The investing of Takaful premiums to optimize returns for both contributors and the scheme operators is evolving, due to the higher quantity of funds being handled, noted a Malaysian asset manager.
While such investments used to be conducted by an in-house team of experts, several Takaful firms have already begun to conduct tests with external fund managers – emulating the practice of many conventional insurance firms.
Hong Leong Islamic Asset Management (HLISAM) Executive Director and CEO Noor Aini Shaik Awab told IFN Investor the firm has already been contracted to perform investments on behalf of an independent Takaful operator.
Explaining that such investment outsourcing for Takaful funds is a relatively new phenomenon, Noor Aini said that returns could be further optimized by tapping into alternative strategies by external fund managers.
Being part of the Hong Leong Group conglomerate with diverse business portfolios, HLISAM is able to draw on the resources of other entities within the group that operate in both the conventional and Islamic finance arenas.
HLISAM provides investment support for its sister firm Hong Leong MSIG Takaful, which included investing in Hong Leong Dana Abadi. The independent Takaful operator is similarly invested in this Shariah compliant fund, said Noor Aini.
Hong Leong Dana Abadi is an open-ended wholesale Sukuk fund targeted at corporate clients and Takaful partners. The fund invests 70% in Islamic money market instruments, Islamic deposits, Islamic investment account products and Islamic collective investment schemes while 30% is placed in Sukuk.
“Takaful as an insurance offering has finally found its footing and will now be taken seriously as a financial product, which means its flows into the investment market will become more important,” said Noor Aini.
“We collaborate with Takaful companies on their investment-linked funds. We extend free Takaful coverage to our group’s retail customers who cannot buy Takaful. This is part of our corporate social responsibility long-term strategy.”
HLISAM is currently working towards the launch of two new Islamic funds, namely a balanced fund and an additional fixed-income fund. The company is also in discussions to launch an exchange-traded fund (ETF) and a tokenized Shariah fund.
“ETF has been here for a long time but fared poorly before because there were not enough investments and partnerships. And when the Security Commission Malaysia licensed the Digital Asset Exchanges we started to look into Islamic tokenization.”
Noor Aini further said HLISAM aims to launch a regional Shariah equity fund. “The demand for equity is still strong from the retail side. We are venturing into the Asia Pacific region as part of our diversification plan.”
