April 9, 2009

AmConstant Extra Bond Fund

AS INTEREST rates globally continue to fall and are expected to stay low at least this year, AmInvestment Bank Group is starting a bond fund aimed at "preserving wealth".

"Amid the turbulent financial times and falling interest rates, investors prefer bonds and bond funds as safe haven investment tools," chief executive officer at the funds management division Datin Maznah Mahbob said in Kuala Lumpur yesterday. The division manages RM16 billion at the end of March.

"Bonds had overtaken equities as the preferred asset class amid the current volatile market," Maznah said, citing a recent poll by a regional online unit trust portal which has a presence in Malaysia, Singapore and Hong Kong.

Central banks around the world are likely to keep slashing interest rates this year to boost the weak economy and chances are high that interest rates will remain low next year, head of Asian Fixed Income at the bank, Julian Chow said.

With a RM200 million approved size, the AmConstant Extra is benchmarked against the current fixed deposit (FD) rates and aims to provide investors with regular income throughout the tenure.

Up to 99 per cent of the fund will buy debt papers issued by the Malaysia government and local corporates rated "BBB" and above. It may also invest in foreign papers and US dollar convertible bonds that are rated or unrated. The fund adopts a buy and hold strategy where investments are held to maturity.

"We have a strong credit team with a track record in picking up quality papers. All our funds have never experienced a credit default before," Maznah said.

The new fund is targeted at risk-averse investors who seek potentially higher returns than the FD, but less risky unit trust compared to equity funds.

Source: BusinessTimes

For more details about the new fund, click here.

Comments: For a bond fund that intends to beat the fixed deposit rates and yet charge 2% sales charge, i guess this fund is not worth the investment, in my opinion. The fees alone are probably enough to offset the difference between the gain of the fund and the FD rates.

No comments:

Related Posts Plugin for WordPress, Blogger...