Key Points:
- Leading the pack is OSK-UOB Global New Stars Fund posted a whopping 20% return by end-March.
- TA Global Technology Fund, the runner up with 14.2% returns focuses on the exciting technology sector.
- India focused funds like Manulife Investment - India Equity Fund and OSK-UOB China-India Dynamic Growth Fund benefited from the rally of the Indian market. Both funds went up 12.5% and 11.4% respectively.
- AmPrecious Metals, OSK-UOB Gold and General Fund and Manulife Investment – Global Resources Fund tumbled 7.03%, 4.08% and 2.82% respectively.
- The 1Q 2012 underperformance of the Malaysian equity market suggests investors to have a globally diversified portfolio to enjoy higher potential returns overseas.
- We continue our call to overweight equities vis-à-vis bonds in 2012, within the equity space, our recommendation is the Greater China region and South Korea for single country markets, and Global Emerging Markets (GEMs) for the regional market.
Global equity markets had a positive start to 2012 (see Chart 1). The coordinated actions from major central banks, the retreat of fear coupled with better-than-expected economic data all boosted investors’ confidence globally. For more insights about the market quarterly performance, see Equity Market Review 1Q 12: A Positive Quarter For All Markets.
| Chart 1: Global Equity Markets 1Q Performance |
|
Top Equity Funds in 1Q 2012
A quick glance on Table 2 shows that overseas funds dominated the top performing list. The only exception is Malaysia small and mid-cap fund, OSK-UOB Emerging Opportunity Unit Trust which ranked number 8 in the list with a 11.4% quarterly return. Single country or sector-specific funds make up the rest of the top performing funds list. Good news is these top 10 performing funds delivered impressive double digit returns.
Leading the pack is OSK-UOB Global New Stars Fund, a specialist fund that invests primarily in initial public offerings (IPO) and early stage companies, posted a whopping 20% return by end-March. TA Global Technology Fund, the runner up with 14.2% returns focuses on the exciting technology sector. Common technology sector benchmark, Nasdaq-100 index climbed up 16.9% in the same period. Tech titans such as Apple, Microsoft, Google and IBM are its portfolio heavyweights whereby Apple and Microsoft spiked 43% and 21% in these 3 months alone, which greatly contributed to the fund’s performance.
Given that India is our third placed market in 1Q 2012, India focused funds like Manulife Investment - India Equity Fund and OSK-UOB China-India Dynamic Growth Fund benefited from the rally of the Indian market. Both funds went up 12.5% and 11.4% respectively.
Table 1: Top 10 Performing Equity Funds
1 |
|
20.0% |
|
2 |
|
14.2% |
|
3 |
|
12.6% |
|
4 |
|
12.5% |
|
5 |
|
11.9% |
|
6 |
|
11.6% |
|
7 |
|
11.4% |
|
8 |
|
11.4% |
Malaysia - Small to Medium Companies
|
9 |
|
11.2% |
|
10 |
|
10.8% |
|
Source: iFAST compilations, returns in RM terms, calculated using NAV prices, with any income or dividend reinvested as of 31 March 2012 |
Bottom Equity Funds in 1Q 2012
Out of the 10 bottom performing equity funds, 3 equity funds have more than 90% of their holdings in cash and cash equivalent liquid assets which yielded little interest, namely the MIDF Amanah Asia Pacific Equity Fund, MIDF Amanah Asia Pacific Islamic Equity Fund and OSK-UOB Global Food Islamic Equity Fund. The reason is that their investment strategies are constrained by their relatively small fund sizes. These newly-launched funds’ size stood at RM0.63 million, RM0.60 million and RM1.9 million respectively according to their March 2012 fund factsheet.
AmPrecious Metals, OSK-UOB Gold and General Fund and Manulife Investment – Global Resources Fund tumbled 7.03%, 4.08% and 2.82% respectively. They have substantial exposure to gold mining companies which have underperformed the broad market indices recently. The FTSE Gold Mines Index suffered a major setback of -8.8% return in 1Q 2012 whereas MSCI ACWI index rose 7.6%, a staggering difference of 16.4% points.
Unsurprisingly, 3 Malaysia equity funds also appeared in the bottom performing funds list given FBM KLCI edged up by a mere 4.3%, lagging behind regional peers. For more insights about the Malaysia outlook, see Malaysia 2012 Outlook: A Resilient But Unexciting Market.
Table 3: Bottom Performing Equity Funds
1 |
|
-7.03% |
|
2 |
|
-4.08% |
|
3 |
|
-2.82% |
|
4 |
|
-0.92% |
|
5 |
|
-0.88% |
|
6 |
|
0.36% |
|
7 |
|
0.56% |
|
8 |
|
0.93% |
|
9 |
|
0.94% |
|
10 |
|
1.25% |
|
Source: iFAST compilations, returns in RM terms, calculated using NAV prices, with any income or dividend reinvested as of 31 March 2012 |
Conclusion
The 1Q 2012 underperformance of the Malaysian equity market suggests investors to have a globally diversified portfolio to enjoy higher potential returns overseas. Although the strong rally in global equity markets lifted market valuations from previous distressed level, we believe that a number of equity markets are still very attractive (see Sector Star Ratings).
Thus, the current entry points still offer tremendous upside potential over a longer time horizon. Hence, we continue our call to overweight equities vis-à-vis bonds in 2012, within the equity space, our recommendation is the Greater China region and South Korea for single country markets, and Global Emerging Markets (GEMs) for the regional market.
Related Article
Equity Market Review 1Q 12: A Positive Quarter For All Markets
1Q 12 Investment Outlook Review And Changes To Star Ratings
Tech And US Funds Dominated In March 2012
Malaysia: Telcos Up, Airlines Down In March
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