Launch of Public Natural Resources Equity Fund (PNREF)
Investing in natural resources sectors is a good option for investors who wish to capitalize on opportunities provided by the regional natural resources sectors. The regional natural resources sectors are expected to benefit from robust demand for resources materials driven by rapid industrialization, urbanization and rising consumerism trends in the fast growing and heavily populated countries such as china, India, Brazil and Indonesia.
In some of these resources sectors, the available supply is relatively scarce and faces significant constraints in production expansion due to the high costs of exploration and development. Other obstacles such as geopolitical, industrial and environmental issues can also severely limit the capacity to increase production. Thus, a favorable demand supply condition can develop and lead to price rises in the affected resources as witnessed by the rally in the process for a number of commodities such as crude oil from 2004 to mid-2008. It is during such periods that inflation may escalate and for this reason, investing in resources companies that benefit from the higher prices for natural resources commodities is a good hedge against rising inflation.
Public Natural Resources Equity Fund (PNREF) is designed to allow investors to capitalize on the favorable demand and supply trends for natural resources through investments in related sectors in the domestic and overseas markets.
FAQS
Q1: What are the main features of PNREF?
An aggressive equity fund that is designed to help investors capture the long-term growth potential offered by the natural resources sectors in the domestic and overseas markets as well as to capitalize on the current attractive stocks valuations.
PNREF invests in a portfolio of equities and equity-related securities of companies that are engaged in or are substantially related to the natural resources sectors in the domestic and overseas markets.
The resources sectors which the fund will invest in include energy (oil and gas exploration, extraction, production, transportation and power producers), metals and mining (industrial and precious metals exploration, extraction, production and transportation), agriculture, forestry and paper.
To achieve increased diversification, the fund may invest in selected foreign markets which include Singapore, Thailand, Indonesia, Philippines, Hong Kong, China, Taiwan, South Korea, Australia, New Zealand and other markets.
Equity exposure: Generally range from 75% to 90% of its NAV (Net Asset Value).
Suitable for investors with aggressive risk-reward temperaments.
Q2: What makes PNREF attractive to prospective investors?
PNREF allows investors the opportunity to participate in the long-term growth potential of companies that are engaged in or are substantially related to the natural resources sectors.
Q3: What are the prospects of investing in the natural resources sectors?
Investing in the regional natural resources sectors enables investors to participate in the strong growth of these sectors. The region’s natural resources sectors are expected to benefit from robust demand for resources materials driven by rapid industrialization, urbanization and rising consumerism trends in the fast growing and heavily populated countries such as China, India, Brazil and Indonesia. Strong demand coupled with tight supply conditions in certain resources have led to the rally in the prices for a number of commodities such as crude oil from 2004 to mid-2008.
Investing in natural resources commodities can help to hedge against inflation.
Natural resources sectors also provide the benefits of diversification as these sectors are often driven by different factors from those driving other business sectors. The liquidity and diversity of the natural resources sectors also present many investment opportunities to investors.
Q4: In view of current global market uncertainties, why should investors consider investing in natural resources?
Following the retracement in commodity prices and the corresponding correction in natural resources sectors, the valuations of a number of natural resources stocks have fallen to relatively attractive levels vis-à-vis the favorable longer term dynamics for the affected commodities. As mentioned earlier, a favorable demand supply condition can develop and lead to price rises in the affected resources as witnessed by the rally in a number of commodities such as crude oil from 2004 to mid-2008.
Q5: What is the fund’s benchmark index?
An appropriate benchmark to be used to evaluate the performance of PNREF is a customized index based on selected sectors within the S&P/Citigroup BMI Asia ex Japan Index comprising Malaysia, Singapore, Thailand, Indonesia, Philippines, Hong Kong, China ‘H’ Shares, Taiwan, South Korea, Australia and New Zealand.
The selected sectors are customized to the following weights:
- o 40% Energy Sector
- o 30% Metals and Mining Industry
- o 30% Agricultural Product Sub-Industry
Q6: What is the fund objective and investment strategy of PNREF?
PNREF is actively managed and aims to achieve capital growth by investing in a portfolio of equities and equity-related securities of companies that are engaged in or are substantially related to the natural resources sectors in the domestic and overseas markets.
The resources sectors which the fund will invest in include energy (oil and gas exploration, extraction, production, transportation and power producers), metals and mining (industrial and precious metals exploration, extraction, production and transportation), agriculture, forestry and paper.
In identifying companies for investment, the fund manager relies on fundamental research where the financial health, industry prospects, management quality and past track records of the companies are considered.
The fund may also invest in fixed income securities such as sovereign bonds, corporate debt and money market instruments to help generate returns.
Q7: What level of risks will we be looking at when investing in PNREF?
As the fund generally invests 75% to 90% of its NAV in equities in the natural resources sectors, PNREF may experience significant volatility in times of adverse market movements.
The asset allocation, liquidity management and diversification strategies employed are central to the efforts to manage the risks posed to the fund.
Q8: Who are most suited to invest in PNREF?
Investors who wish to capitalize on the current attractive stocks valuations and participate in the long-term growth potential offered by the natural resources sectors in the domestic and overseas markets.
Existing and prospective investors with aggressive risk-reward temperaments and can withstand extended periods of market highs and lows in pursuit of capital growth.
Q9: When is PNREF going to be launched?
30 June 2009
Q10: What is the Initial Issue Price? And when is the offer period?
The initial issue price is at RM0.2500 per unit during the 21-day offer period from 30 June 2009 to 20 July 2009
Q11: What is the approved fund size of PNREF?
The approved fund size for PNREF is 1.5 billion units.
Q12: Please tell us the service charge and the annual management fee involved when investing in PNREF. Is there any repurchase charge?
During the offer period from 30 June 2009 to 20 July 2009, the service charges are as below:
| Investment amount per transaction | Special Service Charge |
| RM5,000 to RM9,999 per transaction | 5.25% of Initial Issue Price per unit |
| RM10,000 and above per transaction | 5.00% of Initial Issue Price per unit |
After the offer period, the service charge is up to 5.5% of the NAV per unit. The annual management fee is 1.70% per annum of the NAV.
There is no repurchase charge.
Q13: What is the going rate for annual management fee of a global natural resources unit trust fund in Malaysia?
The rate charged by some of the unit trust companies can be as high as 1.80% p.a. of the NAV.
Q14: What is the minimum initial investment and minimum additional investment of the fund?
The minimum initial investment is RM1, 000 and minimum additional investment is RM100.
Q15: Will there be any special promotion to support the launch of PNREF? Please give us the details.
There will be special service charges offered during the period of 30 June 2009 to 20 July 2009 for investment above RM5, 000 per transaction. The service charges are as below:
| Investment amount per transaction | Special Service Charge |
| RM5,000 to RM9,999 per transaction | 5.25% of Initial Issue Price per unit |
| RM10,000 and above per transaction | 5.00% of Initial Issue Price per unit |
Q16: Approved for EPF Members Investment Scheme?
No.
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