Schroders next to get Malaysia offshore money

Latest in raft of offshore funds launched by HLG Unit Trust
Schroder Investment Management has partnered with MalaysiaÆs HLG Asset Management, a unit of Hong Leong Bank, to sub-advise a new equity growth and income fund investing in Asia ex-Japan equities.

Its launch has been made possible by a recent relaxation of capital controls by Bank Negara, MalaysiaÆs central bank, enabling domestic fund managers to invest overseas for the first time in almost 10 years.

Bank Negara originally implemented the capital controls in 1998 to stop funds fleeing the country in the wake of the Asian financial crisis. But last year Bank Negara allowed fund management houses to invest up to 30% of total assets overseas, sparking a revival in the sleepy domestic industry.

Since March last year, sixteen new offshore funds have been launched, and industry insiders say many more are expected in the coming months.

After almost a decade of only being able to invest domestically, Malaysian fund have generally fallen behind in terms of international investment experience. They have therefore looked to team up with global players, meaning Schroders now joins a list that already includes names such as Franklin Templeton and Henderson Global Investors.

HLGÆs chief executive Richard Lin says with ôSchrodersÆ regional advantage and track record, the fund will be able to provide investors access to the dynamic Asia-Pacific region with potentially attractive returnsö.

The new fund aims to provide investors with ôsteady recurring income that is potentially higher than the average fixed deposit ratesö and medium-to-long term capital gains by investing in high quality dividend yielding securities.

Market exposure, according to Lin, will be between 50-95% in foreign markets and a maximum of 50% locally. Asset class exposure will be between 50-95% in equities and between 0-30% in fixed income securities.

The HLG Asia-Pacific Dividend Fund, which is available immediately, has a total approved fund size of 500 million units priced at Rm0.50 per unit during the IPO period, which is open until the 20th March. Minimum initial investment is Rm1,000 while the minimum additional investment is Rm100.

HLG, which was founded in 1994, had a combined fund size of Rm1.71 billion at the end of December 2005.

For an in-depth look at the Malaysian mutual funds industry, see the March edition of AsianInvestor magazine.
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