SE Asian fund managers expect delayed recovery-S&P

SE Asian fund managers expect delayed recovery-S&P

Reuters Hong Kong

Funds investing in Southeast Asian markets expect a delayed regional recovery and have adopted a defensive posture, reining in sector and stock bets against benchmarks, Standard & Poor's said on Tuesday.

"However it is not all gloom, some managers view recent depressed levels as a highly attractive buying opportunity," S&P's said in a report on Southeast Asian fund performances.

S&P's said Southeast Asian markets have been disappointing performers in recent years but their volatility has provided opportunities for rewarding investment.

"The challenge for investors is fund selection," Linda-Jane Coffin, director and head of S&P's Asian team, said in a statement.

S&P's said although most fund managers have not been able to buck the declining trend in prices, they have mitigated the market setback.

The MSCI All Countries Far East Free ex-Japan index fell nearly 50 percent in U.S. dollar terms during the past five years, but median performances for offshore funds investing in the region tracked by S&P's posted smaller falls of some four percentage points.

S&P's, in its report covering 23 locally-managed funds and 16 offshore funds covering the year up to September 1, noted a wide dispersion in such performances, due to diverse ways in which the funds are managed.

"A variety of different benchmarks are used which result in a wide range of portfolio constructions," it said.

Some portfolios, for example, had held as much as 40 percent cash during the height of the Asian crisis three years ago.

But in the 12 months to Sept.1, cash had typically not exceeded 10 percent of fund managers' portfolios.

S&P's rated the fund performances stable across the board.

"This trend reflects the more cautious and index neutral stance taken by fund managers," S&P's said.