Mutual funds registered for sale in Malaysia posted an average loss of 3.99% in January, according to data from Lipper.

Equity funds, which were last yearÆs top performers, led the decline with an average loss of 6.47%. Funds that invest in Greater China and the Asia-Pacific region suffered the steepest losses.

Islamic sub-sector funds were down 2.83% on average, but managed to outperform the broader market. Money market funds held steady.

ôMalaysia is increasingly being touted for its defensive qualities, but a slowing global economy and rising inflationary pressures remain risks,ö says Singapore-based Kenneth Koh, head of research for Asia ex-Japan at Lipper, referring to sentiment for the local market.

The Malaysian bourse started the first trading month of 2008 on a rosy note, gaining nearly 5% at one stage to touch an all-time high of 1,524.69 points. A deteriorating US growth outlook and heavy selling pressure amid sliding global bourses eventually saw the benchmark KL Composite Index giving up all its gains and falling sharply to a low of 1,340.29 points last month. Bargain hunting and a technical rebound at the end of the month enabled the KL Composite Index to close the month with a relatively smaller decline of 3.58% at 1,393.25 points, outperforming most of the other markets in the region.

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

Equity Funds -6.47%
Mixed-Asset Funds -3.70%
Guaranteed Funds -1.71%
Protected Funds -1.38%
Bond Funds -0.17%
Money Market Funds +0.21%

Top 5 fund sectors in terms of performance in January, with their average gain/loss:

Equity Sector Gold and Precious Metals +5.04%
Bond Global +0.83%
Money Market Malaysian ringgit +0.21%
Commodities +0.18%
Bond Malaysian ringgit -0.06%

Bottom 5 fund sectors in terms of performance in January, with their average loss:

Equity Greater China -16.44%
Equity Asia-Pacific -12.74%
Equity Sector Real Estate -10.56%
Equity Global -10.50%
Equity Asia-Pacific Ex-Japan -10.26%