Unit trust funds blossom despite Asian crisis<\/p>\n
By Josephine Ng<\/p>\n
SINGAPORE (Reuters): The unit trust industry is blossoming in
\nSingapore despite Asia's financial crisis and negative returns
\nfrom 81 percent of locally-authorized funds in 1997.<\/p>\n
Last year, out of 69 Singapore-registered unit trusts, only 13
\nmanaged to grow in value, according to British fund monitor
\nStandard & Poor's (S&P's) Micropal.<\/p>\n
By early February this year, the number of funds had grown to
\n93, not counting several new ones launched this month.<\/p>\n
"The number of funds here are still small compared to
\nelsewhere. Hong Kong has some 1,000 funds," said Ronnie Teo, DBS
\nAsset Management's executive director.<\/p>\n
He said the Singapore $3.0 billion to S$4.0 billion (US$1.8
\nbillion to US$2.4 billion) invested in unit trusts so far were a
\ndrop in the ocean considering the amount available from the city
\nstate's employee savings scheme, called the Central Provident
\nFund (CPF), and cash deposits.<\/p>\n
"We are going to see growth in the next five years at 20 to 25
\npercent per annum," Teo said.<\/p>\n
The growth could be boosted further as Singapore moves to
\nreform its financial sector, fund managers said.<\/p>\n
A committee looking into the reforms has recommended that 20
\npercent of public sector funds, including foreign reserves, be
\nallocated to the private sector, with 20 percent for management
\nby fund managers in three years.<\/p>\n
The Singapore government in response said last week that it
\nwould place out more funds for private sector management and was
\nstudying the details.<\/p>\n
More savings in the CPF, now about S$78 billion, could also be
\nplaced with fund managers in the years ahead.<\/p>\n
The government also said it was looking into allowing other
\nfunds to be invested into unit trusts approved by the CPF.<\/p>\n
But fund managers admit the target size of new unit trusts has
\nshrunk to more realistic levels of as low as S$20 million from
\nearlier expectations of S$100 million.<\/p>\n
And a sign of how the rout in Asian markets has taken a toll
\non investments -- three of the top 10 performing Singapore-
\nauthorized unit trusts in 1997 were bond funds.<\/p>\n
They were Citibank's Citi Global Bond Fund with a 16.2-percent
\nreturn, OCBC Savers Global Bond Fund, which rose 11.52 percent
\nand DBS Shenton Income Fund which recorded a 9.7-percent return,
\naccording to S&P's Micropal.<\/p>\n
This did not mean equities would lose their appeal this year,
\nfund managers said.<\/p>\n
Instead, new equities-based funds have to be nimble and find
\nnew ways to offer diversification and value.<\/p>\n
In the last six months, new unit trusts have been pegged to
\nideas like "buy small", "buy global", "buy battered", "buy
\nspecial situations", "buy Europe" or "buy technology".<\/p>\n
These concepts are not new, but avoided the herd instinct, as
\nPeter Seah, chief executive officer of Overseas Union Bank said
\nof his bank's Global Contrarian Fund launched in November.
\nAnd partnerships between local and foreign fund managers might
\nscore extra selling points with investors.<\/p>\n
DBS's Shenton Global Advantage Fund was launched on Feb. 10 in
\npartnership with U.S.-based small stock specialist Cowen Asset
\nManagement, to invest in companies with market capitalisation of
\nnot more than US$500 million.<\/p>\n
Late last year, Singapore's United Overseas Bank Ltd. and U.S.
\nfund manager Robertson Stephens jointly launched a global
\ntechnology fund.<\/p>\n
Teo of DBS said foreign partnerships were necessary to keep up
\nwith the fast changing pace of the industry.<\/p>\n
"Some of us realize focusing investment in Asia is not
\nsufficient. We need to globalise," Teo said.<\/p>\n
For foreign fund managers, an Asian partner was one way to
\ndevelop their client base, said Cowen Asset Management's chief
\nexecutive officer Kenneth Dowd.<\/p>\n
Others like Robertson Stephens join forces to get into Asian
\nmarkets without spending huge resources.<\/p>\n
While it is too soon to be conclusive, early signs this year
\nshow funds invested in markets that are among the worst hit
\nduring the financial crisis have raced ahead.<\/p>\n
S&P's Micropal's data show that from January to the first week
\nin February, the Templeton IF Thailand unit trust heads the pack
\nwith gains of 28.35 percent, followed by Templeton IF Korean with
\n21.2 percent and Aberdeen Malaysia with 19.91 percent.<\/p>\n
And the worst three were DBS Shenton Greater China, down 14.04
\npercent, Nicholas-Applegate Regional India, falling 10.63 percent
\nand Templeton IF China, down by 9.05 percent.<\/p>\n
But fund managers said while they were pushing "contrarian"
\nideas to match changing situations, they did not foresee
\nsignificant redemption from older unit trusts.<\/p>\n
These older funds could still do well over the long term if
\nproperly managed, they said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/unit-trust-funds-blossom-despite-asian-crisis-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}