Kuala Lumpur-based Maybank Asset Management has rolled out in Malaysia the Maybank Global Sustainable Equity-I Fund, according to a statement from the firm.
The fund both integrates ESG factors into its investment process and is also shariah-compliant.
Shariah-compliant investments are in line with basic Islamic principles. For example, no stocks may derive income from gambling, alcohol, tobacco, pork products, adult entertainment or military equipment. The principles also restrict the use of some mainstream financial instruments such as debt-financing, charging interest or the use of derivatives.
The fund aims to provide both capital appreciation and income to investors, according to a separate Maybank AM document. It seeks to achieve a total target return of 8-10% a year, inclusive of a “potential annual income of 3%” annually over the medium- to- long-term, it said.
The firm launched the product in partnership with Schroders in Singapore, which serves as the product’s investment adviser. According to the statement, the fund will be combining the sustainability insights generated by Schroders and Maybank AM’s capabilities on shariah investing.
“We found that incorporating sustainability considerations is complementary in philosophy to shariah investing, and broadening the focus of shariah investing beyond the traditional exclusion of industries and companies can pave the way to investment product innovation,” Lily Choh, Schroders’ deputy CEO for Singapore and head of distribution for Southeast Asia, said in the statement.
Maybank AM’s new fund will be competing against at least two other products that are also global shariah ESG offerings, which are the BIMB Investment’s BIMB-Arabesque I Global Dividend Fund and Public Mutual’s Public E-Islamic Sustainable Millennial Fund, according to data from Morningstar Direct.
The BIMB fund, which was launched in 2017, has assets of around MYR 833m ($200m) with year-to-date (ending July) net inflows of MYR 10m, according to Morningstar data. Meanwhile, the Public Mutual fund, which was launched in November last year, has an AUM of MYR 67m with YTD net inflows of MYR 27m.
In Malaysia, there are few ESG-focused funds. Morningstar data shows there are only around 10 Malaysia-domiciled “ESG”- or “sustainable”-labelled products. Of those 10 funds, five are shariah-compliant.
The case is the same in Thailand, where the market has not yet been bombarded with ESG-focused products. There are just seven ESG offerings in Thailand, with only three of them having global mandates.