CIMB-Principal rolls out first structured fund

Malaysian fund manager gives investors the chance to buy into global names through unit trusts.
CIMB-Principal Asset Management, one of MalaysiaÆs top-three investment managers as measured by assets under management, has launched its first structured fund with principal protection for investors. The Global Income Fund will provide potential regular payouts to investors over a period of three years and give them access to a diverse basket of international equities than have previously been unavailable to unit trust holders on a wide scale.

As both a unit trust and structured fund, the fund will potentially pay out an enhanced rate of return to investors, which is contingent on the performance of the basket. The approved fund size of 300 million units has been set up CIMB-Principal at an initial selling price of RM0.50 a pop. Based on the performance of the basket, the Global Income Fund will pay out investors twice a year.

Within the fund, the global diversity of the constituents is probably the biggest selling point. Out of the 20 selected stocks in CIMB-PrincipalÆs Global Income Fund, investors will gain access to global sectors ranging from banking, oil and gas to consumer electronics and pharmaceuticals. Among the baskets are constituents investors will find names such as HSBC, Toyota, Pfizer and Exxon Mobil.

Outside of the principal protection, which the firm is using as a way to target conservative Malaysian investors, the fundÆs other selling points include a waived management fee and a low minimum investment. Most traditional structured products in Malaysia require an investment of around RM250,000 (over $72,000), but CIMB-PrincipalÆs product will set the minimum investment at RM10,000 (just under $3,000), which the firm believes well bring in a greater number of potential unit holders.

ôProducts offering principal protection have proved very popular with the investing public,ö says Noripah Kamso, chief executive at CIMB-Principal Asset Management. ôAs this is a unit trust, we have be able to make structured products more affordable for investors.ö

The fund, which is closed-ended, includes an application fee of 3.75% of the net asset value (NAV) per unit and a withdrawal fee of 1.5% if investors withdraw prior to the three-year maturity. Investors that withdraw before maturity will also lose the principal protection component.

CIMB-PrincipalÆs Global Income Fund will remain open to subscribers until 4 May and will be distributed by CIMB Wealth Advisors and CIMB Private Banking around Malaysia.
The launch comes approximately two months after CIMB Wealth Advisors, in collaboration with CIMB Trustee, extended its newly launched trust nomination services to all unit trust holders. Under this new scheme, CIMB unit trust investors can now name up to four beneficiaries for each unit trust fund account. Additionally, only a minimal one-time fee is required for those investors that want to set up the trust nomination account.
It also follows the 7 February signing which completed CIMB-PrincipalÆs acquisition of SBB Asset Management in Malaysia, which the firm believes will greatly help it reach its target of RM19 billion ($5.5 billion) by the end of 2007.

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