The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
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.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
Insto roundup: Norway's Oil Fund praises China governance efforts; NPS commits $100m to taxi-hailing app
Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.