RHB Asset Management (RHBAM), a wholly-owned subsidiary of RHB Investment Bank Berhad, has launched a first-of-its-kind fund in Malaysia that feeds into an actively managed exchange-traded fund (ETF).

The RHB Global Equity Premium Income Fund presents investors with consistent income opportunities and appreciation potential with lower volatility, as it combines active equity investment with an options overlay strategy, according to RHBAM.

The combination presents a conservative global equities exposure and aims to generate a regular and higher income stream, capturing both equity dividends and options premiums.

The fund, a wholesale feeder fund, invests in J.P. Morgan Asset Management’s JPMorgan Global Equity Premium Income UCITS ETF, an actively managed outcome-oriented ETF strategy that invests in global equities.

“The RHB Global Equity Premium Income Fund offers investors an alternative to traditional income-generating asset classes and potentially higher income stream, with the aim of delivering a 7% to 9% annual income distribution, paid monthly. This potentially higher regular income stream is made possible with the active management of the underlying ETF. We expect to achieve 100 million ringgit (US$20.9 million) in assets under management within 12 months from its launch,” says Mohd Fauzi Bin Mohd Tahir, chief investment officer of equity at RHBAM.

The global ETF market has grown by more than 25% since December 2022 to reach a record high of almost US$11.5 trillion at the end of 2023, making it one of the world’s fastest-growing investment products.

“Investors are always looking to participate in the global equities space, with lower volatility and at the same time offering a consistent high-income stream. Having identified this gap, we have been searching for better investment opportunities for our customers. To this end, we are very excited to work with our business partner, J.P. Morgan, to meet Malaysian investors’ demand with this unique investment strategy,” Fauzi says.

Supreet Bhan, head of Southeast Asia funds at J.P. Morgan Asset Management, adds: “As one of the world’s largest managers of active ETFs by AUM, we are excited to introduce one of our market-leading active ETF strategies in a feeder fund format to Malaysian investors, in partnership with RHBAM. Combining equities with options overlay, this strategy aims to strike a balance between yield, capital growth, and risk to meet investors’ growing demand for diversified income sources without taking on undue risk.”