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ETF available in Malaysia

Do malaysia has ETF?

Looking at the policies and initiatives introduced by China government, I am convinced that China is going to have a fast track progress ahead. Hence, this made me wonder is there anyway I could invest in China stocks in Malaysia. And I found this - ETF.

In order to understand ETF better, first, you have to know what is an index fund.

If you have started to invest, you might already experienced riding the roller coaster enjoying the up and down of an individual stock. The stock price could spike when the revenue announced is good, but it could drop drastically when the quarter result is bad. Sometimes, some stocks could even drop to few cents and never re-bounce again.

But if you look at any stock index, for instance, KLCI for Malaysia, Dow Jones for USA, Hang Seng for Hong Kong, you will notice that the stock index is always going up. Yes, it did drop when financial crisis hit. But, it will always perform a comeback and head for higher new. Due to this reason, index fund was introduced. Its purpose is to simply mimic the index. Due to the fact that the world economy will keep improving, the belief is that holding an index fund for long term will definitely bring about return. Furthermore, it also diversifies our investment, as an index is made up of dozens or hundreds of big cap companies from different countries and different sectors.

Moving on, Exchange Traded Fund (ETF) is also a copy of an index, equities, bonds, or commodities. Then how is it different as compared to index fund?

Generally, ETF 
- has lower cost of transaction and management fee
- can be traded in online stock exchange platform such as HLebroking and CIMB trade
- is not limit to tracking index, but also equities, bond and commodities (have to pay more attention on what the ETP track before investing)

difference of ETF and unit trust mutual fund


ETFs available in Malaysia

Equity ETF
1. FBMKLCI-ETF (0820EA)
Tracks KLCI and mainly invest in Malaysia 30 largest listed companies.

2. CIMB FTSE ASEAN 40 Malaysia
Tracks ASEAN 5 market index (Indonesia, Malaysia, Singapore, Philippines, Thailand) by investing on the largest 40 companies of these stock exchanges.

3. CIMB FTSE China 50 
Tracks the performance of FTSE China 25 index by investing in the 50 largest and most liquid Chinese stocks listed and traded on Hong Kong Stock Exchange.

Shariah Compliance Equity ETF
1. MyETF MSCI Malaysia Islamic Dividend 
Invest in high dividend Shariah compliance stock in Malaysia

2. MyETF MSCI SEA Islamic Dividend 
Invest in high dividend Shariah compliance stock in ASEAN 5 market index (Indonesia, Malaysia, Singapore, Philippines, Thailand)

3. MyETF-AGRI
An interesting one. Invest in agriculture related companies in asia pacific countries, excluding Japan. Click the link to view more details about it.

4. MyETF Dow Jones Islamic Market Malaysia Titans 25
Invest in 25 Shariah compliance companies in Malaysia, which complies with investment laws established by Dow Jones.

Fixed Income ETF
1. ABF Bond Malaysia
Conservative investors could take a look at this bond ETF. This ETF gives an exposure to Ringgit dominated government and quasi government debt securities.


In Conclusion
As you can see, the ETFs available in Malaysia are still very minimal. And most of them focus in Malaysia market, except for the China and ASEAN ETF. This proves that ETF is still a very new concept in Malaysia. In fact, the trading volume is very low as well.

Even though the long term holding strategy of ETF really works in US market, this doesn't mean that it will work locally. As of today (23 Dec 2017), KLCI index closed at 1760, which is still below the peak of index in 2014 (around 1870). This signifies that investing in ETF might not really work in Malaysia. Personally, I see no reason to invest in ETF except for investing in China ETF, considering the future growth China could undergo.

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