SC plans to allow wholesale funds to gain exposure to alternative assets

KUALA LUMPUR: The Securities Commission (SC) plans to allow the wholesale funds market to gain exposure to alternative assets such as digital assets, investment accounts and investment notes.

This follows the liberalization of measures for exchange-traded funds and private pension schemes (PRS) last month, allowing retail funds to have exposure to invest in digital assets and investment accounts, said SC Chairman Datuk Seri Awang Adek Hussin.

“As one of our oldest and largest market segments, the unit trust industry must first and foremost adapt to changing demand.

“The search for yield has shifted investor preferences from traditional products to alternative assets and sustainable and responsible investments (SRI).

“Going forward, this trend is expected to continue, alongside new product innovations and a higher interest rate environment,” he said at the annual convention of the Federation of Investment Managers. Malaysian Investments (FIMM) and Industry Education Series.

Awang Adek also announced that its training and development arm, Securities Industry Development Corp, will introduce SRI certification for market professionals in 2023.

The certificate will build capacity in the industry, especially those involved in fund distribution, such as unit trusts and PRS consultants, Bernama reported.

“Better equipped intermediaries will increase investor confidence and participation in the SRI asset class.

“After the pandemic, retirement adequacy has become an urgent national concern. It also presents an opportunity to improve PRS offerings, through a better understanding of investor behaviors, and to narrow the retirement savings gap,” he said.

Amid growing demand, he reminded market intermediaries to continue to act in the best interest of their investors.

“The SC will not hesitate to take legal action in the event of misconduct by consultants. In fact, we have imposed penalties of over RM4mil from 2020 to 2022.

“In terms of conduct, the SC acted against consultants for failure to explain the unitary trust fund marketed, for providing performance guarantees, unauthorized transactions on client accounts and the dissemination of false or misleading information “, he noted.

He said FIMM, as a self-regulatory organization, must also continue to hold “bad actors” accountable.

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