87
Malaysia’s broad investor base includes financial institutions, insurance companies, takaful
operators and mutual funds. Leading institutions by the size of assets under management
(AUM) include the Employees Provident Fund (EPF), Kumpulan Wang Persaraan
(Diperbadankan) (KWAP), Permodalan Nasional Berhad (PNB) and Lembaga Tabung Haji
(LTH) (refer to Table 4.5). These entities can be regarded as cornerstone investors for the
sukuk market.
Table 4.5: Malaysian Institutional Investors
EPF
(Malaysia’s largest
retirement fund)
KWAP
(Malaysia’s 2nd
largest retirement
fund)
PNB
(Malaysia’s largest
fund-management
company)
LTH
(Malaysia’s sole
pilgrimage fund)
AUM RM731.1 billion
(end-2016)
RM126.8 billion
(estimate, end-
2016)
RM266.5 billion
(end-2016)
RM64 billion
(estimate, end-
2016)
Shariah-
compliant
investments out
of total AUM
45%
(end-2016)
49.7%
(end-September
2016)
Not available 100%
Sources: Annual Reports
Given the enlarged investor base (inclusive of Shariah-compliant investors) for sukuk
compared to conventional bonds and the growing appetite for Shariah-compliant assets, sukuk
yields have been more competitive than those of conventional bonds, as depicted in Charts 4.9
and 4.10. Between August 2005 and 2006, the spreads between Islamic and conventional debt
securities came up to double digits for tenures of 1 and 5 years. Since sukuk constitutes more
than 60% of new issues now, however, the price differential has been reduced to 5 bps. This
unique market-driven phenomenon adds to the conducive environment which, in combination
with the various tax and regulatory incentives, provides that tipping point to become the
preferred choice for issuers.