By The Star; LOONG TSE MIN and LAW KAI CHOW
PETALING JAYA: The global financial turmoil has not resulted in a mad rush to get out of the Malaysian unit trust sector, but investors have been pulling out of the stock market and putting their money elsewhere as funds posted mostly negative returns, fund managers said.
Areca Capital Sdn Bhd’s chief executive officer Danny Wong told StarBiz: “Contrary to what people believe, while the equity market has fallen some 20% year-to-date, there has not been panic selling in unit trusts.”
PETALING JAYA: The global financial turmoil has not resulted in a mad rush to get out of the Malaysian unit trust sector, but investors have been pulling out of the stock market and putting their money elsewhere as funds posted mostly negative returns, fund managers said.
Areca Capital Sdn Bhd’s chief executive officer Danny Wong told StarBiz: “Contrary to what people believe, while the equity market has fallen some 20% year-to-date, there has not been panic selling in unit trusts.”
The size of funds had remained quite stable, he added, observing that the funds had invested 50% to 60% of their allocations in the stock market. “This also means that there is 40% to 50% left to return to the (equity) market when things recover,” he said, acknowledging that there had been some selldown by equity-based unit trust funds in the first half of the year.
Wong said he has seen shifts in funds from equity funds to short-term fixed income funds unit as investors shunned long term bets. Investors have been “sidelining,” that is reducing exposure to capital markets by going into more liquid and conservative investments, he said.
At the same time, unit holders have also shifted away from bond funds which were longer term in favour of money market funds.
The take-up rate of new funds was about 50% slower than last year as investors were more cautious amid the current volatility, he noted. Ng advised investors to continue to invest in the stock market as it was oversold.
“We think the market will continue to slow down for the next 6 months and we may be at near bottom now,” he said. “Next year, the market will be at a better position and we could see the funds and equity market (coming in) to pick up momentum again.”
Meanwhile, fund research house Lipper’s latest Fund Market Insight in a report for August said funds registered for sale in Malaysia had made losses for the third consecutive month.
In August, Malaysian funds posted an average loss of 1.65% with commodity-linked funds sliding 5.58% and equity-based funds dropping 2.98%.
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