Mutual funds registered for sale in Malaysia posted an average gain of 2.24% in April, reversing MarchÆs average loss of -3.84% and ending five months of negative consensus performance, according to data from Lipper.

Equity funds gained 3.45% on-average, contributing the bulk of the overall monthly return. Among equity funds, China and Greater China portfolios occupied the top spots of the performance table with average gains of 10.37% and 7.75%, respectively, while gold and precious metals was at the bottom with an average loss of 9.91%.

Bond funds and mixed-asset funds gained 0.11% on-average. Bond funds operated in an unfavourable market environment in April because investors switched capital from government bonds to equities on the perception that the worst of the credit crunch might have passed.

Islamic funds gained 1.93% on-average.

ôSeveral fundamental parameters such as US housing prices, the unemployment rate, wage growth, and food and natural resources prices suggest that the global investment climate remains challenging,ö says Eric Wong, head of Hong Kong research at Lipper. ôInvestors must remain vigilant and should avoid overweighting their portfolios in high volatility assets until these fundamental parameters have consistently improved.ö

Malaysian stocks generally are still relatively inexpensive despite having recovered nearly 10% of their value since mid-March. However, the future of Prime Minister Abdullah Ahmad Badawi and the continuity of government policies remain uncertain, Wong notes.

ôThese political factors may restrain the performance of the equity market in Malaysia in the near term,ö he says.

Average performance of fund groups registered for sale in Malaysia in April, by asset type:

Money Market Funds +0.22%
Bond Funds +0.11%
Protected Funds +0.56%
Guaranteed Funds +0.94%
Commodities +4.07%
Mixed-Asset Funds +2.18%
Equity Funds +3.45%