The fund house plans to launch the Nikko AM Shenton Horizon Investment Fund – Singapore Dividend Equity Fund in Malaysia with Affin Hwang Asset Management, subject to regulatory approval from the host country.
The ASEAN CIS Framework, launched in August, facilitates cross-border offering of funds to retail investors in Singapore, Malaysia, and Thailand.
“The ASEAN CIS Framework is a win-win proposition for both investors and asset managers—it brings diversity to investors and it gives asset managers access to a wider audience to build scale for strong products,” said Eleanor Seet, president of Nikko Asset Management Asia.
The Singapore Dividend Equity Fund is the first in a series of funds that Nikko plans to passport under the ASEAN CIS Framework, Seet added.
The fund aims to invest primarily in equity shares of companies listed on the Singapore exchange that offer attractive and sustainable dividend payments.
“Nikko AM’s Singapore Dividend Equity Fund is a natural choice to kick off the passporting initiative as it adds to our income-based fund offerings, providing alternatives for Malaysian investors to choose from,” said Teng Chee Wai, managing director of Affin Hwang AM.
As of 30 September, the fund had S$157m ($123.5m) in assets under management.
Cerulli Associates recently highlighted that tapping into a local distribution network is a real challenge under the ASEAN fund passporting initiative.
Other potential hurdles for passport funds are tax implications as well as operational issues such as currency mismatches and different settlement times.
A look at the performance of the Singapore Dividend Equity Fund against the benchmark: