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In October, commodities funds (-17.39%) and equity funds (-14.08%) underperformed funds in other asset types on average. Bond funds reported an average loss of 0.62%, while mixed-asset funds incurred an average loss of 7.93%.
With the 2008 US presidential election over, market attention will shift to president-elect Barack Obama, says Eric Wong, Hong Kong head of research at Thomson Reuters Lipper.
ôInvestors will scrutinise his actions for hints on the measures he will adopt to revive the US economy and they may even use speculation on these measures to set the direction of financial markets in the near-term,ö he says. ôHowever, with mounting national debt, the arsenal at the disposal of the new president is limited, and the economic and corporate earnings outlooks are still full of challenges and uncertainties.ö
Separately, Wong believes the deteriorating global economic environment means tougher times for Malaysia in the quarters ahead. Thus, investors should continue to adopt a conservative investment strategy for their portfolios for the time being, he says.
Only money market (+0.23%) funds reported an average gain in October.
Natural resources prices continued to undermine the returns of commodities funds. They fell on persistent concerns that the demand for commodities would be reduced as the global financial meltdown went from bad to worse and on anticipation that the global economy was entering into a deep recession. Crude oil futures fell 32.6%, while copper futures lost 35.6% in October. Corn and soybean futures declined 17.7% and 12.1%, respectively. Precious metals (gold and platinum) fell 16.9% and 18.7%, respectively, in October, on easing inflationary expectation as crude oil prices fell. The continuing recovery of the US dollar, which was regarded as a safe-haven currency in a turbulent global financial market environment, in October also posed as a negative catalyst to precious metal prices.
Average performance of fund groups registered for sale in Malaysia in October:
Money Market MYR +0.23%
Mixed Asset -7.93%
Hedge/Fixed Income -9.36%
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Actively managed funds were also not found to have better odds of higher returns than more passive funds.