Versa Readies Malaysian Money Fund
The Edge Malaysia published the article, "Fintech: The best of both worlds," which explains, "Investors may soon enjoy the benefits of parking their emergency funds in a fund that allows flexible withdrawals yet gives returns comparable to that of fixed deposits. Versa Asia Sdn Bhd, a financial technology (fintech) start-up, will launch a mobile application at end-November that will allow investors to put their money in a money market fund through their smartphone without any sales charge imposed. Versa wants to tackle distribution issues faced by money market funds through the app, enabling more retail investors to access such funds. The start-up has obtained conditional approval from the Securities Commission Malaysia (SC) to be a recognised market operator. The approval allows Versa to distribute capital market products, including money market unit trust funds, through e-services platforms." The CEO of Versa, Teoh Wei-Xiang, comments, "Versa will onboard investors through our app and they can invest in and withdraw their money from a money market fund online at any time." The piece continues, "There are many money market funds in the market. As at Sept 11, there were 93 such funds, according to The Edge-Lipper Fund Table. The average annual return of the 46 non-Islamic and 47 Islamic money market funds was 2.41% and 2.36% respectively." It adds, "The participation of individual investors, especially retail investors, is extremely low, says Teoh. 'Money market funds are dominated by corporate investors and high-net-worth individuals (HNWIs). I do not have the exact number, but it is safe to say that the retail participation in these funds is extremely low due to various reasons.'" The article asks, "Why? Firstly, fund houses are not active in pushing money market funds to investors. These funds are low-risk, low-return products that are sold without imposing sales charges on investors because any amount of additional charges imposed would immediately deem the returns unattractive.... Also, the profit margin earned from money market funds is low, as reflected by the annual management fee of these funds, which is only up to 0.5%. Fund houses need a much larger amount of investment to justify the cost of managing money market funds. As such, corporate investors, instead of individual investors, are the target customers for these funds, [Teoh] adds." Finally, it adds, "Versa does not have the license and capability to manage unit trust funds. As such, it is tying up with Affin Hwang Asset Management (AHAM) to let investors invest their money in AHAM's Enhanced Deposit Fund through the Versa app."
