ETF Malaysia – Five Top Funds for Exposure to Malaysia’s Stock and Bond Market

For investors looking to gain exposure to Malaysia’s economy, several ETFs provide access to the country’s stock market and bond market. These funds track different indices, offering opportunities in large-cap equities, Islamic-compliant investments, regional Southeast Asian markets, and Malaysia’s sovereign bond sector.

Below are some of the most well-known ETFs offering exposure to Malaysia:

1. iShares MSCI Malaysia ETF (EWM)

Focus: Tracks the MSCI Malaysia Index, offering exposure to large and mid-sized Malaysian companies.

Performance:

Overview: The iShares MSCI Malaysia ETF is one of the most recognised funds for gaining exposure to the Malaysian equity market. The ETF consists of companies from various sectors, including industrials, utilities, and consumer staples. However, it is dominated by financials (44.83%). The financial sector reflects the country’s robust banking industry.

Some of the top holdings include Public Bank, Tenaga Nasional, and CIMB Group.

The fund was launched in 1996 and currently holds 30 stocks, with the top 10 making up around 60.90% of the total weighting. Overall, it provides investors with targeted access to 85% of the Malaysian stock market. The expense ratio is 0.5%. The fund is listed on the NYSE Arca.

Malaysia’s economy is driven by commodities, manufacturing, and services, making this ETF a diversified play on the country’s key industries. The fund’s total net assets are $305.12 million.

2. FTSE Southeast Asia ETF (ASEA)

Focus: Provides exposure to large and mid-cap companies across Southeast Asia, including Malaysia.

Performance:

Overview: The FTSE Southeast Asia ETF is not exclusively focused on Malaysia but includes substantial exposure to its stock market as part of a broader Southeast Asian investment strategy.

The ETF tracks the FTSE ASEAN 40 Index, which includes the largest and most liquid stocks from Malaysia, Singapore, Thailand, Indonesia, and the Philippines. The fund is 17.1% weighted towards Malaysian stocks.

This ETF allows investors to diversify across multiple regional economies while maintaining Malaysian exposure. Like the EWM ETF, the ASEA is dominated by financial stocks at 62.7%. Some of the other top sectors represented include communication services, industrials, consumer staples, and utilities. Some Malaysian stocks featured in the index include Malayan Banking, Public Bank Berhad, Tenaga Nasiona,l and CIMB Group.

The fund was launched in 2011 and currently holds 40 stocks. It has net assets of $60.02 million and is listed on the NYSE Arca.

Due to its diversified approach, the ETF is an appealing option for those looking for regional growth potential.

3. MyETF Dow Jones Islamic Market Malaysia Titans 25 (EQ8MY25)

Focus: Tracks the Dow Jones Islamic Market Malaysia Titans 25 Index, comprising Shariah-compliant large-cap Malaysian stocks.

Performance:

Overview: The MyETF Dow Jones Islamic Market Malaysia Titans 25 is a Shariah-compliant ETF designed for investors seeking investment options that align with Islamic investment guidelines. The fund follows an index consisting of 25 of the largest and most liquid Shariah-compliant companies listed in Malaysia.

The fund was launched in 2008 and is listed on the Bursa Malaysia Securities Berhad. The expense ratio is 0.49%, and the fund size stands at MYR million.

The ETF spans various sectors, with utilities the most represented at 21.13%. Other sectors include telecommunications & media, healthcare, industrial products and services, and consumer products and services. Major holdings include Tenaga Nasional, IHH Healthcare, Press Metal Aluminium Holdings and Petronas Gas.

Overall, the ETF provides an opportunity for Muslim investors and those interested in ethical investing to gain exposure to Malaysia’s economy while adhering to Shariah guidelines.

4. FTSE Bursa Malaysia KLCI ETF (0820EA)

Focus: Tracks the FTSE Bursa Malaysia KLCI Index, representing the 30 largest companies listed on the Bursa Malaysia.

Performance:

Overview: The FTSE Bursa Malaysia KLCI ETF is one of the most direct ways to gain exposure to Malaysia’s benchmark stock index. The FTSE Bursa Malaysia KLCI Index consists of the 30 largest companies by market capitalisation, representing a substantial portion of the country’s total market value. The fund has a management fee of 0.5% and a trustee fee of 0.05%. It was launched in 2007 and is listed on the Bursa Malaysia Berhad.

The top sectors represented in the index and fund are banks, utilities, telecommunications, and food, beverages and tobacco. As expected, Malayan Banking, CIMB Group, Public Bank, Tenaga Nasional, and IHH Healthcare make up the top five stocks held.

The fund provides investors with exposure to Malaysia’s most influential corporations, making it a core option for those interested in tracking the country’s stock market performance.

5. ABF Malaysia Bond Index ETF (0800EA)

Focus: Tracks the Markit iBoxx ABF Malaysia Bond Index, offering exposure to Malaysian government bonds.

Performance:

Overview: The ABF Malaysia Bond Index ETF is designed for investors seeking fixed-income exposure in Malaysia. Unlike the other ETFs on this list, which focus on equities, this fund invests in high-quality Malaysian government bonds.

Launched in 2005, the fund was Southeast Asia’s first bond exchange traded fund listed on Bursa Malaysia Berhad. It has a management fee of 0.1%. It primarily invests in Malaysian government bonds denominated in Malaysian ringgit.

Government bonds are generally considered lower risk compared to stocks, making this ETF an appealing option for conservative investors or those looking to diversify their portfolio with fixed-income assets. The fund provides exposure to Malaysian sovereign debt, benefiting from the country’s credit stability and economic policies. In December 2024, FitchRatings affirmed Malaysia’s long-term foreign-currency issuer default rating at ‘BBB+’ with a Stable Outlook.

Fitch Ratings stated: “Malaysia’s ratings are supported by strong and broad-based medium-term growth, driven by robust domestic and foreign investments, and persistent current account surpluses with a diversified export base.”

Who Should Invest in Malaysian ETFs?

Investors considering Malaysian ETFs should assess their investment objectives and risk tolerance. These funds cater to different types of investors:

Growth Investors: Equity-focused ETFs like iShares MSCI Malaysia ETF and FTSE Bursa Malaysia KLCI ETF provide exposure to Malaysia’s largest companies, offering growth potential. They are particularly for investors with a positive outlook on the Malaysian economy as a whole.

Shariah-Conscious Investors: The MyETF Dow Jones Islamic Market Malaysia Titans 25 offers an ethical investment approach that aligns with Islamic finance principles.

Regional Diversification Seekers: The FTSE Southeast Asia ETF allows investors to spread their investments across multiple Southeast Asian countries while maintaining Malaysian exposure. Investors who are bullish on the region’s prospects may want to take a closer look at this ETF.

Fixed-Income Investors: The ABF Malaysia Bond Index ETF provides a lower-risk investment in Malaysian government bonds, suitable for those looking for more stability in their portfolio. In its December 2024 report, Fitch said it expects the Malaysian economy to expand by 4.5% in 2025 and 4.3% in 2026.

Malaysian ETFs offer a range of investment opportunities, from blue-chip stocks to Shariah-compliant equities and sovereign bonds. Whether investors seek capital appreciation, diversification, or lower-risk fixed-income assets, these ETFs provide access to different aspects of Malaysia’s financial markets. By selecting the right ETF, investors can tailor their portfolios to meet their financial goals while gaining exposure to one of Southeast Asia’s key economies.