AmInvest is targeting to convert some of its existing funds to SRI-qualified funds by the end of the first quarter of 2024, Goh Wee Peng, CEO of AmFunds Management (AmFunds), told ISFI.
AmInvest, which is the brand name of the fund management business AMMB Holdings comprising AmFunds and AmIslamic Funds Management, marked its conversion efforts on the 10th January 2023 with the relaunch of its AmBon Islam fund as an SRI fund.
“We are looking to convert a few more existing funds. However, we are cognizant of the fact that the upcoming relaunches are dependent upon approvals from our regulators,” Goh shared.
According to Goh, AmInvest is deciding which funds to convert based on the availability of SRI assets in the universe of investible assets of the underlying funds.
While AmBon Islam has been relaunched as an SRI fund, Goh shared that ESG considerations will only be applicable to Sukuk held in the portfolio. Liquid assets including deposits and money market instruments are excluded from the ESG assessment.
“Suitable sustainable deposits are still new to the Malaysian market and we are in the midst of assessing them for inclusion into the portfolio in the future,” Goh shared.
AmInvest will take a negative screening approach for its SRI-qualified funds, excluding investee companies that are involved in activities which are prohibited from an ESG perspective. However, Goh shared that even if AmInvest’s investment managers have ESG concerns regarding a particular company, they may still invest in that company if they believe the company has a positive ESG trajectory and the potential to improve from a sustainability perspective.
For instance, power generation companies typically score low in terms of the ‘E’ component of ESG given their predominant fossil fuel mix but AmInvest would still invest in power generation companies which it views to have strong governance and clear targets to improve their fuel mix over time, Goh explained.
The asset manager’s conversion efforts are a response to the Malaysian government’s call to develop Malaysia into a regional Shariah compliant SRI finance center by building a robust SRI marketplace as well as the growing demand for and availability of SRI assets.
Explaining why the AmBon Islam fund was relaunched as an SRI fund rather than initially launched as one to begin with, Goh shared that when the fund was first launched in November 2001, there were no guidelines on sustainable finance to assist asset managers in identifying suitable investible assets to form an ESG or SRI portfolio. At that time, there was also a lack of demand for SRI funds.