co/wp-content/uploads/2021/08/iStock-1186178292_1920x108038-156x111.png "Despite headwinds, ESG continues to perform")
