Kuala Lumpur, 13 January 2020 – Kenanga Investors Berhad (“Kenanga Investors”) the asset management arm of Kenanga Investment Bank Berhad announced the listing of OneETF by Kenanga (“OneETF”) on the Main Market of Bursa Malaysia Securities Berhad, which signals the company’s first foray into exchange-traded funds (“ETF”) by means of leveraged and inverse ETFs. The Kenanga KLCI Daily 2X Leveraged ETF (KLCI2XL) and the Kenanga KLCI Daily (-1X) Inverse ETF (KLCI1XI) are the first L&I ETFs to be benchmarked against the FTSE Bursa KLCI (“KLCI”) and the first ETF listing of the new decade on the local bourse.
Both KLCI2XL and KLCI1XI adopt a futures-based replication investment strategy in order to provide daily performance that closely corresponds to their respective tracked indexes.
Kenanga Investment Bank Berhad’s Group Managing Director, Datuk Chay Wai Leong said, “At Kenanga, we are continuously working to broaden our range of products and solutions to complement the varied goals investors have. While ETFs in South East Asia is still in its early stages, it has been garnering strong traction and showing tremendous growth potential. Today, we are pleased to introduce OneETF by Kenanga, which provides investors with a low-cost alternative to diversify and hedge their portfolios. With its multitude of benefits, we look forward to ETFs becoming a mainstream investment option.”
“The introduction of L&I ETFs, particularly the inaugural KLCI-based OneETF, will further invigorate our local bourse by offering investors a wider range of innovative products catering to varying risk appetites,” says Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia Berhad. “We will continue to work closely with Kenanga Investors and other industry partners to drive the sustained development and increase competitiveness of the Malaysian ETF market through education and creation of attractive and diverse investment opportunities that meet the evolving needs of retail and institutional investors.”
According to Ismitz Matthew De Alwis, Executive Director and Chief Executive Officer of Kenanga Investors, KLCI was decided upon due to the company’s conviction in its own expertise within the Malaysian equities environment, in reference to the its award winning history at local and regional levels. “The KLCI has been appreciating ever since its steady recovery from the financial crisis of 2008, which is a market behaviour inverse ETFs can help investors with by providing the opportunity to hedge downside risk. Meanwhile, leveraged ETFs enable those with a bullish view of the market to possibly maximise potential returns. Investors will be able to cushion the sharp shifts that may occur as our OneETFs are traded on a real-time daily basis; this is especially significant for institutional investors due to their large exposure,” he adds.
Unlike a conventional ETF, the KLCI2XL aims to achieve a return of two times the FBM KLCI 2X Daily Leveraged (Price) Index via futures as margin contracts and money market instruments amongst others while KLCI1XI uses short selling, derivatives trading and other leveraged investment techniques to perform inversely to the FBM KLCI Daily Short (Price) Index. Investors will be able to increase their yield without having to scrutinise the fundamentals of the underlying index components which is a form of passive management, something that Kenanga Investors is excited to bring to the market. “This further adds depth to the value of the products and services that we want our investors to experience, enabling both retail and institutional investors in capturing market opportunities in a volatile environment,” says De Alwis.
Kenanga Investors’ collaboration with Taiwan’s largest mutual fund house and the pioneer of ETFs, Yuanta Securities Investment Trust Co., Ltd (“Yuanta SITC”) to develop ETF products has been a valuable one. Yuanta Securities SITC has played a major role in the development of ETFs within Taiwan for more than 17 years. Dr Julian Liu Tsung-Sheng its Chairman, shares his thoughts, “It has been a rewarding experience for Yuanta SITC as Kenanga Investors’ strategic advisor in its initiatives to bring L&I ETFs to Malaysian shores. Following this, both parties remain committed for the long haul to continue developing the ETF market to rival those in neighbouring regions.
“We are confident that OneETF will blaze a trail for more sophisticated ETF products to follow starting in 2020 and we are honoured to have been a part of this monumental occasion. The trading of ideas between Kenanga Investors and Yuanta SITC has also helped us gain new insights and perspectives for our own learning curve which has been enriching for our organisation,” he says.
The two L&I ETFs are suitable for qualified investors who wish to seek either leveraged or inverse exposure to the companies of the index (bullish vs bearish) and are be able to actively monitor and manage their investments whilst mitigating risk when used appropriately.