Unit trust have over the years proven their ability to give better returns compared with other instruments, and at relatively lower risks.
A report by Standard & Poor’s Fund Services, dated January 23 2007, indicates that the average return on equity funds last year was 24.88 per cent, followed by asset allocation category of 17.74 per cent.
The Kuala Lumpur Composite Index (KLCI) in comparison delivered lower but still solid 21.8 per cent return in 2006.
“The above clearly demonstrates that unit trusts do deliver respectable returns. Of course, this is buoyed by the good performance of the local stock market in the later part of last year.” Federation of Malaysian Unit Trust Managers president Datuk Tunku Ya’acob Tunku Abdullah said.
The trend pursued by mutual fund companies since last year has been offshore-based funds, and this year alone four have launched such funds
The reason why these foreign funds sold like hot cakes was the poor performance of the local equity market, MAAKL Mutual Bhd chief executive officer and executive director Wong Boon Choy said.
But today, the tables have turned. The KLCI is shooting its way towards the 1,200-level and analysts remain bullish about the market.
In fact for 2006, MAAKL’s local equity funds outperformed the offshore funds, Wong said.
“Take, for example, the one-year period ended December 29 2006: the average total return of the local Equity Growth category was 25.87 percent versus the Equity Asia Pacific Ex-Japan category’s average total return of 22.78 percent,” he noted.
Fund companies unanimously agree that more local unit trust funds will be introduced this year to build up foreign investment capacity, pointing out that most of the 30 per cent of the foreign capacity is used up.
“We intend to launch local funds as the demand is always there. This is in readiness to build up our fund size for future foreign fund launches,” OSK-OUB Unit Trust Management Bhd chief executive officer Ho Seng Yee said.
And build it will. Even as competition increases and margins start to get squeezed, mutual houses have set ambitious targets for their fund sizes.
OSK-UOB plans to increase its fund size to RM3.5 billion this year from RM2.4 billion; MAAKL intends to launch between four and five funds this year to boost its fund size to RM1.5 billion; while RHB Unit Trust Management is working towards a RM1 billion target.
Source: New Straits Time, 6 Feb. 2007