ValueCAP offers easy access to US market
Company unveils syariah-compliant investment tool
KUALA LUMPUR: Fund manager ValueCAP Sdn Bhd is offering investors a new Islamic product that tracks the performance of some of the biggest US companies including Apple Inc, Facebook Inc and Exxon Mobil Corp.
This is the first US dollar-denominated exchange traded funds (ETF) that the company has in the pipeline this year.
Chief executive officer Khairi Shahrin Arief Baki said i-VCAP has up to six ETF launches in the pipeline this year, and hopes to launch other currency-denominated syariah-compliant securities.
According to him, the company sees a niche market for foreign currency-denominated fund.
“MyETF-US50, along with new ETF products to come, shall also be targeted towards the European and Middle Eastern markets, where there is a lack of syariah-compliant ETFs,” he said after launching the ETF prospectus here yesterday.
The US denominated syariah-compliant MyETF Dow Jones US Titans 50 (MyETF-US50) is targeted for listing on Bursa Malaysia Securities on Feb 28.
The MyETF-US50 is the fifth Islamic ETF by i-VCAP Management Sdn Bhd, a subsidiary of ValueCAP.
MyETF-US50 aims to provide investment results that closely correspond to the performance of its benchmark index, the Dow Jones Islamic Market US Titans 50 Index, regardless of its performance.
Its benchmark index consists of the 50 largest syariah-compliant US companies by float-adjusted market capitalisation, which include Apple Inc, Microsoft Corp, Facebook Inc, Johnson & Johnson, Exxon Mobil Corp, Chevron Corp, Procter & Gamble and Home Depot Inc, among others.
At the prospectus launch, Khairi said MyETF-US50 also mirrored the S&P 500, where there is no exposure to the financial sector and non-syariah compliant stocks.
“Based on last year’s performance, the US economy is still going strong. The S&P 500 closed 2017 with a 19.4% growth, which is expected to continue in 2018,” he said.
The US economy is expected to see moderate growth of 2.1% to 2.4% this year compared with 2.2% last year.
Meanwhile, corporate earnings growth in the United States is expected to be sustained, with the S&P 500 2018 earnings per share (EPS) growth forecast at 15% this year.
Khairi said President Trump’s initiatives, including the proposed reduction in corporate tax, have yet to be reflected in corporate EPS growth.
Through MyETF-US50, investors can now add the top 50 blue chip US companies to their portfolio with a single investment.
This allows investors easy access to the US equity market as a competitive syariah-compliant investment tool and an additional avenue for diversification in investors’ portfolios.
i-VCAP chairman Rosli Abdullah said the ETF produced an accessible way for investors to diversify their portfolios and manage risk through exposure to the US market with stocks that have passed rule-based screens for syariah-compliance of S&P Dow Jones Indices.
“For most Malaysian investors, buying into a variety of syariah-compliant US blue chip stocks has previously been out of reach.
“The MyETF-US50 addresses this investment gap by making it easier for investors to access the US equity market in US dollars, marking an new chapter in the Malaysian capital market,” he said.
MyETF-US50’s initial approved fund size is up to 500 million units, with an initial issue price of US$1 per unit.
The offer for initial subscription via initial public offering began yesterday and closes at 5pm on Feb 9.