Unit trust industry stable with record sales of RM18bil

By LAALITHA HUNT
KUALA LUMPUR: There has not been any panic selling in the local unit trust industry as redemption rates are at an average of 2% of total fund size per month, said Federation of Malaysian Unit Trust Managers (FMUTM) president Tunku Yaacob Tunku Abdullah.
The local unit trust industry had continued to record net sales of nearly RM18bil in the first 10 months of 2008, he noted.
However, the total NAV (net asset value) of the unit trust industry as at end 2008 slid RM34bil or 20% from RM169bil in 2007.
“However, this decline was relatively less severe compared to the drop in commodity and stock-market indices,” Tunku Yaacob said after the Morningstar 2008 Fund Awards presentation here yesterday.
“Going forward, we expect redemption rates to be maintained and sales to improve this year.”
From 2001 to 2007, the Malaysian unit trust industry had enjoyed double digit growth in NAV, from RM43bil in 2001 to RM169bil in 2007.
Tunku Yaacob also said he did not see the Kuala Lumpur Composite Index dropping below 850 points.
US-based Morningstar Inc chief financial officer Scott Cooley said the long term prospects for unit trust funds were still bright despite the current downturn in comparison with other asset classes.
“US equities have lost more than 50% of their value since October 2007.
“Besides that, out of 10,691 US equities, 2,886 lost over 75% of their value last year. In comparison, out of 15,272 mutual funds, only one lost more than 75% of its value,” Cooley noted.
For the Morningstar 2008 Fund Awards, winning funds were determined based on their delivery of risk-adjusted returns over the past year and their consistency over the longer term.
Seven awards covering three categories, namely equity, fixed income and balanced fund, were given out, with Islamic funds dominating the awards.
ASM Investment Services Bhd was named the winner for its Islamic syariah equity fund, while MAAKL Mutual Bhd took the award for its ringgit bond fund under the fixed income category.
RHB Investment Management Sdn Bhd won the award for the balanced fund category for its RHB Mudharabah Fund.
Tunku Yaacob noted that Islamic funds had turned out to be more resilient and were shielded from some of the huge portfolio losses that conventional funds had encountered.
“This could be due to the fact that Islamic funds were not permitted to have any exposure to conventional banking and financial equities, which had taken a beating as a result of the current crisis,” he said.

Source : The Star 12 March 09