Ambank's New Islamic Fund Aims To Perform In Bull Marts

AmIslamic Bank's second Islamic structured deposit, AmMomentum Select Islamic Negotiable Instrument of Deposit (NID-i), aims to perform in bull markets and protect investors against bear markets.

AmBank retail banking executive director, Mahdi Murad, said the NID-i was a highly innovative rule-based asset allocation strategy that used momentum to decide how to invest in a portfolio of multiple assets.

"It automatically avoids underperforming asset classes and takes advantage of bull markets," he said at the launch of the fund here Wednesday.

The NID-i is a four-year syariah-compliant principal protected structure that provides diversified exposure in 100 syariah-compliant stocks in 44 countries and in four indices namely, equity, energy, agriculture and metal.

It is essentially a deposit with a fixed tenure and returns are linked to the performance of syariah-compliant underlying assets, which may be equities, bonds, commodities, foreign exchange, indices or any combination of these assets.

Mahdi said the fund was suitable for investors who wanted to ride on the economic recovery but were uncertain about which asset classes to invest in and when was the best time to invest.

Meanwhile, the bank's structured products senior manager in treasury and markets, Hoe Cheah Kit, said investors could expect a two percent return for the first year.

"Upon completion of the four-year tenure, they can expect the principal and the two percent return if it was not drawn out before," he said.

On the expected average return for the fund, he said: "Going into the next four years, it depends on how fast the market recovers from here onwards."

Hoe said in the last seven years, where the bull run was in 2007 and early 2008, the average return was eight percent.

For the bank's first Islamic structure deposit launched last September, it gave a 1.5 percent return for the first six months, he said.

He said although the net asset value of the first fund was now lower then when it was first launched, it was now on a recovery trend.

"We went through a hard time in the second half of 2008. But even then we raised RM45 million (for the first fund) and saw momentum picked up over the last few months," he said.

The NID-i targeted a fund size of RM75 million during its 30-day offer period, he said.

Hoe said the bank aimed to launch another conventional structured product by year-end.