Mutual funds registered for sale in Malaysia posted an average return of 2.63% in October, thanks to a strong ringgit and the positive sentiment for shares in this region, according to data from Lipper. In September, the funds posted an average return of 2.99%.

Equity funds were the best performers once again, posting an average return of 4.05%, led by gains from local and regional portfolios. Bond funds were up a mere 0.15% on average as declines in Asian and global offerings dragged down overall gains, while money market funds remained steady at an average return of 0.20% on average.

ôA rebound with regional bourses at month-end in anticipation of a cut in the US Fed fund rate saw plantations, property, and government-led companies leading gains (in the local stock market), with a stronger ringgit spurring renewed buying interest from foreign funds,ö says Singapore-based Kenneth Koh, head of research for Asia ex-Japan at Lipper.

MalaysiaÆs benchmark stock market index breached the key psychological level of 1,400 last month for the first time, boosted by the strong foreign buying. The Kuala Lumpur Composite Index of 100 blue chips closed at 1413.65 in end-October, up 5.8% from end-September.

The US Federal Open Market Committee cut federal funds target rate by 25 basis points to 4.5% in late-October in a bid to help ease the US credit crisis, following a 50 bps cut in September. Prior to September, the Fed kept its key interest rate steady for nine straight meetings since August 2006.

Average October performance of fund groups registered for sale in Malaysia, by asset types:

Equity Funds +4.05%
Mixed-Asset Funds +2.84%
Commodities +1.79%
Target Maturity Funds +1.74%
Protected Funds +1.58%
Guaranteed Funds +0.98%
Money Market Funds +0.20%
Bond Funds +0.15%

Top 5 fund sectors in terms of performance in October, with their average gain:

Equity Sector General Industry +9.27%
Equity Sector Natural Resource +8.54%
Equity Greater China +8.05%
Equity Emerging Markets Global +7.23%
Equity Asia Pacific Ex-Japan +4.76%

Bottom 5 fund sectors in terms of performance in October, with their average loss/gain:

Equity Sector Real Eastern Europe -4.81%
Equity Sector Pharma & Health -2.42%
Bond Asia-Pacific -0.98%
Bond Global -0.67%
Money Market MYR +0.20%

Top 5 funds in October, with gain:

HwangDBS Greater China +18.10%
Public Aggressive Growth +11.25%
PB Growth +10.87%
PB Asean +9.85%
CMS Islamic +9.62%

Bottom 5 funds in October, with loss:

AmPan European Property -4.81%
HwangDBS Indochina -2.48%
Prudential Shariah -2.44%
HLG Global Healthcare -2.42%
MAAKL Asia-Pacific REIT -2.05%