Kenanga debuts with inverse & leveraged ETFs in Malaysia

Jan 13th, 2020 | By | Category: Alternatives / Multi-Asset

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Kenanga Investors, the asset management arm of financial services giant Kenanga Investment Bank, has launched its first ETFs on Bursa Malaysia.

Malaysia equity ETFs

The funds provide inverse & leveraged exposure to Malaysian large-cap equities.

Introduced under the firm’s newly unveiled ETF platform – OneETF – the Kenanga KLCI Daily 2X Leveraged ETF (KLCI2XL MK) and Kenanga KLCI Daily (-1X) Inverse ETF (KLCI1XI MK) offer inverse & leveraged exposure to Malaysian large-cap equities.

The funds, which were created in partnership with Yuanta Securities, a leading provider of ETFs in Taiwan, have been launched just one month after Affin Hwang Asset Management listed the first inverse & leveraged ETFs in Malaysia.

The Kenanga KLCI Daily 2X Leveraged ETF provides twice the daily return on the FTSE Bursa Malaysia Kuala Lumpur Composite Index (KLCI), while the Kenanga KLCI Daily (-1X) Inverse ETF provides the inverse daily return on the same index.

The index is Malaysia’s most prominent large-cap stock market benchmark. It consists of the 30 largest companies on Bursa Malaysia with eligible companies requiring to pass certain liquidity thresholds and have a minimum free float of 15%.

A third (35.8%) of the index’s weight is allocated to bank stocks with the next largest sector exposures being food & beverage (13.4%), utilities (12.9%), telecommunications (9.9%), and industrial goods & services (6.6%).

A handful of stocks play a significant role in determining index performance. These include Public Bank (12.0%), Malayan Bank (10.3%), Tenaga Nasional (10.3%), CIMB Group (7.2%), and Petronas Chemicals (4.1%).

Each ETF comes with a management fee of 0.50%, a trustee fee of 0.04%, and an index licensing fee of 0.05%.

Datuk Chay Wai Leong, Managing Director of Kenanga Investment Bank, commented, “At Kenanga, we are continuously working to broaden our range of products and solutions to complement the varied goals investors have. While ETFs in South East Asia are still in their early stages, they have been garnering strong traction and showing tremendous growth potential.

“Today, we are pleased to introduce OneETF by Kenanga, which provides investors with a low-cost alternative to diversify and hedge their portfolios. With its multitude of benefits, we look forward to ETFs becoming a mainstream investment option. ”

Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia, added, “The introduction of inverse & leveraged ETFs, particularly the inaugural KLCI-based OneETF, will further invigorate our local bourse by offering investors a wider range of innovative products catering to varying risk appetites.

“We will continue to work closely with Kenanga Investors and other industry partners to drive the sustained development and increase the competitiveness of the Malaysian ETF market through education and creation of attractive and diverse investment opportunities that meet the evolving needs of retail and institutional investors.”

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