CIMB-Principal Asset Management Berhad (CIMB-Principal) launched the CIMB-Principal Enhanced Opportunity Bond Fund (EOBF), a close-ended fund that will invest in both local and foreign bonds.
“Last year global markets were seen as volatile but local bond markets were stable and good”, said Munirah Khairuddin, Deputy Chief Executive, CIMB-Principal. The fund is aimed at providing investors with total returns through investment and a platform of stabilized investment.
“Generally, Southeast Asia is becoming an extremely important Foreign Direct Investment (FDI) destination, with Indonesia topping the list. Overall, Asian economies have demonstrated their resilience despite the weak recovery observed in advanced economies”, Munirah further added.
The 45-day Initial Offer Period (IOP), will commence on the Feb 19 and last till the Apr 4. The IOP price per unit is set at RM1.00. It is available with a minimum subscription of RM5000 and has an approved fund size of RM100 million.
The expected rate of returns are between 4.25 percent to 4.75 percent. Application fees are 2.00 percent charged on the IOP per unit. Annual fees are up to 1.20 percent per annum of the NAV and trustee fees are at 0.05 percent per annum of NAV. Since there are no switching facilities available, there are no switching fees are applied. Early withdrawal has its penalty charges.
CIMB may consider dividend payouts if coupons received from the bond are reasonable enough to declare dividends. Regional Chief Investment Officer of CIMB-Principal Raymond Tang said, “We want the payouts to be meaningful”.
The press release stated, “ The Fund will invest 70 percent to 99 percent (both inclusive) of the Fund’s Net Asset Value (NAV) in non-ringgit debt securities primarily in bonds (including convertible bonds). Up to 40 percent of its NAV may be invested in unrated Securities and up to 40 percent of its NAV may be invested in high-yield securities while the remainder will be invested in investment grade securities”.
Tang highlighted risks involving the bonds – credit risk, inflation risk and currency risk. On the outlook for 2013 Tang stated that it would be a repeat of 2012, as the majority of the bonds were issued in 2012 or earlier.
Munira said CIMB Principal’s assets under management is expected to grow between 10 percent and 11 percent to RM41 billion in 2013.