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How to invest in the Bursa Malaysia KLCI Index
The FTSE Bursa Malaysia KLCI could be a promising investment for you. We’ll walk you through all the different ways you can get exposure to it, so that you’ll be able to make an informed choice about if and how you want to invest.
Where can I buy into the FTSE Bursa Malaysia KLCI?
What is the FTSE Bursa Malaysia KLCI?
The FTSE Bursa Malaysia KLCI (also known as the FBM KLCI) is a share index of the 30 largest stocks (by market capitalisation) on the Bursa Malaysia. Jointly operated by the FTSE Group and Bursa Malaysia, it tracks a collection of stocks that, while not having the size and influence of those listed on the FTSE 30 and the Dow Jones Industrial Average, still offers growth opportunities for investors looking to expand their horizons.
Is it a good investment?
That depends on your investment goals. If you’re looking for huge, widely recognized global brands, the FBM KLCI might not be your speed. But if you’d like to explore the best and brightest names within an emerging economy and possibly reap the rewards of fast economic growth, then this could be a good way to go.
Just make sure that if you do decide to invest, you do so during a bull market, as bear market environments usually cause steep falls in indices across the world.
How do I invest in the FTSE Bursa Malaysia KLCI?
Here’s a three-step plan that you can follow to get started with index investing:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose investment type
There are lots of ways to invest, and the first step is choosing which option is right for you. To choose your investment type, consider factors such as the relative size of transaction fees for each approach, as well as the level of customer service that you want when investing. Here are some of the most popular ways to do so, and the reasons why you might want to consider using each of them.
An ETF (short for exchange-traded fund) is an investment fund that can be traded on a stock exchange in a manner similar to an individual stock. You can trade Bursa Malaysia ETFs any time during regular stock market hours, the same way you can with any stock in your portfolio. ETFs usually include numerous different assets at once, such as stocks, bonds, commodities, or can be structured to track an index such as the FTSE Bursa Malaysia KLCI. An ETF can be an effective, low-fee entry point to the stock exchange, granting you access to a diversified portfolio of 30 blue-chip stocks, while still giving you the flexibility that comes with a tradable asset. Just remember to avoid buying Bursa Malaysia ETFs during a bear market.
If there’s any downside to ETFs, it’s that when you buy Bursa Malaysia stocks, you’ll be holding both the best- and worst-performing stocks within that index. More selective investors might thus choose the next investment method on our list instead.
If you want to focus on the top-performing stocks in the FTSE Bursa Malaysia KLCI rather than the entire index, you can choose to buy shares of all 30 individual stocks that the index tracks in separate trades. This allows you to evaluate each stock as you go, then decide which FTSE Bursa Malaysia KLCI stocks you want to keep and which ones you want to sell. You can’t do this with an ETF or mutual fund (see below), as these are investment approaches geared to following the entire index.
The problem with buying 30 individual stocks is that you must make 30 separate trades to buy each one, plus even more trades when it comes to the point that you want to sell. This leads to big transaction fees and lots of time spent trading. Beginner investors with smaller budgets and less time to burn might want to try a different approach. You can find more ways to invest and trade in our investment courses.
A mutual fund is a professionally-managed investment fund that collects money from many different investors, then invests that large sum of pooled money into different assets. A Bursa Malaysia fund (also called an index fund) enables you to invest in all 30 of the FTSE Bursa Malaysia KLCI’s stocks at once, which means you’re mitigating risk by holding a diversified batch of stocks. A Bursa Malaysia fund is bought through a broker, or directly from the company that administers the fund.
One drawback of a Bursa Malaysia fund is that it can only be bought at the end of the stock market’s trading day, not during regular market trading hours (unlike ETFs which can be traded freely). Another is that mutual funds charge higher fees than ETFs do. Mutual funds are ideal if you want to buy and hold for a longer stretch of time, since it’s more difficult and more expensive to trade than an ETF.
2. Use our top tips to be a successful investor
Here are our top investment tips to help you get started:
- Do your research. Investing takes time, hard work, and patience to do well. In this case, that means evaluating all the pros and cons the FTSE Bursa Malaysia KLCI, and whether that investment fits your goals. After that you’ll want to build a sound investment plan, which will improve your chances of success and enable you to make level-headed decisions whenever the stock market turns volatile.
- Set a budget. The budget you set should account for your personal level of risk tolerance, as well as how much money you can afford to lose without affecting your financial and emotional well-being.
- Select the right platform. When deciding on the right trading platform for your investing goals, consider factors such as the relative size of transaction fees and the level of customer service and advice you want. Shop around, pick a platform, and then don’t be afraid to switch if you’re not happy with the first one you choose.
- Grow your investments gradually. As a beginner investor, it’s best to start by investing a smaller amount of money. You can always invest more as you become a more experienced, more successful investor.
- Think long-term. If you buy in a bull market and are able to hold through the typical ups and downs that even market uptrends tend to go through then an index could suit a long term strategy. Just remember to avoid investing during bear markets, as these conditions usually cause indices to tumble.
3. Choose a platform to invest with
OK, so you want to invest. Where do you put your money to make that happen? Here are some of the best investment options:
- Brokers & trading platforms. Online brokers offer easy-to-use platforms at a low price with little hassle. However, online brokers don’t usually offer in-depth investment advice. So if you’re looking for more thorough investing advice and can afford to pay more in terms transaction fees, you might want to look elsewhere.
- Robo advisors. Robo advisors are algorithm-powered trading platforms which execute trades without the need for human help. Some robo advisors, though, will also allow you to discuss your investment strategy with an actual human advisor to help you make the right decisions. As robo advisors also tend to offer low fees, they are often an attractive option for investors. But be aware that robo advisors are still a more hands-off investing approach than what you get when investing with a dedicated financial advisor.
- Financial advisors. Financial advisors offer the most investment advice to people who pay for their services. They’ll go over your financial goals in great detail and explain how every different investment option and decision can fit with those goals. The catch is that out of all investment options, financial advisors charge the most. That can sometimes be worth the price given the high level of customer service they provide. That said, since index investing isn’t very complicated, it probably isn’t worth paying high fees in this case.
- Banks. Your bank gives you the convenience of having all of your financial instruments in one place. The problem is that banks tend to charge high fees without providing the level of service that top financial advisors offer. So other than the convenience factor, banks might not provide the combination of service and affordability that you’re seeking.
Here’s our top recommended broker
What should I do now?
Ready to invest? Then simply log into your online broker’s website, select the specific investment asset you like most as a FTSE Bursa Malaysia KLCI investment, and buy. Just remember not to get complacent. Keep close tabs on your investment so you can make informed decisions about whether to hold or sell.
Try some of our investment courses for beginners
Long-term Stock Investing
Short-term Stock Trading
Fact-checking & references
Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >