'Foolproof' ASM unit trusts snapped up by M'sians

THE strong appetite for the latest Amanah Saham Malaysia (ASM) unit trust, launched earlier this week without any purchase cap or racial quota, has not come as a surprise. Economists say it reflects two things, Malaysians have a lot of excess cash and they want clear and certain returns as they become more risk-averse. Such was the demand for state fund manager Permodalan Nasional's (PNB) additional one billion units that queues had formed as early at 4.30am, although subscription for the units priced at one ringgit each, was only open from 10am. Although Monday's speedy take-up rate was a record for PNB, the mad rush to subscribe for 'a sure thing' was not a surprise. Economists believe the popularity of these investment options reflects the wariness of Malaysians towards other investment instruments such as fixed income, treasury and equities. ASM is obviously seen as a 'no-brainer' given its past returns of 6-8 per cent, especially when compared to the 3-plus per cent banks pay for fixed deposits of up to 12 months, or to the volatility in the stock market. ECM Libra economist, Wong Chee Seng, observes: 'People are moving towards risk-averse instruments. If you go into the market, can you make such returns?' And with ASM dividends likely to beat corporate earnings projections of 5.5 per cent for the year, Mr Wong believes 'this is one investment you can sleep on'. Previously, the 2.5 billion ringgit Merdeka Savings Bonds, issued by the central bank in eight separate tranches over 2004 and 2005 and only open to senior citizens, was quickly bought up at every launch. Offering a 5 per cent yield, the bonds were perceived as superior to fixed deposit rates and better than chancing it at the stock market. The Malaysian public's growing risk aversion is also evident in the reduced level of participation by retail investors in the stock market. Retailers were active participants in the early to mid-1990s accounting for 70 per cent of market activity, but have shied away in droves. Retail participation, which has also been eclipsed by greater institutional participation in the stock market, now accounts for about 35 per cent. This is an improvement from 30 per cent previously in the past few years, but the exchange hopes to boost the level to 40 per cent. In launching the additional units, the government said the objective was to make available more investment opportunities for all Malaysians. A remisier agreed the public wanted more options as people are fed-up of buying shares, and losing money. 'Private funds also charge a management fee; PNB does not and is capital guaranteed,' he said. The fact that PNB consistently averages better returns than most other funds is attributable to its status as the state's premier fund, which allows it to tap more prestigious initial public offerings (IPOs) and which in turn boosts its portfolio returns, some believe, by as much as a third. Not surprisingly, many who availed themselves of the ASM offer on Monday were non-bumiputras. Launched in 2000, ASM - of which 4 billion units have now been sold - is only the second PNB fund available to all Malaysians. The other fund is the Amanah Saham Wawasan (ASW 2020), but it limits non-bumiputra participation to 49 per cent of the fund. The ASM does not have such a quota, but one reason why bumiputras are not as anxious about buying the ASW or ASM is because they have access to better yielding PNB unit trust funds which are reserved for bumiputras only, which often pay dividends in excess of more than 10 per cent. PNB's total fund size is close to 58 billion units, and is estimated to have paid out a total of 52 billion ringgit in income distribution, both in dividends and bonuses, to its unitholders.