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All asset types turned in a negative performance last month, save for guaranteed funds, which managed to close with a marginal gain of 0.24%.
Equity funds suffered the most, posting an average loss of 19.93%. The next most disappointing fund category was commodities funds, which posted an average loss of 18.85%, mainly pulled down by a more-than-35% drop in global crude oil prices.
Bond funds and money market funds dropped 8.32% and 1.69% on-average because of currency-translation losses, especially in euro-denominated funds and emerging markets-focused portfolio products.
Mixed-asset funds dropped 10.96% on average, following the equity market correction, while hedge funds û with an average loss of 2.58% û could not hedge fully against the market volatility. Protected funds ended down by 1.55% on average, led by equity-linked products as well as currency translation losses.
Among equity funds, the 10 worst performing fund groups were: Equity Sector Gold & Precious Metals (-35.30%), Equity Russia (-33.59%), Equity Emerging Markets Europe (-31.90%), Equity Thailand (-30.65%), Equity Indonesia (-30.50%), Equity Emerging Markets Latin Am (-29.63%), Equity Sector Real Estate Europe (-28.64%), Equity Emerging Markets Other (-28.37%), Equity Brazil (-28.17%), and Equity Asia-Pacific Small & Mid-Cap (-26.75%).
The best performing fund in October was an equity global fund, Lyxor OS S&P All Stars Global Income fund (+0.21%), the only equity fund ending with a positive return.
With expectations of a severe economic slowdown in global and domestic markets, the market foresaw a drop in bond yields because of the higher possibility of policy interest rate cuts. In October, the US government bond yields for short maturities went down following several US Fed fund rate cuts. The US one-month government bond yield decreased 26.2 basis points to 0.113%, but the bond yields for long maturities increased marginally from the previous month.
Global fixed-income markets suffered from market turbulence, but the US dollarÆs strengthening boosted the performance of fixed-income fund groups such as money market USD and bond USD short-term, which posted gains of 3.32% and 1.67%, respectively.
In early November, investor anxiety eased as the global markets rebounded quickly after the freefall in October, with support from aggressive policy interest rate cuts by central banks in many countries, according to Suthee Luangaramkul, research manager at Thomson Reuters Lipper. For example, the Chinese government announced one of the largest economic stimulus packages û valued at Rmb4 trillion ($586 billion) û to spend in two fiscal years in order to revive and save the economy from recession and the global financial crisis.
However, as Luangaramkul notes, markets remained clouded with risk and volatility, especially now that all market participants are keeping an eye on the economic policy measures of the new US government to be administered by president-elect Barack Obama.
ôIt remains to be seen if the new economic policies could end the soured banking troubles and can stimulate the US economy effectively to bring it out of the unwanted recession,ö Luangaramkul says.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
Insto roundup: GPIF staff say J-Reits more attractive than traditional assets; Hong Kong's strict Spac criteria
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.