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Saturday, May 25, 2024

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RHB launches ‘Islamic SILX’ ESG-linked wealth management product

RHB Banking Group has furthered its sustainability commitment with the launch of its Islamic Structured Investment Linked to Index (Islamic SILX) product to institutional investors. The product allows investors to benefit from portfolio diversification utilizing proprietary multi-asset indices with ESG considerations, foreign exchange, commodities and other global indices, in addition to traditional cash assets such as equities and fixed income, with a maturity of between three and seven years.

“ESG investing has grown more prominently in recent years, especially within Malaysia’s investing community, since it was first coined in 2005. Offering new investment products with ESG considerations is not just a natural step, but a necessity moving forward as institutional investors especially are mandated to comply to the global ESG requirements. Together with our partners, RHB anticipates continual development and focus to provide more ESG-compliant product offerings to both institutional and high-net-worth investors,” Angus Salim Amran, the group treasurer of RHB Banking Group, told ISFI.

The group has issued approximately RM978 million (US$221.78 million) in conventional structured investment products in 2021 tied to ESG-linked underlying assets ranging from equities to proprietary quantitative indices prior to the launch of Islamic SILX, according to Angus. One of the key focus areas in the group’s ‘Together We Progress 24’ three-year strategy launched in May 2022 is integration into key Islamic ecosystems, including the enhancement on Islamic wealth management services, to further provide wider investment options to our customers.

The Islamic SILX product framework was established to allow quick turnaround time to launch any new Shariah compliant indices in a principal-protected structured investment format, enabling investors to react from ideation to trade within a short period of time, capitalizing on volatile market conditions. The principal-protected product is primarily based on the concepts of Musawwamah, Waad, commodity Murabahah and Wakalah.

“RHB’s Islamic SILX framework allows for indices that reference Shariah compliant equities, Sukuk, commodity prices, foreign exchange rates and also other indices that meet the same requirements. For indices that are deemed ESG-compliant, either the underlying reference index has existing ESG filters or our partners may provide an ESG overlay with ratings provided by a globally accepted rating partner. Performances of various indices are usually volatility-controlled according to our investors’ targeted returns,” Angus shared regarding the indices linked to the product.

In addition to its sustainability efforts in Islamic wealth management, RHB Islamic Bank supports the UN SDGs with an added focus on SDG14 ‘Life Below Water’ under its Ocean Harmoni Initiative in line with its value-based intermediation commitments.

The RHB Harmoni framework is designed to further expand the sustainability agenda through 1) ‘Social Harmoni’, focusing on enabling Islamic social finance helping to mobilize social capital for the purpose of enhancing the well-being of communities, 2) ‘Ocean Harmoni’ focusing on engaging stakeholders including the public to raise awareness, activism and contribute toward the conservation of the ocean and marine ecosystem and 3) ‘Business Harmoni’ which focuses on values that the bank brings to the business ecosystem concentrating on the education, health and government segments.

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