Exchange-Traded Fund | Principal Malaysia

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Each of the funds referred to in the Principal Asset Management Berhad (‘Principal’) website is intended only to be made available in Malaysia and offered only to persons in Malaysia. The data presented is for information purposes only and is not a recommendation to buy or sell any securities or adopt any investment strategy. This material is not intended to be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. The information it contains does not take account of any investor's investment objectives, particular needs or financial situation. You should consider whether an investment fits your investment objectives, particular needs and financial situation before making any investment decision.

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An ETF is an open-ended investment fund listed and traded on a stock exchange. An ETF aims to track the performance of an index and to provide access to a wide variety of markets and asset classes.

An ETF holds a basket of individual securities, allowing an individual investor to take a position in many individual companies or fixed income securities with one trade.

With the trading on an exchange and the continuous offering of its units, an ETF generally adds greater flexibility, ease and liquidity compared to a typical unit trust fund.

An ETF generally uses indexing, often called "passive management”. ETF trades like shares but offers diversification and exposure similar to an index unit trust fund.

An ETF offers market level performance as it aims to match the performance of a specific index, net of fund expenses. An ETF also generally has lower management fees and operating expenses than actively managed funds.

By investing in an ETF, stock selection is taken off the investor. This allows the investor to focus on asset allocation.

Advantages of ETF:

Exposures - to stock markets of different countries, regions, sectors and styles.
No Sales Charge or Application Fee - only customary transaction charges, including brokerage commission charges, clearing fees and stamp duty apply.
Lower Overall Cost - the cost of investing is generally lower than an actively managed fund.
Flexibility and Liquidity - the combination of trading on an exchange and the continuous offering of units in the Fund provides investors greater flexibility and convenience in trading the units and higher liquidity than most typical unit trust funds.
Transparency - the constituent securities of an ETF are transparent and price quotations are disseminated during trading hours. Trading information of an ETF is also easily accessible on a real-time basis.
Lower Tracking Error - by tracking the benchmark index, the Fund will generally have a lower tracking error compared to an actively managed fund.

1. How is the pricing of an ETF done?
Net Asset Value (NAV) and Indicative Optimum Portfolio Value (IOPV) of the ETF will approximate the trading value of the underlying securities held in the ETF plus any undistributed income.

However, the trading price of units in the ETF may differ from the NAV / IOPV per unit of the ETF.

Although supply and demand determine the market price of an ETF, arbitrage will help to keep the traded price of an ETF in line with its underlying value.

2. How can I buy or sell an ETF?
Investors can buy or sell an ETF through any broker, exactly the same way as stocks are traded. The ETF is listed on the stock exchange of the respective countries and can be traded intraday, making it easy for investors to buy or sell. Investors can commence trading the units of the ETF from the listing date.

Investors may also choose to apply for creation/redemption in a creation/redemption unit block (“Creation/Redemption Unit Block”) or whole multiples thereof, through the Participating Dealers. The Creation/Redemption Unit Block size varies for each ETF and the details for our CIMB ETFs can be obtained in “How to Invest” section of the respective ETF.

Investors can also buy or sell an ETF through the CIMB online share trading service. To open an account with i*Trade@CIMB Malaysia:

You will require two accounts:
- A Central Depository System (CDS) account, and
- A trading account maintained with a broker
You have to be a registered user and to open an i*Trade@CIMB online trading account with CIMB Investment Bank Berhad. Once your trading account has been approved by CIMB Investment Bank Berhad, an email notification will be sent informing you that your online trading account is activated. You can then start trading online.

3. Do CIMB ETFs pay dividends?
We intend to have yearly distribution of income to unit holders on an ongoing basis. The payment of distributions is at the discretion of the Fund Manager and will vary from period to period depending on market conditions and the performance of the Fund.

4. Can I purchase and redeem units of an ETF through the Manager?
Retail investors cannot purchase or redeem units of an ETF like they do for normal mutual/unit trust funds.

Retail investors who intend to purchase or redeem units of an ETF can simply place orders through their brokerage accounts for execution.

5. Where can I get up-to-date price information on an ETF?
Investors can obtain information on trading prices from their brokers or stock quotation systems. The closing prices are also published in major newspapers on the following business day.

The following will be provided in the CIMB ETF website on a delayed basis:

the mid-day estimated Indicative Optimal Portfolio Value (IOPV) per unit, and
the end-of-day Net Asset Value (NAV) per unit

Please note that the trading price of the units of the ETF may differ from the actual IOPV or NAV per unit of the Fund.

Principal FTSE ASEAN 40 Malaysia ETF

Principal FTSE China 50 ETF

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