Reliance Capital to court Malaysian retail investors

Reliance Capital Asset Management (RCAM), via its Malaysian unit Reliance Asset Management Malaysia (RAMMY), is seeking to attract local retail participation via a series of syariah-compliant funds that it will be launching in the country.

RCAM CEO, international business, Vikrant Gugnani said this was part of the group’s long-term strategy to transform Malaysia into its global Islamic finance hub.

RCAM is the asset-management arm of Reliance Capital Ltd, a member of the Reliance Anil Dhirubhai Amhani Group, a major diversified group whose activities include communications, financial services, power, infrastructure, media and entertainment as well as natural resources and energy.Reliance Capital currently manages over Rs1.5 trillion (RM103.89 billion) in assets across mutual funds, pension funds, managed accounts and hedge funds with an annual growth of 32%.

“We believe that in the emerging market place, Malaysia will grow significantly because it has an inherent growth story and the future of the retail market is going to be significant from an investment perspective; that’s what we believe will happen within the next five to six years and we want to position ourselves to capitalise at the right time,” Gugnani said.

RCAM recently announced it planned to launch a series of innovative and differentiated syariah-compliant funds, starting with a quantitative Global Equity Fund and an India Country Fund. Malaysian retail investors will be able to invest in them via feeder funds. The joint launch date of the two funds has yet to be finalised.

“There is potential for future retail growth opportunities in Malaysia that will drive syariah opportunities over the next few years. We plan to build up our brand, track record and positioning locally to reach out to retail investors in smaller towns,” he said.

RAMMY was working with some local Islamic banks to provide an investment platform for retail investors to tap into the new funds, said RAMMY CEO Ian Lancaster.

Declining to name the financial institutions, he nonetheless said: “They are well-known Islamic banks.”

The India Country Fund, which is the first syariah-compliant Indian fund, is designed to address pent-up demand in the Middle East.

“We are very excited about the India country fund as India can sustain positive growth, and there are not many Islamic products to grab this growth,” he said.

He added that the product would enable Middle Eastern investors, who form the primary target market of the country fund, to enjoy the top-performing techniques of Indian fund management. RCAM and RAMMY are still in the midst of designing the India Country Fund.

Meanwhile, details of the international Islamic fund, the Global Equity Fund, have been firmed up. It will cover 2,500 companies in 27 countries with 80 to 100 choice stocks within its basket, representing the top 5% of companies, said Lancaster. A minimum of US$1,000 (RM3,225) is required to make an investment in the global fund, he said.

The Global Equity Fund will be domiciled in Guernsey, a British Crown Dependency while the India Country Fund will be domiciled in Mauritius.

“Regulators here are very supportive of our plan (to launch the proposed funds),” said Gugnani.

Meanwhile, Gugnani said RCAM was planning to launch a hybrid syariah-compliant India-Malaysia fund “within the next few years”. It is still at the conceptual stage.

On the outlook of the global equity market, Lancaster said he was bullish on the medium to long-term prospects of the global market and expected momentum stocks to be among the top performers. “Thus, we will enter a growth phase again in the equity market,” he said.



Written by Lam Jian Wyn
This article appeared in The Edge Financial Daily, July 5, 2010.