As how retail investors in other parts of the world, especially the developed countries, have an array of advanced investments to select from, Malaysian retail investors should also be given this opportunity to experience more sophisticated, legitimate investment products.
Teh Chi-cheun, the CEO, CIO and executive director of Pacific Mutual Fund Bhd, an investment management company under the OCBC Group, said, “We believe a high number of Malaysian retail investors have long been ready to try more advanced investments. These advanced investment choices would help retail investors to navigate the volatile trend of markets these days. Hence, this would potentially translate to a more ideal rate of returns than conventional investments.”
“The group of retail investors who are ready to try more advanced styles of investing would also understand that such products, that can even generate returns during falling markets, would also have higher elements of risks. As such, this group is able to stomach risk much better than normal retail investors.”
According to Teh, to meet the demands of this group of sophisticated retail investors for more advanced investing styles, the company is introducing an exciting, breakthrough product. This product has an investment strategy that aims to generate positive returns from rising, as well as falling markets.
Teh, would lead a team of investment professionals, who has the expertise to manage local and global investments, to run an investment scheme that can hold short positions in derivatives, as well as invests in inverse exchange traded funds (inverse ETFs).
This should be one of the very first investment products in local shores that allows investors to experience inverse ETFs.
ETFs are funds that track an index. So their performance move in the same direction of the performance of the index they track. Inverse ETFs, on the other hand, track the daily performance of an index but its performance is the opposite of the return of the index tracked. For example, for an inverse ETF that tracks the S&P 500 Index, a 1% decline in the said index would see the inverse ETF gain by 1% before any fees.
Therefore, investments will be made into an inverse ETF when the outlook of the market or index it is tracking has a downside trend. This provides the opportunity to realise positive returns in falling markets.
As a form of risk management, investments in inverse ETFs is capped at 50% of the total assets of the new scheme which Teh’s company has launched i.e. the Pacific ROAR Fund (Pacific Real Opportunities Absolute Return Fund).
As the product’s investment universe includes derivatives and alternative investments – such as options, warrants, inverse ETFs, this investment product is open only to qualified, sophisticated investors who meet the conditions that are defined in the Capital Markets and Services Act 2007.- Bernama