United-i Malaysia Discovery Fund

Launched on the 9^th May 2025 by UOB Asset Management, the United-i Malaysia Discovery Fund is a Shariah compliant equity fund targeting long-term capital growth focused on Malaysian small-cap stocks.

Structured for investors seeking higher growth potential, the fund invests a minimum 70% of its NAV in listed equities of companies with a market capitalization of up to RM5 billion (US$1.83 billion) at the time of purchase. The fund’s selection is based on a bottom-up approach, focusing on operating performance, governance quality and relative valuation.

Suhazi Reza Selamat, CEO of UOB Islamic Asset Management, explained the fund seeks to capture untapped opportunities in an often-overlooked segment of the market.

“Investing in Malaysian small-cap stocks, within the Shariah compliant space, presents a compelling opportunity. While nearly 80% of Bursa Malaysia-listed companies are Shariah compliant, the focus of many Shariah funds has traditionally been on large-cap or blue-chip stocks. Small-cap Shariah equities have a lower profile and are under-researched compared with their large-cap counterparts.

“So, an active manager with strong local knowledge and insights can capitalize on market inefficiencies in small-cap Shariah equities over the medium- to long-term.”

The fund currently favors sectors that are more domestic, given their relative insulation from external shocks such as the US trade policy uncertainty. These include consumer, healthcare and construction.

While concentrating on small-cap names, the fund may continue to hold securities that appreciate beyond the RM5 billion threshold. Up to 30% of NAV may be allocated to Islamic money market instruments and deposits to manage liquidity and risk.

Islamic derivatives such as swaps and options may be employed for hedging, subject to approval by the fund’s Shariah adviser. During periods of heightened market volatility, the fund may temporarily increase its allocation to liquid instruments, up to 100%.

Performance is benchmarked against a blend of 40% FTSE Bursa Malaysia EMAS Shariah Index and 60% FTSE Bursa Malaysia MidS Cap Shariah Price Return Index, reflecting the strategy’s broad and mid-market focus.

“Investors typically look at the broader market to gauge performance,” Reza noted. “While we run a small- and mid-cap strategy, benchmarking 40% to the broader EMAS Shariah Index offers a truer representation of expectations, while the 60% allocation to the MidS Cap Index reflects the core mandate.”

Benchmarks are reviewed periodically, typically after a minimum of three years’ track record. If a change is warranted, it must be justified and approved by unitholders to ensure transparency and fairness.

The fund’s initial offer period closed on the 29^th May 2025, with units priced at RM0.50 (US$0.12) across accumulation and distribution classes A, B and C – denoting various categories of institutional and retail investors, with same price points.

The accumulation class is not expected to make any distribution; however, any distribution (if declared) would be incidental. In contrast, the distribution class can look forward to annual income declarations, subject to availability.

Minimum initial investment for classes A and B is RM1,000 (US$235.82), with additional investments from RM100 (US$23.58). For more sophisticated investors, class C entry is set at RM100,000 (US$23,582), with subsequent top-ups from RM10,000 (US$2,358).

*Disclaimer:  The opinions and viewpoints expressed in this Fund Profile do not constitute recommendations for any funds highlighted. The information presented is not investment advice and should not be treated as such.