Mutual funds registered for sale in Malaysia posted an average loss of 4.65% in September, extending AugustÆs average 1.65% decline, according to data from Lipper. That brings the average mutual fund losses in Malaysia to 16.53% in the first nine months of this year.

On average, commodities (-11.47%) and equity (-7.79%) funds underperformed other asset types for the month.

Natural resources prices continued to undermine the returns of commodities funds. They fell as speculation grew that the demand for commodities would be reduced as the global financial meltdown fell from bad to worse and on mounting expectations that the global economy was entering a recession. Crude oil futures fell nearly 13%, while copper futures lost 15.3% in September. Corn and soybean futures declined nearly 21% and 18%, respectively. Gold was the only major commodity product gaining in September as falling asset prices lifted its investment appeal as a medium for capital preservation. Spot gold prices climbed almost 5% in September.

Equity funds fell an average 11.47% in September. The average loss would have been bigger if the Sabah state government had not subscribed for the fund units of Saham Amanah Sabah, an equity Malaysia fund, at a premium price during the month, according to Lipper. The subscription allowed the fund to climb 32.65% in September. The only other funds recording positive returns in September were Am-NamaaÆ Asia-Pacific Equity Growth (+1.30%), an equity Asia-Pacific ex-Japan fund, and HLG European Dividend-Growth (+0.12%), an equity Europe fund. Monthly losses incurred by equity funds in September reached as much as 21.07%, reported by AmGlobal Agribusiness, an equity sector noncyclical consumer goods fund, and CIMB-Principal Climate Change Equity, an equity global fund.

Bond funds posted an average return of 0.40% in September. Bond Malaysia portfolios (+0.81%) occupied the high end, while bond global (-0.54%), bond Asia-Pacific (-2.81%), and bond emerging markets global (-4.14%) lay at the low end of the performance table for the month. The 10 best performing bond funds were all categorised under bond Malaysia funds, including OSK-UOB Income (+2.71%), AmDynamic Bond (+2.58%), and Public Islamic Bond (+2.49%). Meanwhile, all four bond Asia Pacific and three bond emerging markets global funds, including AmAsian Income (-6.98%), AmEmerging Markets Bond (-6.07%), and RHB Asian Total Return (-2.47%), accounted mainly for the 10 worst performing funds in September.

Islamic funds fell an average 3.82% in September, 83 basis points less than the average loss of the broader fund universe. Such a discrepancy was contributed mainly by the fact that Islamic equity emerging markets global (-3.51%), equity Asia-Pacific ex-Japan (-8.14%), equity global (-9.72%), equity Asia-Pacific (-10.67%), and equity Greater China (-13.51%) outperformed their respective broader fund universes for the month. Among the 14 Islamic fund groups, only bond Malaysia (+0.96%) and money market Malaysia (+0.22%) posted average gains in September. Meanwhile, Islamic equity fund groups such as equity Greater China (-13.51%) and equity sector gold and precious metals (-11.47%) lay at the low end of the performance table for another month.

Average performance of fund groups registered for sale in Malaysia in September:

Bond +0.40%
Others +0.84%
Money Market MYR +0.25%
Protected -0.30%
Guaranteed -0.76%
Hedge/Fixed Income -4.19%
Mixed Asset -4.61%
Equity -7.79%
Commodities -11.47%