i-VCAP Shariah Enhanced Yield Fund

i-VCAP Shariah Enhanced Yield Fund (“iSEYF”) is an open-ended wholesale fund issued with the aim to provide liquidity and income distribution while maintaining capital preservation to its investors. iSEYF is structured to have exposures mainly to short-term Islamic money market instruments, Islamic deposits and/or Islamic investment accounts and Islamic commercial papers and medium-term exposure to Sukuk issued and/or offered within Malaysia. Investors will also benefit from the tax-exemption on income or returns for their cash management.

Features of i-VCAP Shariah Enhanced Yield Fund
  • No specific tenure or maturity period.
  • Low risk exposure vis-a-vis equities and fixed income.
  • Collective placement of cash in licensed financial institutions.
  • Possible enhanced profit return via investment in Sukuk.
  • Daily accrual income reflects in the NAV daily.
  • No penalty for withdrawals, subject to minimum holding.
  • Tax-free income.

Income distribution policy
  • The Fund income distribution will be made from realized income after fees of placements maturity of each month (if any).
  • Income will be allocated to each investors in proportion to their investments in the Fund.
  • Income will be automatically reinvested into the Fund or investors could request for physical distribution via cheque/telegraphic transfer, the cost of which shall be borne by the investors.

Benefits of i-VCAP Shariah Enhanced Yield Fund
  • iSEYF invests in ‘conservative’ deposit-related instruments;
  • Almost all iSEYF cash inflow will be placed out in the licensed Financial Institutions;
  • Tax-exempt profit income – up to 25% savings;
  • Quick and easy access to money – up to T + 5 (subject to cut-off time);
  • Simple treasury solution for institutions who do not have treasury capability – increase operational efficiency;
  • Integral asset class that for all investor’s investment portfolio; and
  • Vehicle to mitigate market risk in the event of volatilities in the equity and fixed-income markets.

For more information, please view our Product Highlight Sheet and Information Memorandum

Risks to take note of :
Market risk Market risk refers to the possibility that an investment will lose value because of a general decline in financial markets, due to economic, political and/or other factors, which will result in a decline in the Fund’s NAV.
Liquidity risk Liquidity risk refers to the ease of liquidating an asset depending on the asset’s volume traded in the market. If the Fund holds assets that are illiquid, or are difficult to dispose of, the value of the Fund will be negatively affected when it has to sell such assets at unfavourable prices.
Manager’s risk This risk refers to the day-to-day management of the Fund by the Manager which will impact the performance of the Fund. For example, investment decisions undertaken by the Manager, as a result of an incorrect view of the market or any non-compliance with internal policies, investment mandate, the Deed, relevant law or guidelines due to factors such as human error or weaknesses in operational process and systems, may adversely affect the performance of the Fund.
Interest rate risk
This refers to the risk that the investment value of the Fund may generally be reduced due to a rise in future interest rates. Interest rate risk is particularly borne by assets that have exposure to interest rate movement, such as Islamic money market instruments or Sukuk. In the event that Sukuk is held till maturity, the interest rate changes will not affect the yields of the Sukuk. However, investors should be aware that whether the Fund will hold any Sukuk until maturity will depend on actual and expected changes in interest rates.

Profit rates in Islamic money market instruments will fluctuate according to the overnight policy rate determined by Bank Negara Malaysia. On the other hand, Sukuk are tradable and therefore, fluctuation of the Sukuk profit rates will be determined by supply and demand for such investments in the trading market. Islamic money market instruments and Sukuk valuation generally moves inversely with interest rates, the valuation will decline when interest rate rises or are expected to rise. The price volatility is normally greater for longer-tenure asset rather than shorter-tenure asset as they are more sensitive to interest rate changes.

The return of Islamic deposits and/or Islamic investment accounts moves in tandem with fluctuations in interest rates. In the event of a decrease in interest rates, the returns of any new placements in Islamic deposits and/or Islamic investment accounts will also decrease. When interest rates rise, profit income for any new placements in Islamic deposits and/or Islamic investment accounts will also increase.

The Manager attempts to mitigate the interest rate risk of the Fund by managing the duration structure of the assets according to the Manager's view of the future interest rate trend. When interest rates are expected to increase, the Fund will switch to assets with shorter duration and are less sensitive to interest rate changes.

The above interest rate is a general economic indicator that will have an impact on the management of the Fund regardless whether it is a Shariah-compliant fund or otherwise. It does not in any way suggest that the Fund will invest in conventional financial instruments. All the investments carried out for the Fund are in accordance with Shariah requirements.
Default risk This risk relates to the creditworthiness of a financial institution or an issuer and its expected ability to make timely payments of profit and/or principal. Any adverse situations faced by the financial institution or issuer may impact the value as well as liquidity of the Islamic deposits and/or Islamic investment accounts, Islamic money market instruments or Sukuk. In the event a financial institution or an issuer defaults on its obligations, i.e. unable to service timely payments of profit and/or pay the principal amount upon maturity, this may result in the loss of capital and/or income, thus reducing the value of the Fund. The Manager will conduct ongoing monitoring of the financial institution’s or issuer’s credit ratings.
Inflation risk This is the risk that the investor’s investment value may not grow or generate income at a rate that keeps pace with inflation. This would reduce investors’ purchasing power even though the value of the investment in monetary terms has increased.
Profit Rate Risk Due to Large Redemptions The Fund’s return may be lower than the prevailing profit rate of the investments of the Fund should the Fund be subjected to early upliftment of its investments due to large redemptions by Unit Holder(s). The Manager shall mitigate this risk by constantly observing the asset allocation policy and monitoring the market liquidity and pricing of the Fund’s investments.