Page 75 - SC SCAR 2023 ENGLISH Flipbook

PART 3 STRENGTHENING THE SUSTAINABILITY AND COMPETITIVENESS OF THE CAPITAL MARKET
STRENGTHENING THE FUND MANAGEMENT INDUSTRY
The fund management sector is a pivotal contributor to the Malaysian economy, serving as a cornerstone for the efficient allocation of capital to productive resources and fostering wealth accumulation for investors. The evolution of investment preferences and the dynamic nature of industry players has been a primary driver behind substantial growth in AUM, contributing to a diversified landscape in terms of product offerings and intermediation capabilities.
Consequently, the AUM of the fund management industry has exhibited noteworthy expansion, achieving a CAGR of 7.6% to reach RM975.5 billion in 2023, up from RM377.5 billion in 2010. This remarkable growth underscores the escalating prominence and significance of the fund management industry within the capital market and the broader economy.
While the industry has seen strong growth over the past few decades, a proactive and adaptive regulatory approach is necessary to address the challenges and opportunities brought about by technological advancements, changing investor preferences, and the globalisation of financial markets.
In view of the changing economic landscape and the evolution across the value chain from products and strategies offered, to marketing and distribution channels as well as fund operations, the SC aims to take steps to ensure the industry remains relevant and competitive vis-a-vis global development.
To this end, the SC sought to shape the future of fund management by taking an inclusive, industry- wide approach through engagements and an industry wide CEO survey. Responses were received from 68 fund management CEOs across different license types and covered a wide range of areas across the fund management value chain from strategic priorities to client preferences and digitalisation.
Through insights derived from the survey, a holistic set of policy recommendations covering the competitiveness of fund management companies, promoting efficiency
of the value chain and widening access and investment options have been developed. Prioritisation of initiatives and implementation over the next three years will be undertaken through joint working groups with industry captains/leaders.
Ultimately, these recommendations aim to actively chart and push the next phase of growth for the Malaysian fund management industry by ensuring that the industry adapts to the evolving landscape and that market participants operate within a framework that promotes innovation without sacrificing investor protection.
Expanding the Wholesale Fund Framework
In line with measures to liberalise the fund management industry, efforts were undertaken to provide investors with access to a more varied range of alternative assets and strategies. This initiative reflects the SC’s commitment to enhance the depth and breadth of the capital market while promoting an inclusive investment environment for various risk appetites and needs.
In this regard, the Wholesale Fund Framework has been expanded to enable domestic managers to invest in in alternative investment products via special purpose vehicles, in addition to the available conventional assets such as securities, derivatives, money market instruments and deposits.
To improve transparency, fund managers will be required to provide an offering document setting out information that would facilitate comparability between funds and enable investors to make more informed decisions. Additional measures have been put in place to ensure fund managers are prepared to manage the risks associated with alternative assets.
Overall, these measures will provide wider investment opportunities and diversification potential for investors as well as broaden fund managers’ capabilities to maximise returns and promote more innovation which in turn will improve competitiveness of the Malaysian fund management industry.
SECURITIES COMMISSION MALAYSIA ANNUAL REPORT 2023 73