Money manager Fidelity saw a surge of cash into a Southeast Asian
equities mutual fund this summer, helping it leap past US$2 billion in size and
overtake a long-time leading rival product from J.P. Morgan.
Fidelity's ASEAN fund has
attracted estimated net inflows of $460 million in the last three months alone
to become, for the first time in more than six years, the largest fund focusing
on the region, data from Thomson Reuters Lipper showed.
The inflows underscore the
popularity of Southeast Asia at a time when key emerging market economies are
seeing outflows. The region of 600 million people has a combined economy of $2
trillion that is boosted by domestic consumption, public spending and a growing
middle class.
It also shows that Southeast
Asian investors are getting choosier, and gravitating towards better-performing
funds.
"It's been a good story to
market," Medha Samant, a Hong Kong-based investment director at Fidelity
Worldwide Investment, said in a telephone interview.
"Clients are increasingly
feeling that ASEAN markets are in a much stronger position to weather a global
economic downturn compared to 10 years ago," she said.
Assets of Southeast Asia-focused
funds tracked by Lipper stood at $7.8 billion at the end of July, the highest
since December 2007. Other offshore funds investing into individual countries
in the region managed a further $16 billion.
More than 50 mutual funds focus
on Southeast Asia stock investments, nearly double from five years ago, and the
inflows for Fidelity and some others such as Japan's Daiwa will help draw
investor attention to the region as other Asian countries such as China and
India slow. The inflows could ultimately help deepen the region's relatively
illiquid markets.
Offshore equity funds dedicated
to China and India saw a combined $2.4 billion of net outflows, according to
Lipper data. Even offshore equity funds investing in emerging market such as
Brazil have seen net outflows worth $826 million in the first seven months of
2012.
Weak returns
A prolonged period of weak
performance has driven some investors away from J.P. Morgan Asset Management's
$2 billion JF ASEAN Fund, leading to an estimated $78 million in outflows in
2012 and benefitting the rival Fidelity product, Lipper data showed.
The Fidelity Funds-ASEAN has
grabbed $814 million, nearly three-fourths of the estimated $1 billion of net
inflows into funds investing in all of Southeast Asia this year.
"This may be attributed to
the ability of Fidelity's fund to consistently deliver better returns than the
JF fund, particularly since the first quarter of 2011," said Eric Wong,
head of Lipper Hong Kong research.
Fidelity's fund has gained 14.3
percent in the year to end-August, helped by a 25 percent jump in top holdings
such as Singapore banks DBS Group and United Overseas Bank.
By comparison, its benchmark MSCI
South East Asia index is up 13.6 percent. The J.P Morgan fund trails with gains
of 12.8 percent during the period, Lipper data showed. The fund also lags its
benchmark over one-, three- and five-year periods.
Fidelity's fund managed $2.4
billion at the end of August, while the one from J.P. Morgan had just over $2
billion. They are the only two offshore ASEAN-focused stock funds with assets
of more than $2 billion.
"We saw some profit-taking
in the first quarter since ASEAN economies have performed well since the global
financial crisis," Pauline Ng, a managing director at J.P. Morgan Asset
Management, said in an e-mail. "Over the second quarter ending June 30th,
we have seen net inflows again."
Reuters
Business & Investment Opportunities
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