Appetite for US equities among Malaysians on the rise
KUALA LUMPUR: The risk appetite of Malaysian investors in American equities has been rising steadily, providing the potential for more United States equity products to enter the market.
Franklin Templeton Asset Management (Malaysia) Sdn Bhd country head Sandeep Singh said an incremental interest is seen following the launch of Franklin US Opportunities Fund in May.
Some RM60 million has been invested so far and Sandeep says the flow is encouraging, considering the short period, limited distribution and restrictions to qualified investors.
"In the last few years, investors here have been wanting to diversify and are looking at regions other than Asia (and China). The US makes a lot of sense not only because it is a big market but also of its world-class companies (S&P 500)," he said at a briefing, here, yesterday.
However, the participation of Malaysian investors depends on the distribution channel as well as awareness on the US equities market.
Meanwhile, Grant Bowers, portfolio manager of Franklin US Opportunities Fund, said investors are starting to look to the US and developed markets for lower volatility, consistency of quality returns and financials.
"We'll see investment risk appetite continuing to increase as investors see the returns. They will embrace more risks in their portfolio, further away from the memories in 2008."
Interest in equities will, however, spike further when the US Federal Reserve raises its interest rates next year.
"If investors are allocating 20 per cent of their portfolios for equities versus the 30 to 40 per cent (level) in 2005, we can see it move to more normal ratios," he said.
Insurance and pension funds, which manage big portfolios on all assets, have been increasing their equity ratings and retail investors are expected to follow as well.