Fresh from the officially launching Brunei’s first domestically-managed Islamic mutual fund with partner BIBD Securities (BIBDS), Singapore-based Lion Global Investors (LGI) is already looking to expand this fund’s scope to beyond the US dollar initial unit pricing.
LGI Islamic Business Director Zefri Delaney Mohd Dennis told IFN Investor that units of this Lion-BIBDS Islamic Enhanced Liquidity Fund will also be offered in either the Singapore or Brunei dollar from the 1st August 2024. These two Southeast nations’ currencies are interchangeable since they were pegged in 1967.
From next month, the minimum investment amount for institutional clients is set at either US$1 million or SG$1 million (US$737,825). Lowest entry point for retail investors is SG$1,000 (US$738), with subsequent investments at SG$500 (US$369) increments.
“Retail investors can also opt for the minimum SG$100 monthly savings investment scheme,” explained Zefri, adding that retail investors can also opt for US dollar-denominated units with this scheme.
Outlining developments that led to this fund, Zefri said the work began in early 2023 as both LGI and BIBDS felt there was a real gap in the market for Shariah compliant liquidity or cash management solutions, especially for investors using either the Singapore or Brunei dollar.
“The only option then available in terms of stability and low volatility was fixed deposits, which in either Brunei or Singapore are returning 1% or less with your money locked in till maturity.” Taking the cue from available conventional options, the partners proceeded to craft this Islamic liquidity fund.
While this fund was initially meant for their usual institutional clients like pension funds, insurance companies, sovereign wealth funds and central banks, Zefri said the Brunei-Singapore top management jointly decided to extend the fund’s reach to retail investors.
“It would be a disservice as we have applied this expertise but we’re just selling to institutional clients.”
As Brunei’s current fund regulations and legal framework are not ready yet, this fund is domiciled in LGI’s home base of Singapore, said Zefri, who added that this is the first Shariah enhanced liquidity fund to be domiciled in the island-state.
After getting recognized by the Brunei regulator, with BIBDS approved to be the fund’s sub-manager, it made history by becoming the first mutual fund to be managed locally. BIBDS is also the fund’s exclusive distributor in Brunei.
Rolling out the fund is conducted in three stages, with the US dollar-denominated units offered from the 4th March 2024 to selected institutional clients which were consulted during the fund’s development phase.
Zefri said these early investors – both in Brunei and Singapore – have already seen gains of around 1.7-1.8%.
The second stage of offering the US dollar units to the public began on the 1st July 2024 with institutional and retail share classes. Each class is further divided into either accumulation or distribution types – with the latter for investors seeking income with semi-annual payouts in July and December while for accumulation, the payouts are reinvested for longer-term gains.
The offering is already available in Singapore via FSMOne Singapore, formerly Fundsupermart, and Interactive Brokers from the 1st August 2024 with the Singapore dollar-denominated units.
Zefri explained some clients did not want to invest in US dollar terms and asked for the Singapore dollar or Brunei dollar-hedged units. Due to the extra processes involved, this is the offering from next month – with the four share classes similar to the US dollar units.
Amid negotiations for extra distribution channels to Malaysia, Indonesia, GCC nations and beyond, Zefri said work has begun on what would be LGI’s second Shariah fund. That is expected to launch latest by the first quarter of 2025.
Noting that LGI had managed a Shariah compliant portfolio for over a decade with institutional clients seeking customized services, Zafri said the asset manager leverages on its parent group’s resources with the Shariah compliant center of excellence at OCBC Al-Amin in Kuala Lumpur, Malaysia.
With a track record of 38 years and 28 unit trusts launched so far, LGI will continue to be guided by what its investor clients ask for – as the firm has done well with this targeted approach.
Summing up this approach, Zefri posed: “Is there market demand? You can build it and they come. Or assess the market demand and then provide a solution. Our focus is clear.”
