KUALA LUMPUR: Malayan Banking Bhd launched its first structured Islamic deposit product which would invest in two underlying commodities — copper and wheat — while guaranteeing an annual payment of 2.45% over the four-year tenure.
The proposed RM300 million close-ended fund — STRIDE-i — would invest in copper futures on the London Metal Exchange (LME) and wheat futures on the Chicago Board of Trade (CBOT) respectively.
Maybank’s executive vice president and Islamic banking head Ibrahim Hassan said yesterday STRIDE-i offered total capital protection on the principal investment and guaranteed annual payment of 2.45% over four years or a return of 9.8% at maturity date.
“On a best-case scenario, the syariah-compliant fund would deliver potential upside earnings of up to 39.6%,” he said at the launch of the fund. The initial offer period for the deposit will close on Nov 4.
He said the potential upside was achievable, as the commodities had relatively low risks, due to limited supply and increasing demand for consumption that would drive the prices up.
Maybank would invest in the futures markets of LME and CBOT over a four-year period, Ibrahim said, adding that demand for these commodities would be driven by China and India’s economic and population growth.
“For copper, these two countries have overtaken the US as the largest copper consumer since 2002. They are expected to absorb 41% of the world’s copper supply in 2009, from 36% in 2006.
“For wheat, China and India are already consuming more than they produce especially since they need to satisfy the appetite of 2.4 billion people for noodles, dumplings, bread, pastries and all sorts of cookies. Today, these two nations are estimated to consume as much as 39% of the world’s wheat supply,” Ibrahim said.
STRIDE-i is opened to local individuals aged 18 and above and institutional investors. Minimum initial investment is RM50,000 while the subsequent investment is in multiple of RM50,000 and above. Investors will be issued a negotiable Islamic debt certificate, redeemable at face value on the maturity date. There will be no exit fees, annual management fees or service charges imposed upon investors.
The new fund would also enable Maybank to market at least RM600 million in via syariah-compliant wealth management products for its fiscal 2008 as well as offering these products to regional customers, starting with Singapore early next year.
Ibrahim said Maybank would also offer more structured deposit products investing in different underlying assets.
“In addition to structured deposit products, we will also explore other platforms for syariah-compliant offerings; among them, private investment funds, managed portfolios, exchange-traded funds, restricted investment scheme and others. We plan to launch another such products by the end of this financial year,” he said.