Commodities, hedge funds outperform in Malaysia

Investors are now paying close attention to Malaysian corporate earnings as mutual funds in the country post further gains, according to data provider Lipper.

Mutual funds registered for sale in Malaysia posted an average return of 0.73% in August, bringing the average gain for the first eight months of 2009 to 20.03%, according to Lipper. All fund types delivered positive returns in the January-to-August period, led by equity funds which were up an average of 35.05%, while commodities and hedge funds did particularly well in August.

"The idea that markets are forward-looking is an appealing one," says Ivan Ng, a research analyst at Lipper. He says there has been a lot of commentary about the fact that August "was a slightly more volatile month for equities as we approached the one-year anniversary of the collapse of Lehman Brothers in September 2008".

Markets are a combination of investor psychology and expectations about the future, adds Ng, and thus sentiment could shift very quickly. "All of that can change in an instant, and whether the market is efficient and forward-looking or not is still widely debatable, particularly in this environment, where markets seem to be the subject of a massive reflation exercise, aided by massive amounts of money from governments," he says.

Investors concerned about inflation have little reason to be at the moment, Ng says, with the consumer price index in Malaysia continuing to fall for the second consecutive month -- by 2.4% year-on-year in July. All eyes will be on corporate earnings over the next quarter, he says.

Funds that invest in commodities and hedge fund portfolios were Malaysia's best performers in August, posting average returns of 2.8% and 2.75%, respectively. On a one-year period, however, both fund types were down by an average of 28.12% and 3.01%, respectively.

Equity funds posted an average return of 2.39% in August. HwangDBS Global Property was the top-performing fund in August, returning 19.65%. Second-placed AmPan European Property Equities returned 15.17%. The worst-performing equity funds in August were mostly invested in Greater China or China equities.

On the local front, Malaysia's benchmark index, the FTSE Bursa Malaysia KLCI, was down 0.05% for the month of August, but up 33.93% year-to-date. The index outperformed the Singapore market, which fell 2.49% in August, but underperformed its Asean neighbours Thailand, the Philippines and Indonesia, which gained 4.69%, 3.07%, and 0.79%, respectively.

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