Kuala Lumpur: CIMB-Principal Asset Management Berhad (“CIMB-Principal”) today launched the CIMB Islamic Global Commodities Equity Fund (“the Fund”), a Shariah-compliant fund that provides investors broad investment opportunities in global commodities.

Speaking at the press conference today, J. Campbell Tupling, Chief Executive Officer of CIMB-Principal, said: “The Fund will provide exposure to stocks that will benefit from the strong and rising demand for natural resources and basic materials namely energy, metals, agriculture and renewable energy. The demand for these global commodities is driven by the current “supercycle”, an observable and prolonged trend which has a significant impact on businesses and the economy.”

Tupling continued that current trends include population growth, industrialisation, urbanisation and clean energy, which are triggering a ripple effect on the commodities sector.  By 2050, the world's population is expected to rise from 6.5 billion to 9.1 billion and the E7 emerging economies (the BRIC economies of Brazil, Russia, India and China, plus Indonesia, Mexico and Turkey) are expected to become approximately 50% larger than the current G7 economies (Canada, France, Germany, Italy, Japan, UK and US). The urban population in the East Asia/Pacific are also likely to increase by 1.1 billion in the next 20 years.¹ 

“As populations increase and lifestyles change, there is a permanent shift in demand for more food, efficient energy resources and better infrastructure. Therefore, supply needs to find ways to keep up. Consequently, it will also drive the adoption of alternative energy sources to mitigate increasing pollution,” explained Tupling.

Meanwhile, Tan Beng Wah, Chief Executive Officer of CIMB Wealth Advisors Berhad (CWA) said: “The nature of the Fund makes it simpler for investors to diversify their portfolio further as it invests in companies along the entire commodity value chain, ranging from companies that are involved in project financing to production and maintenance.”

The Fund, which will be primarily distributed by CWA (formerly known as CIMB Wealth Advisors), appeals to all investors, especially those who wish to observe Shariah guidelines in their investments. Tupling added that investors can do so with confidence as a Shariah-compliant fund shows no significant difference in performance as compared to a conventional fund over the long-term.

The Fund offers potential capital growth over the medium to long term, investing at least 70% of its net asset value (NAV) in Shariah-compliant equities and Shariah-compliant equity related securities of companies that are primarily engaged in activities related to commodities. However, it may also invest in Shariah-compliant derivatives such as commodity exchange-traded funds and commodity indexes if it presents a more compelling alternative to equities, but subject to a maximum of 28% of the Fund’s NAV.

The CIMB Islamic Global Commodites Equity Fund has an approved fund size of 600 million units, with an initial offer price of RM0.2500 per unit. It is also distributed by CIMB Bank, CIMB Private Banking and CIMB Investment Bank with a minimum initial investment of RM1,000.

¹ Source: Schroders, PriceWaterhouseCoopers, Asian Development Bank, 2009