A study by Eastspring Investments also found that a majority of investors believe Shariah investments are limited to certain groups of people and offer less capital appreciation, indicating a lack of understanding in the area.
But the study also showed that more than half of the investors were planning to invest in Shariah funds in the next six months, a figure in line with Threadneedle and Eastspring plans to set up operations in Malaysia.
Meanwhile, an informal poll carried out in March by International Adviser of fund selectors in Kuala Lumpur found almost 64% believed the Shariah-compliant fund industry has not grown more rapidly because of the inadequate product innovation and range that the market is offering.
Growth Vs Income
Eastspring Investments’ research is based on 300 interviews with Malaysian unit trust fund investors in March and April. In October last year, the fund house had unveiled an index that offers perspectives on investors’ prospective asset allocation over the next six months.
The Growth-Income Index of Eastspring is a number that indicates the preferences of unit trust fund investors, as either shifting toward income funds or shifting toward growth funds in the next six months.
The study shows that Malaysian unit trust fund investors are continuously searching for yield and increasingly looking at alternative options, such as Asian high dividend equities and Asian multi-asset income to capture income and returns in the next six months, according to Yap Siok Hoon, chief sales and marketing officer, Eastspring Investments in Malaysia.
The index score of 47 indicates that there is an allocation preference for funds which deliver income among Malaysian current unit trust fund investors in the next six months.
Those who plan to invest in unit trust funds over the next six months recorded an index score of 42, which also shows a preference for income funds.
Lynn Cheah, chief executive of Eastspring Investments, Malaysia said: “This is an important indicator for the asset management industry, as well as for Eastspring Investments when it comes to the products we offer investors in Malaysia.”
The study also indicated that investors are starting to look at other global opportunities, particularly for funds from China, emerging markets and Japan, signalling an uplift in investors’ risk appetite.
The study also found that Malaysian unit trust fund investors have less confidence in cash and bonds while their outlook for alternatives in the next six months is expected to improve, hinting at a possible shift towards an income orientation in the future.