Source: Bernama, 3rd September 2009
Hong Leong Tokio Marine (HLTM) Takaful expects AUD30 million (AUD1=RM2.94) worth of funds to be subscribed by the Malaysian public for its newly launched capital protection investment-linked (CPIL) scheme — a global recovery income plan (GRIP) — within 45 days.
GRIP is a four-year Australian dollar denominated Shariah compliant and 100 per cent CPIL plan using the concept of Murabahah and Wa’ad (unilateral undertaking).
HLTM Takaful chief executive officer, Ab Latif Abu Bakar said GRIP is expected to pay an annual income distribution with a cumulative total of 15 per cent.
The potential of investment return maturity is referenced upon the performance of a basket of reference assets, consisting of equity (US and Hong Kong) and commodity (crude oil and precious metals) based underlying.
“Apparently, there is a strong demand from the Malaysian public for the Australian dollar.There are also a lot of parents preparing their children for educational purposes in Australia,” he told reporters after launching GRIP, HTLM Takaful’s fourth CPIL here Thursday.
Latiff said the launch of GRIP was timely for participants to gain annual income in Australian dollars at a time when market conditions are recovering.
“Amidst the backdrop of a recovering economy, we have included a protection element in the investment plan where participants will have 125 per cent takaful protection on their investment amount,” he said.
He said the plan would invest in certificates issued by Oasis Certificate Programme Limited (Oasis) which are 100 per cent principal protected if held to maturity.
The certificates are arranged by Citigroup Global Markets Limited (CGML), a 100 per cent indirectly controlled subsidiary of Citigroup incorporated in the United Kingdom and regulated by the UK Financial Services Authority.
Harold Kim, Managing Director, Head of Asia Pacific Retail Structured Product, Citigroup Global Market Asia Limited, said the plan was managed by HLTM Takaful with Citi as the structure provider and distributed by Hong Leong Bank through its extensive branch network nationwide.
“This product is an investment that have derivatives in it. By putting derivatives in it, we can generate fixed coupons and we can generate principal protection,” said Kim.
He said derivatives are very powerful tool as they could be used to make investments more aggressive to leverage or it could be used as conservatives for principal protection.
“Within Asia we have wide range of structure products such as in South Korea and Hong Kong,” he said.
Like some markets in South Korea and Hong Kong, investors used structured products quite aggressively, he said.
“They used primarily leveraged products during market boom and they make a lot of money and when the market is down they lose a lot of money,” he said.
Kim said Malaysia was a very good example as the structured products produced in the country are primarily conservative structured goods which usually had principal protection and often had fixed coupon.
“What we have seen is that the experience of investors in Malaysia with structured products was quite positive due to their principal protection,” he said.
Ab Latiff also said HLTM Takaful was working with some banks to provide more investment structured products due to the demand for investment-linked products.
The company is also looking into more family takaful products and hoped to launch two more such products by January and April next year.