The Malaysian Islamic investment sector is ripe for growth, with many looking for new opportunities – beyond traditional products – to diversify their portfolios, RHB Islamic International Asset Management CEO and Chief Investment Officer Najman Isa shared with IFN Investor.
Noting that financial literacy among Malaysians had improved a lot, Najman said an increasing number “have become arguably more willing to take higher risks”.
As this trend was especially noticeable with region-focused and thematic Shariah compliant unit trust offerings, the RHB Group will be giving extra focus to introducing more such investment products to the market.
Najman said this niche strategy is important for the RHB Group, given strong competition from Amanah Saham products offered by Permodalan Nasional – which the Malaysian government established in 1978 and is viewed as the entity that many would closely associate with local unit trust offerings.
Laying claim to be the fourth-largest player in Malaysia’s unit trust sector in terms of assets under management, RHB Group is aiming to give extra focus to Islamic investment offerings as market penetration of such products is considered to be relatively low – estimated to make up between 18% and 33% of total investment products on offer.
Aiming to bring more interesting products to the industry, Najman said RHB Group will be driving innovation with offerings that will touch across traditional assets like equities, Sukuk and balanced products. “I believe there is more upside potential for Islamic products in general.
“These could include alternate investments like crypto products and we’re still exploring some opportunities. We have to be mindful of matching the risk tolerance of investors in relation to the products.”
Among influences being assessed include the diverse asset classes offered in Hong Kong. “Those risks may be too high and not be acceptable in Malaysian market, but such risks may be acceptable to a certain segment of investors like high net-worth individuals.”
In driving innovation of new Shariah compliant investment products, Najman said engagement with regulators would be critical – especially in relation to retail investors, who would relate more easily to equity products because these “give you a higher upside or alpha compared to Sukuk products”.
While this process continues, Najman expressed confidence that Islamic investments would eventually become the norm.
“It is the dream for Shariah or Islamic finance investing to stand on its own as an asset class. Which means that our investors have to come beyond just Muslims. At the end of the day, that comes from fund performance with the right set of products, the right investment approach and also philosophy to match or outclass conventional asset classes.”
