Why ASB Returns Dropped from 14% to 5%?
If you talk to your parents about investing, they'll likely get misty-eyed about the 1990s. Back then, Amanah Saham Bumiputera (ASB) was a wealth-building machine. In 1990 and 1994, the fund delivered a staggering 14.0% total return.
Today, seeing 5.75% (as of 2024 and 2025) might feel like a letdown. But as the saying goes, "Comparison is the thief of joy"— especially if you aren't comparing the right things. Here is the story of how ASB matured from an explosive "Tiger" fund into the stable bedrock of the Malaysian economy.
The 1990s: A "Tiger Economy" Sprint
Amanah Saham Bumiputera (ASB) launched in 1990 and entered the market at full throttle, with immediate high-yield performance that averaged above 13% in its first seven years (1990-1997). This explosive growth was due to a product in a unique era.
The Global Standout:
During the early 90s, Malaysia achieved real GDP growth of approximately 8% to 9% annually—a rate roughly double the global average and second only to China.
The Agility of a Small Fund:
In 1990, ASB was a relatively small fund, managing roughly RM2 billion. It is much easier for a fund manager to achieve outsized percentage returns when managing a nimble fund than when steering an "ocean liner" worth RM350 billion.
Market Euphoria:
In 1993, the local stock market benchmark (the KLCI) skyrocketed by over 98%. Malaysia was in the middle of an industrial revolution. Dr. Mahathir's Vision 2020, launched in February 1991, was attracting billions in foreign investment, factories were being built across Penang and Johor as Malaysia became one of the world's leading exporters of electronics, and the government was privatizing giants like Telekom Malaysia (listed 1990) and Tenaga Nasional (listed February 1992). ASB was able to lock in extraordinary capital gains by selling these highly appreciated stocks.
The Price of Safety: If Returns Reduced, How Does RM1 Stay Fixed?
One of the most common myths is that ASB is "capital guaranteed." While it feels that way because the price is fixed at RM1.00, it is actually managed through a risk mechanism called the Distribution Equalisation Reserve (DER).
What is Distribution Equalisation Reserve (DER)?
Think of it as a "Rainy Day Jar".
Instead of letting the unit price drop when the stock market crashes, PNB uses this Rainy Day Jar system.
- When the sun shines: In years of high realized income, a portion of the surplus goes into the DER rather than being fully distributed.
- When the storm hits: During economic downturns — like the 1997 Asian Financial Crisis or COVID-19 — the manager draws from these reserves to maintain distributions.
Is fixed-price Shariah compliant?
The fixed-price structure itself (according to some) is considered permissible under a specific mechanism. Unitholders essentially agree to support one another by "smoothing" out the profits over time so that no one person takes a massive hit during market downturns.
However, it's crucial to understand that ASB itself is NOT fully Shariah-compliant. It is classified as "Harus" (permissible but not ideal) by some scholars.
Why 5% Can Be Wealthier Than 10%?
To see the true value of your money, you must look at inflation — the "invisible thief" that eats your purchasing power.
1998 (High Return, High Cost):
ASB gave 10.50%. However, inflation was 5.27%. Your "real" wealth only grew by 5.23%. Remember the time when Malaysia was combatting inflation with the Inflasi Sifar campaign. This was the mark left from the Asian financial crisis which got the government to step in and control price to keep inflation at bay.
2020 (Low Return, Low Cost):
ASB gave 5.00%. Because the economy saw deflation of 1.14%, your real return was actually 6.14%.
Mathematically, you were actually wealthier during the pandemic year than during the high-inflation years of the late 90s because your money could buy more.
Reduced Compared to Global Markets
If you look at US Shariah-compliant funds like HLAL, you might see double-digit growth that makes 5.75% look small.
The Geographic Reality
ASB is a domestic-focused fund. About 80.9% of its portfolio is in equities, with a deep concentration in Malaysian blue-chip banks and utilities like Maybank and Tenaga Nasional. While these are stable dividend-payers, they don't offer the explosive growth seen in the US tech sector.
The Balance
Understanding Risk and Reward
ASB is considered a low-risk, or to a certain extent risk-free investment. You sacrifice higher potential returns in exchange for capital stability. Other funds offer the possibility of higher upside returns—but you take on significantly more risk.
ASB (Stability)
You get a fixed RM1.00 price. If the market crashes 20%, you don't lose a single cent of your principal. Your returns are modest but predictable (typically 5-6% annually). This is the trade-off: lower risk = lower reward, but your capital is protected.
Global Funds (Growth)
You can get high returns (potentially 10-15%+ in bull markets), but your capital is at risk. If a market bubble bursts, your investment value drops immediately—you could lose 20%, 30%, or more of your principal overnight. Higher potential reward = higher risk.
ASB can be used as a place for emergency funds because it beats inflation and banks every year without the anxiety of market volatility. It remains one of the most effective tools for wealth preservation in Malaysia.
Sources & Footnotes
- Amanah Saham Nasional Berhad (ASNB) - Official Product Page
- Permodalan Nasional Berhad (PNB) - Annual Reports and Press Releases
- StashAway Malaysia - Ultimate Guide to ASB
- iMoney - Everything You Need to Know About ASB
- RinggitPlus - ASNB Funds Explained
- 1-Million-Dollar-Blog - Historical ASB Dividend Rates
- CEIC Data - Malaysia Fixed Deposit and Interest Rate Trends
- The Edge Malaysia - PNB Strategic Outlook
- World Bank - Historical GDP Growth Data
- Bank Negara Malaysia - OPR and Monetary Stability Decisions
- Department of Statistics Malaysia (DOSM) - Inflation and Price Indices
- HLAL ETF (Wahed FTSE USA Shariah ETF) - Fund Overview
