ASIA - The fall in South East Asian regional markets by nearly 45% in sterling terms over the past five years has proved a testing background for fund managers, according to the latest report by Standard & Poor's (S&P's).
Median performances for both UK authorised Open Ended Investment Companies (OEICs) and unit trusts and their offshore counterparts investing in the region record smaller falls – by 22 and 4 percentage points respectively.
Accounting for the slide, S&P said fund managers use a variety of different benchmarks which result in a wide range of portfolio constructions. The firm added that at the time of the Asian crisis three years ago, some portfolios were as much as 40% liquid although over the latest 12 months cash has typically not exceeded 10% of portfolios.
Looking at the disparity in recent annual performance, the margin has been narrowing. Over the latest review year to September 1, 2001, the difference between the 1st and 3rd quartile is down to nine percentage points compared with 12 points the previous year. “This trend reflects the more cautious and index neutral stance taken by fund managers,” said S&P. S&P’s latest South East Asia report includes 39 funds, 23 of which are managed locally in the region, the remainder either in the UK or US. Over the past year overseas based managers have come off best, limiting their median setback to 24.7% in sterling terms compared with a 27.8% decrease registered by locally based competitors.
Of the 39 funds passing the performance screen for this report, four achieved AAA rating, 18 attained AA and 14 A rated status. Those obtaining AAA were: Fidelity Investment funds - South East Asia Fund - (Sub-fund of UK authorised OEIC)First State Funds – Asia Pacific Fund (Sub-fund of UK authorised OEIC)Henderson Global Funds – Pacific Capital Growth Fund (Sub-fund of UK authorised OEIC)Henderson Horizon Fund – Pacific Fund (Sub-fund of Luxembourg domiciled Sicav)
Commenting on the latest report, Linda-Jane Coffin, director and head of S&P’s Asian team, said: “The challenge for investors is the fund selection. There are a wide variety of investment mandates and management approaches.
“As a result performance dispersion between the top and bottom performing funds in the region has been significant.
“All this calls for careful research and appraisal of regional funds, the management group and the manager, not just a look at performance tables for a particular time slot.”
By Janet Du Chenne
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